Store fulfillment is creating associate tension

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Discussion
Mar 29, 2016

Using the store as a fulfillment center — both for buy online/ship from store and buy online/pick up in-store — is creating service challenges and associate push-back, according to Andrea Weiss, co-founder of O Alliance, the retail consultancy.

Ms. Weiss, who previously held executive posts for The Limited, Guess and Ann Taylor, recently spoke at a Manhattan press briefing as part of the release of “Retail Transformation Underway: Achieving Customer-Centric Commerce,” a new report O Alliance developed in partnership with Revmetrix focusing on omnichannel challenges.

Part of the challenge involves how to fairly incentivize in-store staff to support online sales with the goal of satisfying customer’s expectations to “buy anywhere, pick up anywhere.”

Ms. Weiss said many retailers continue to debate compensation structures for associates who lose productive hours or commissions doing online fulfillment in stores.

In the case of ship from store, store associates often send out poorly wrapped or poorly packaged items, either because they have not been properly trained or do not see their primary work duty as being a warehouse associate. In some cases, associates will hold back “best sellers” rather than fulfill online orders to ensure the items are available for their clients, Ms. Weiss has heard.

“Commission-based associates are the most likely to engage in this behavior, as they often feel that they no longer have the opportunity to sell ‘the best inventory’,” said Ms. Weiss.

The best scenario, believes Ms. Weiss, is to allocate payroll for staff specifically hired, trained, compensated and reviewed for shipping standards versus sales associate standards. She said, “This allows for higher degrees of control, quality of execution and accountability.”

If a retailer decides a store can’t afford dedicated fulfillment staff, management could offer a pick-and-pack incentive to ensure compliance and reduce negative behaviors.

“Full commission may not be warranted, but unless dedicated hourly staff role is created to handle store-level fulfillment, some form of pick and pack incentive must be created to align associate behaviors with the new omnichannel expectation created by store fulfillment,” said Ms. Weiss.

New Research Report Finds Retailers Struggling to Put the Customer at the Center of Business – O Alliance/Business Wire

DISCUSSION QUESTIONS:
Should or can stores afford in-store staff dedicated to support omnichannel fulfillment? What level of pick-and-pack incentive would encourage in-store staffs to adequately support omnichannel fulfillment?

Braintrust
"Consumers want omnichannel. Retail employee compensation is not structured for omnichannel. There’s a basic conflict."
"Companies may push back by saying, "We can’t afford to add payroll," but growing evidence suggests that they can’t afford not to, either"
"People who like to sell don’t want to and aren’t any good at administrative or pick and pack type tasks. And people who like to pick and pack typically don’t like to sell and aren’t very good at it."

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15 Comments on "Store fulfillment is creating associate tension"

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Max Goldberg
BrainTrust

Consumers want omnichannel. Retail employee compensation is not structured for omnichannel. There’s a basic conflict. If retailers want to implement an omnichannel policy, they need to examine employee compensation and align it to fit consumer expectations or they are going to hire and have two classes of employees in stores. When these types of conflicts happen, consumers usually win, so retailers better start looking at how they will successfully meet consumer expectations.

Dick Seesel
BrainTrust

I have an acquaintance who sells shoes in a local department store, and who found herself spending time during the holiday season fulfilling BOPIS orders instead of serving customers in her own department. The company paid her time-and-a-half but the extra income didn’t offset her lost commission on her shoe sales. The program didn’t help the store’s reputation for customer service nor associate morale.

Retailers (as in this example) need to figure out the true costs of omnichannel initiatives like BOPIS or ship-from-store in an environment where brick-and-mortar sales are flat or worse. They are compounding the sales problem by stealing store payroll to execute tasks unrelated to serving the customer or restocking the selling floor. Companies may push back by saying, “We can’t afford to add payroll,” but growing evidence suggests that they can’t afford not to, either.

Jerry Gelsomino
BrainTrust

I’ve never thought about this or that there would be a problem. As customers want omnichannel retailing and executive suites boast that their stores are functioning that way, they need to develop staff and store policies that make it a reality so that everybody wins.

Bob Amster
BrainTrust
First, let us agree that when this madness called BOPIS and BOSS started, it sounded like a very accommodating idea, which it is, but few if anyone paid attention to its unintended consequences. We have three dynamics at work here. First, in an omnichannel world, compensation and bonuses have to be directly related — at least in a significant part — to the performance of the entire enterprise, because it is now the entire enterprise acting as one entity to satisfy the consumer and everyone has a part to play. Second, when retailers take on the responsibility to ship from the store, or have product waiting in-store, someone has to pay for the work. If retailers want the store associates to be serving the customer and selling, they can’t be fetching, wrapping and shipping. This calls for an (unintended) added function and payroll expense. Last, like with every other function, and especially those that are customer facing, it is imperative to train the personnel who are charged with the function. Ironically, while on one hand we have been trying through in-store systems to alleviate the administrative tasks of store managers so that they could spend more time on the selling floor, we… Read more »
Kai Clarke
BrainTrust

This is an issue which needs to be addressed with either dedicated personnel for the packing and shipping portion of the omnichannel requirement or fully trained staff with accompanying systems, processes and procedures to clearly support these specialized needs.

Chris Petersen, PhD.
BrainTrust

Tom’s post is a great recap on the transformation of the retail store and how it impacts everything — including roles and staffing.

Meeting the demands of today’s omnichannel customers requires new behaviors on the part of the staff. Most were never trained in the processes of click-and-collect. More importantly, very few were ever trained in how to deliver the quality of experience that meets and exceeds consumer experience expectations.

Retailers must come to grips with the realization that including new levels of customer experience requires: new staffing models, new roles and responsibilities, training for success and compensation commensurate with job role and what is required.

Kevin Graff
BrainTrust

Some very good points in the article and great suggestions from everyone above me in the panel. We’ve gone down this road with various retail clients. People who like to sell don’t want to and aren’t any good at administrative or pick and pack type tasks. And people who like to pick and pack typically don’t like to sell and aren’t very good at it. This is a case of adjusting your hiring and staffing practices. It’s not a pay and incentive issue. Hire the right people to do the job they can succeed at.

Jonathan Spooner
Guest
4 months 29 days ago

A shopper segmentation analysis could show who is the most valuable customer. If BOPIS shoppers have a higher lifetime value then over-index on customer service associates who can manage distribution. And for the commission-based sales associates, they must help with the distribution efforts. Just like reading new product spec sheets, sending out holiday cards, updating contacts — this is not directly contributing to your commission but it compliments the overall business.

One thought that struck me while thinking about this: high commission sales associates who are packing distribution shipments poorly might be purposely sabotaging the BOPIS system (which cuts them out of a commission). Driving customers who’ve been disappointed with a bad shipping experience back into the store. This is likely shortsighted as a bad BOPIS experience is not segmented in the shopper’s mind — a poorly shipped item also reflects on the in-store experience and overall brand value.

Dave Wendland
BrainTrust

For brick-and-mortar retailers who are facing a transformation to fulfill orders made online, it’s time to adjust. It is impractical to expect floor salespeople to now assume this new responsibility … however, retailers must also be careful that personnel hired to perform this “new” role do not diminish the in-store experience. A delicate balance to say the least.

For those retailers that embrace this transformation and put the right people in the right places, rewards will follow. For those that fail to adjust, the consumers will find another way to purchase these products and never return to the retailer.

The decision has been made by consumers and the choice is clear for retailers — support omnichannel fulfillment properly and positively! There is no time to wait and see.

Peter Charness
BrainTrust
The store needs to evolve as does all current thinking on the accounting related to store costs. If you start with the premise that the customer is right, then that store (or some stores in each city) needs to be completely rethought starting with the premise that there will be pick-and-pack for shipping, pick-and-hold for BOPIS and selling stock for in-store shopping, and the right staff levels and skills to support all that. The way that costs are accounted for needs a rethink, revisiting the concept of fixed and variable cost. Even the idea of inter-store transfers can be revisited. If someone starts with these thoughts as requirements then it is unlikely that store layouts or staffing would look anything like they do today. If a “multi function in city facility” was conceived and geographically located that facility could not only beat the delivery times that Amazon is striving for, they could also support better in-stock positions in traditional stores in town, including lower inventory levels all around. Trying to shoehorn all of this function into a store not appropriately laid out, and with staffing and cost control designed for a different purpose is hard. Can it be done cost… Read more »
Arie Shpanya
BrainTrust

If retailers want to make omnichannel a reality, they have to invest in it. Changing employee roles without appropriate compensation isn’t the way to go. Then, as explained in this article, employees aren’t motivated and it could increase turnover. It’s going to take the right staffing with the right training and at a good compensation level to make this work. Maybe retailers need to hire employees specifically for fulfillment so expectations will be clear on both sides.

Ken Morris
BrainTrust
Many retailers are not taking cross-channel fulfillment seriously, and that is a huge risk. According to our research, most retailers understand that consumers want flexible fulfillment options and they are trying to support these options as best they can. However, for those retailers that say they offer cross-channel fulfillment options, most indicate that they are not working well. Over-promising and under-delivering on these complex orders will alienate customers and risk losing their future business. Of the retailers we have surveyed and in discussions with our clients, most are not doing anything to compensate or encourage store associates to adequately fulfill omni-channel orders. I strongly believe that retailers are going to have to either have dedicated staff to support fulfillment (for high volume stores) or provide associates incentives/bonuses or commissions on the orders. Best practice is to treat these sales as if they came from the store location. Many of the systems on the market today employ a model that allows the stores to claim the sale and drive it based on the on-hand quantity. In a real-time retail environment the inventory is typically up to date but in a store and forward polling environment some algorithm is typically used to… Read more »
Lee Peterson
BrainTrust

It really has to be a hybrid in that if an employee is walking the floor, pulling goods, customers are going to ask them questions. And they’d better answer those questions or risk losing the customers. There really is no wiser choice.

The only way dedicated staff works IMO is if you make your back room bigger and create a mini warehouse there. One that makes it easier to pull goods and get them out to the BOPIS customers. THAT, is the way of new store design, where the back of house expands and front of house does two things; 1) get’s better/more experiential and 2) smaller.

For existing stores, however, hybrid staff is the way … until BOPIS goes over 30%, that is. And if the employees are complaining about that, you’ve got the wrong employees.

Michael Patrick
Guest
Michael Patrick
4 months 27 days ago

This type of shift in strategy is seismic. Unfortunately retailers may be trying to implement it with a, “Do your best!” approach. In addition to more structured training about how to actually prepare items to ship, and the compensation issue, is the fact that their hiring model needs to adjust to look for associates who can and want to do this combined work. They need to match omnichannel with omni-people.

Alan Cooper
Guest
Alan Cooper
4 months 20 days ago

Go where the business is. The retailers have to adjust their position matrix to reflect the business trends. It may dictate dedicated team members, or if the business percentages reflect a massive shift to omnichannel, then a massive facility shift may be in order for a new paradigm.

wpDiscuz
Braintrust
"Consumers want omnichannel. Retail employee compensation is not structured for omnichannel. There’s a basic conflict."
"Companies may push back by saying, "We can’t afford to add payroll," but growing evidence suggests that they can’t afford not to, either"
"People who like to sell don’t want to and aren’t any good at administrative or pick and pack type tasks. And people who like to pick and pack typically don’t like to sell and aren’t very good at it."

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