RSR Research: Is It Time for Store Employees’ Roles to Change?
Through a special arrangement, what follows is a summary of an article from Retail Paradox, RSR Research’s weekly analysis on emerging issues facing retailers, presented here for discussion.
Stores are not about products, not anymore. Only on rare occasions do I go to a store for a product I can get just as easily online. And if the purpose of the store is no longer mainly about acquiring products, then what are they there for? Well, they’re there for service — that is, they’re going to need to be there for service if they want to survive.
But $8/hour doesn’t buy you much service. At this month’s ShopperTrak conference, Jerry O’Brien, the director of Kohl’s Center for Retailing Excellence at the University of Wisconsin, put it nicely: "If you treat employee like monkeys, you’re going to get what you pay for."
Retailers might argue that they’ve already "optimized" the heck out of labor, meaning they can’t cut any more. Well, I believe they have achieved a local optimization only. If they would only invest in employees, they might find that the marginal return on that investment is much greater than the marginal return they got from cutting labor in the first place. Somehow retailers and service businesses, such as Container Store, Costco, Southwest Airlines, Nordstrom, never get the credit for such efforts.
To stay relevant, store employees need to compete with what shoppers can do for themselves. But no amount of technology is going to turn a poorly trained employee who barely gets enough hours to justify showing up to work in the first place into the kind of customer service provider that builds loyal customers for life. And, in most cases, the same associate faces no health insurance, no pension savings plan, and is apt to be sent home if it’s slow, or outright "descheduled" because their life is just not as flexible as the retailer demands.
In all of the future possibilities for the store, the role of the employee promises to be the most disruptive change of all.
Discussion Questions
Do you agree with the author’s premise that, considering future possibilities for the store, “the role of the employee promises to be the most disruptive change of all”? From the customer’s perspective, will investments in associates or technology do more to improve service in the store?
I think retailers must hone their focus on store employees and their ability to deliver on the expectations of shoppers. To me, one of the quickest, easiest ways to start is to arm store associates with mobile technology. The hard part is going to be the continual training and motivating that needs to take place with store associates, who often are quite transient.
Are we really going to discuss whether or not investing in employees has good ROI? Or is the question whether we should invest in people OR technology? Maybe we should follow the current Ford ads—”and” is better than “or.”
Seems to me you first have to answer the question about what retail wants to be when it grows up. If it’s a vehicle where you merely get stuff then by all means technology wins. If it’s a positive “customer experience” you’re offering where people actually enjoy being with you while they get stuff, then people is where your investment should go.
Nikki is right (again). Places like Costco, the Container Store—and I’d add Trader Joe’s—are places I truly like to go and I look for reasons to do so. Not once do I think about their technology.
But like I say…just pick which path you want to be on and don’t look back. Or better, go for “and.”
If employees are not trained and treated with respect, this will be evident to shoppers. There is the possibility that employees can be an important differentiator, but that greatly depends on the need for the store to convey expert knowledge or outstanding service. Some stores lend themselves to that and some do not. But technology in and of itself will not save traditional retailing even if it is the latest and greatest, without employees that can truly help customers and make them feel welcome!
I totally agree with Nikki on this and think she summed it up nicely stating “$8/hour doesn’t buy you much service.” Some places, $8 barely gets you a fancy coffee.
For short term gains, hammering the labor force looks great on paper and sets up the top brass for bonuses. But in the long run, it opens the doors for savvy e-tailers (we know who they are) to cherry pick customers one by one as they see less and less reason to jump in the car to go shopping. Biting the bullet and investing in employees to improve service is one of the few options b&m merchants have to thwart what otherwise will be a price war that they can’t win against Internet merchants.
One of the decisions each retailer has to make is whether they are in the customer service industry or merchandise fulfillment industry. If the retailer views themselves as being in a fulfillment industry, the investment in personnel would be a difficult one because personnel is in the cost column.
If the retailer views themselves as a customer experience fulfillment organization, then investment in front-line employees make sense because it is part of the value prop of the business. Technology will help deliver some customer self-service, but it will also amplify the strengths or weaknesses of investment in front-line employees. My $0.02.
My conversations with retail customers reinforce the premise that service makes all the difference in a great shopping experience. It’s what people remember and tell their friends about and it’s often what makes customers return or stay away. It’s up to retailers to create a framework for employees to contribute their portion of the shopping experience at a meaningful level… that is apparent to customers. Technology is a resource for employees and customers, but doesn’t exist in a vacuum. Technology is part of the context in which employees and customers interact.
Sometimes I get the impression that retailers function like 8 track tape decks in that they can only play one tape at a time. Their goal should be more like creating a beautiful sound from an orchestra. Some of the sections should be stronger than others, with more instruments and greater importance in the overall musical sound. However, during the course of the piece each section has a different role, but it’s all integrated and controlled through the skilled leadership of the conductor.
How to enhance the contribution of the employee is a challenge for sure. Payroll, healthcare, training, supervision, and acknowledgement are part of the equation. But it is, as suggested by this article, an investment that can reap great rewards for the retailer.
The technology enabled sales associate is the best hope for a brick and mortar retailer to survive. Customers need information and the best way to gain their confidence enough for them to buy is to prove that your products are the best fit for their need.
In most cases, customers have done research online before making the trip to the store. When they do make the trip, the sales associate’s job is to answer any unanswered questions they have and give them the confidence to buy from them.
The trouble comes when customers know more than associates about a particular item. If they can’t get their decision validated by an associate, they will go elsewhere or buy online at a cheaper price because in their mind; what’s the difference?
Associate pay can be a factor, but integrating simple customer engagement processes supported with technology tools and training is the best investment brick and mortar retailers can make to ensure associate success. These processes and tools will help the associate be more informed than the customer which is one of if not the biggest challenge and enjoy their job a whole lot more.
Happy store environments are created by store associates focused on customers’ desires: fresh, unique products; a prevailing aura of helpfulness and appreciation; quick check-out service; and consistently pleasant employees. Trader Joe’s does that quite well.
While technology and “rocket science” are valuable assets, nothing succeeds like the overall happenings on a store’s floor … particularly if the store’s team consistently projects to the customer: “We like you and we’re happy you let us serve your desires.” That suggests more investment in associates.
The divide Ian names is accurate. I believe it is either $>humans or $>technology. I don’t think it is an “and.”
Employees are coming into the workforce with limited people skills, without training those soft skills, the quick answer is more technology. But more technology means more heads down when they should be looking at the customer eye-to-eye. I think this will further devalue any role of a person working the floor—no matter how many benefits they receive.
If it is the simple question, “From the customer’s perspective, will investments in associates or technology do more to improve service in the store?” the answer is both. It is a combination that are inseparable.
In nearly every case that investments are made in associates, technology will be used to deliver it, develop it, track it, and follow up with successive elements to maintain it.
It would be rare that in today’s world, one can be accomplished without the other.
Just this weekend an Costco associate effectively did the same as a ‘sampler’ would do in providing information about a shirt. Yes, a shirt! This particular associate knew more about the particular shirt than any customer could possibly want to know. My guess is that the associate didn’t become that learned about the product without technology. Did I ask? No. I just looked at them and out it came. Where did the shirt end up? In my basket.
These two things are inseparable.
The shake is going to move in two distinct directions (1) no service in which employees will stock shelves, run checkout and handle returns and (2) consultation sales/service that actually bases its business on providing advice, installation, and alteration on an individual basis. This change has already begun and won’t come as a shock. The shock will come as businesses fail because they don’t adapt to the reality of global sourcing by consumers. I also believe that much of the “service sector” expansion will be drive by mom and pop operations, founded by the displaced, intelligent middle class. After all else fails, many of these people will look to themselves for income solutions and find out that service areas offer the quickest solution.
The retail business is a commodity business. With just a few exceptions, anyone can get just about any product at numerous outlets—online and on-premise. The point is that a customer has choices and the only thing that will make the retailer stand out is the customer experience. For our on-premise/bricks and mortar retailers, that means the employees have more responsibility than ever to deliver that experience. Retailers must hire the right people, train them properly and keep them motivated to be engaged with the customer. Now more than ever, the customer experience is paramount to the success of a business.
I’m sympathetic with the problem, but from my perspective the focus on “customer service” as a driver is completely backward, and a guaranteed way to continue losing at retail. A number of retailers are always cited as providing great customer service, and that is true. But it is NOT great customer service that made them great. Most of them run great SELF-service businesses. This is especially true of Costco, Trader Joe’s and places like Stew Leonard’s.
Retailers and their advisers seem to forget that the retail industry moved massively to SELF-service 100 years ago, and THIS is the real source of massive sales and profits. But if you see a super-successful retailer today, nine times out of ten the foundation of that super success is that their stores HELP the shopper serve themselves. By improving the efficiency OF THE SHOPPERS you will increase sales and profits tremendously. THEN, it is a great idea to invest some of those profits back into customer service employees that will accelerate satisfaction and sales even further.
This is the only realistic model for low margin businesses to provide good “customer service” from staff. The rules are different for Nordstrom and other higher margin businesses, who can use staff to build a successful business. But in the cut-throat, low margin business, staffing doesn’t build the business—structuring the store and merchandising to simplify the customers’ own SELF service is the key. Profits from the solid underlying SELF-service business can then be used to selectively add human service.
As many have noted, technology WILL play a major role in customer service going forward. But in too many cases, it is simply layering complexity on a poorly designed and operated store, by people with a poor understanding of shoppers in the first place. (Standard merchant warehouseman retailing.)
Totally agree with this. We just completed research that’s telling us that customers view online buying as ‘functional’ and the in store experience as ’emotional’. But they also see the sales associate as a low point in the store experience, in our results.
This tells us that retailers either need to improve the emotional quotient (EQ) of store associates or just get rid of them all together. And I personally think they’d be nuts to do the latter. But for sure, the point of the study is spot on: re-think the role of the associate in store, especially from an ability to actually connect with customers. Or, just give the business to Amazon.
I manage a lot of dinner discussions with retailers around the country, and the best way to stop a conversation in its tracks is to ask “can you deliver on that sophisticated strategy while using $8 per hour employees who’ll stay with you for only three months?”
Kenneth Leung is right—retailers will have to decide whether their brand is about customer service or inventory fulfillment. Companies squarely in the service business—The Container Store, Starbucks, and others—have made it clear they reward hard work and innovation.
There are many technologies that compliment the customer-carried mobile device that retailers should focus on to improve shopper service. No doubt many more technology improvements will be developed to utilize the mobile devices of the future.
Retailers have been struggling for years to improve service by tinkering with the labor equation and in many cases have failed to do so. That and the adoption of smartphones by shoppers have many retailers seriously looking at mobile technology to improve service and shopper engagement.
Let’s go back to the article and focus on the statment about The Container Store, Costco Southwest Airlines and Nordstrom. I agree, four companies that never get the credit for their investment in their associates. That is, except once a year when Fortune magazine comes out with their listing of top companies to work for.
Maybe the reason is leadership of the other companies, those in the majority of treating employees as hourly workers and a draw against profit have blinders on when it comes to the true value of employees. Leaders of these companies, the ones with blinders, see that the economy is bringing applicants to them so why not take advantage of them? The aforementioned top companies have been leaders in associate true value for many years. My guess is we can review this in another year and see the same results. Sad, isn’t it?
Nikki is one of our sharpest contributors, however, I believe that the majority of shoppers is not at her level regarding their primary mission for shopping physical stores. I think stores are very much still for the purpose of buying products. Take a look at a typical mall, supermarket or specialty store. You will witness “product shopping.” If there is some service to go along with the product shop, then that’s great…and relatively rare, still. Shoppers still go to stores because they can get the apparel, DIY, food, etc. immediately…even faster than same-day delivery. That will, in fact, be the case for the foreseeable future. We in this biz interact with leading innovation on a daily basis, so we may sometimes forget the silent majority that continues to shop as they did 30 years ago.
As Millennials age, I do believe this will change. Ordering online for products that are not needed today will most assuredly continue to grow exponentially. As that happens, there will be a need for store employees to offer that human touch that we have been talking about for decades. The threat has finally arrived: People can shop for anything online and not have to deal with store employees. Stores therefore have to transform their staffs into compelling reasons to visit the physical stores.
That challenge is being addressed by the most innovative retailers as we speak. I think the majority of retailers, however, have not yet realized how critical this challenge will become in the next 2-5 years.
From my perspective, it’s not the tech, per se, it’s the practice that matters. Employees succeed better and show more self-respect when they are well enabled. That means training, sensible policies, freedom from unnecessary stress, and yes, technology tools that work.
It’s relatively easy to trim the weekly payroll expense in a store if the indirect consequences are deliberately ignored. I believe investing in workers who can influence business outcomes is a sound practice that shoppers will recognize.
Many great points made already. Bottom line, YES! Each retailer needs to decide if store personnel are part of their value proposition or not. If not, then optimize for labor cost. If so, then you need to optimize for revenue/profit which in many cases means investing in the right employees—the right skills, attitude, goals, and results.
I guess my issue is with the focus on “service.” I think the real driver of in-store value vs. online is the human touch delivering better “shopper experience.” I don’t think it’s the money. How much do Goofy or Mickey get paid at Disney World? It is the management orientation to functional service vs. delightful shopper experience. Starbucks totally gets that the baristas are a brand touchpoint. We need to use that thinking more at retail.
My first real job 40 years ago was as a sales associate in a local Federated department store. At that time it was a real coup and seen as a classy job, much better than restaurant or office jobs. The store invested in training and rewarding us for meeting sales goals and provided opportunities for promotion and movement upwards within the company.
Those times are gone, now a sales job is seen as unworthy, as if you couldn’t get a real job working in the technology sector or couldn’t get into college. And I think that attitude and sense of futility is often reflected in both how consumers view the employees and how they view themselves.
Retail has developed a self-service expectation in consumers over the past few decades whether they want to or not. As such, they really do not have high expectations of the quality of help available. I was in a Best Buy store recently and the sales clerk used his phone to Google product information.
I agree that it is important that sales employees use data as a sales tool, not instead of actual training. I love it when someone uses technology to offer to check stock or find an item at another store. After all, I took the trouble to come to the store, anything they can do to help facilitate a sale will benefit all of parties.
Well considering that employees are one of the key differentiating factors between online and in-store shopping, I would have to say that I agree that a lot of retailers’ continued success in their brick and mortar locations is going to depend on the service given by the employees. But whether investments in tech or investments in associates will improve service more will depend on the particular retailer (i.e. where are they at in terms of both of those aspects) and the target markets they serve.
I would agree 100%. Because today’s consumer has unprecedented access to product, pricing and inventory information at all times (online, mobile and in-store), the role of the retail employee must change dramatically. Does this mean retail staff must be all-knowing? Of course not, but it does mean that retailers must equip their stores and staff with technology to facilitate the in-store browsing process and to complement the information the customer may or may not have already accessed on their computers or mobile devices. The act of “selling” has changed — it’s what Retail Prophet Doug Stephens said last October at our iQmetrix Retail Summit: “The shift has already begun from having salespeople to having ‘brand ambassadors.’”