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.