RSR Research: The New Front in Omni-Channel – Store Labor

Discussion
May 31, 2012

Through a special arrangement, presented here for discussion is a summary of an article from Retail Paradox, Retail Systems Research’s weekly analysis on emerging issues facing retailers.

At Epicor’s recent user conference, I moderated a panel of Millennials discussing what they wanted from the retail experience. The most interesting part of that panel was the fact that all of the participants were employees at retailers. Two were store managers, two were assistant managers, and two were part-timers — all ranging from 17 to 27. We eventually got into their perspectives as retail employees.

Two main things emerged from that discussion.

One, they are enthusiastic about their jobs. But except for those that made it to the store manager ranks, they saw no future in it. A 17-year-old part-timer who is thinking about college admits she loves her job. She could be a stable, experienced employee that any store manager would love to depend on. But she’s not going to stick with her job. And one of the most surprising things about the entire panel was the universal perspective that this is just the way it is. The pay isn’t great and the hours get tiring, so it’s fun for awhile, but it’s only going to last until something better comes along. That’s kind of sad.

Two, as the store managers attested, while they feel like their companies do a good job in scheduling people, they do feel like there is generally not enough labor on the floor for both the selling and non-selling work they have to accomplish.

This takes us back to a plea that RSR has made regularly — me, especially. We need to put an end to the practice of setting labor budgets primarily based on percent of sales calculations. Sales is the wrong measure — it has to be based on traffic or you’re not measuring to real demand, you’re only measuring against transacted demand. And consumer technology shifts mean we need to reconsider the employee’s role in the store, that technology to address the gap between what consumers know when they walk through the door and what employees know will only deliver parity. If employees are going to play any kind of relevant role, they have to know more than customers or what’s the point? They’re just there to keep the inventory from walking out the door unpaid.

Service industry jobs are supposed to be the better paying jobs and retail — on average, there are exceptions — is a clear outlier. Just imagine a future where store employees make a career out of helping customers, where you can find knowledgeable and enthusiastic help in great quantities, as at the Apple Store. (I know, I said it.) I fear this may be the only way to ensure the store’s future relevance.

Discussion Questions: Is the mobile-enabled consumer raising expectations around the quality of labor in stores? Do you think that the current model of low paid, low service employees in most retail stores is a model that will work in the future or does it need to change for stores to remain successful?

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19 Comments on "RSR Research: The New Front in Omni-Channel – Store Labor"


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Bob Phibbs
Guest
9 years 11 months ago

Great point Nikki; managing only by sales and transactions is looking backwards. You never know the number of customers who didn’t buy because they couldn’t get helped. The more retailers cut staff, the more they will be subject to showrooming.

Frank Riso
Guest
9 years 11 months ago

I do think Nikki is on the right track when we move away from setting labor based on store sales. But then how do we set them? Customer count is one alternative. What about conversion rates? If a store has a high conversion rate it would be allowed to spend more on labor. There would be an incentive for a store to provide better service in order to get to the higher rates. Now that may work well in a specialty store but what about full self-service stores such as supercenters and supermarkets? They have nearly 100% conversion rates.

I think customer counts may work in these stores. They know how many customers shop in the store each week, each day and for most each hour. Scheduling could be easier to forecast and service levels would naturally go up since the stores would have the greatest amount of staff during the busy time of each day and week.

Ken Lonyai
Guest
9 years 11 months ago

Nikki’s article dovetails nicely with my previous BrainTrust Query: Will Tablets Usher in an Era of ‘Dumber’ Retail Sales Help?

I don’t think that customers will necessarily be looking for sales people with more knowledge than they already can access in their hands — that would be hard to do. Rather, sales staff can add personal, anecdotal information like “most of our customers choose this because…” or “that’s our best seller,” etc., etc.

I’ve been touting the demise of stationary interactive kiosks for a long time, because mobile is a much more useful information tool. Or in other words, it doesn’t disrupt the discovery/sales process. That’s the same thing a great salesperson does: they enhance the customer’s in-store experience rather than repeat known/available information or follow customers like a lost child. To enhance the mobile savvy shopper’s experience, genuine one-to-one interaction is required, delivering “content” that mobile just can’t produce.

The conundrum for retail is balancing the need for a committed, well paid salesperson, with the lack of compensation to nurture/retain them.

Steve Montgomery
Guest
9 years 11 months ago
Does a more knowledgeable shopper need a higher quality clerk or, because they are more knowledgeable, does that lessen the need for store-based knowledge? Store clerks used to be the sole source of information about their products (other than ads, etc.). The consumers could conduct research online before coming to the store. Now a customer can come into a store with a smart phone and conduct their own research, access other consumers’ reviews of products, check competitive prices, etc. The knowledge balance has now shifted to the consumer side of the ledger. Does that mean customers’ expectations have shifted? Yes, but which way? Do they need product smarter clerks or someone to simply help them find the items they have determined they want? The answer is — it depends on the customer and their expectations and the items being purchased. Do you really need a sales associate that knows all about the various attributes of a simple electronic item and its alternatives? Perhaps not, but would you like to speak to a clerk about a… Read more »
Max Goldberg
Guest
9 years 11 months ago

As much as consumers and retail employees would like the model to change, I don’t see it happening. Retailers, particularly in the current job market, are not under economic pressure to pay more to employees. Unless they are willing to offer career paths and better compensation packages, most retail jobs will continue to be seen as stepping stones to something else.

Adrian Weidmann
Guest
9 years 11 months ago
For the most part, retailers have continually looked at in-store employees as a cost of doing business. As such, retailers know that payroll is one of the fastest ways to reduce cost. In today’s landscape of the digitally empowered ‘connected consumer’, the only human interaction with your brand is in the physical store. That human brand interface is invaluable and may be the only true value for ‘brick & mortar’ retail. Retailers have tried to use technology in the the form of kiosks and digital signage to replace the human connection with varying degrees of success. Perhaps retailers should begin to look at their store employees as ‘brand ambassadors’ and focus their efforts on interacting with customers and leave the technology for all the processes that are not customer centric. Given this perspective, the type and caliber of people retailers would hire may profoundly change. As a rule, investors invest because of the people guiding businesses. Retailers should take heed and invest in people that are their ‘brand ambassadors’ in order to bring true value… Read more »
Verlin Youd
Guest
9 years 11 months ago
Simple answer to the first question is yes. Store employees need to be as enabled as their customers in order to both establish credibility and serve the new consumer. However, there was an even more important point made in the article — most retailers are fundamentally flawed in their labor allocations and scheduling practices. Scheduling labor based on sales creates a self-fulfilling prophecy, ensuring that there will always be less labor than needed to address the total opportunity in the store. A good first step is scheduling based on both traffic (indication of total opportunity) and total store conversion (measure of sales success). Honestly, this is just a start. Truly effective labor scheduling should consider traffic, sales, conversion by department or area and ideally use input that considered “shopping groups” vs “individual” to understand true conversion. Additionally, retailers need to consider how to measure, monitor, and manage the customer experience beyond staffing. There are solutions available today that retailers can use to understand the shopping experience from the customer’s point of view and more retailers… Read more »
Gene Hoffman
Guest
Gene Hoffman
9 years 11 months ago

Expectations of the quality of labor are rising with the army of emerging mobile-enabled consumers, but stores are still fixated on costs: labor and product. When will the twain meet cohesively?

Today, retail operators know the price of everything, but not enough of the value expected in the rapidly evolving tomorrow. “Change will occur,” he said prophetically.

Mel Kleiman
Guest
9 years 11 months ago

The model doesn’t work now, but like the airline industry, most retailers aren’t willing to figure out how to do it differently.

Concerning consumer expectation, they have always wanted quality service and people on the floor, but most of them are not willing to pay for the cost of that service.

Gene Detroyer
Guest
9 years 11 months ago

By 2020, most retail stores as we know them will be showrooms. The showroom model will fit the highest spending demographic and its business model will beat that of the brick and mortar centric retailer.

Therefore, the service employees will have to be more competent. The questions from the customers will be more difficult and the guidance will have to be broader. They will have to be the Santa from “Miracle on 34th Street,” but instead of sending customers to Gimbals, send them to the retailer’s alternative channel to make the sale.

The concept alone defines that they cannot be paid on in-store sales. There is no way to track their influence relative to sales. That good advice and service they give in the store may lead to multiple sales online and a very loyal online customer.

Brian Numainville
Guest
9 years 11 months ago

The model of low paid and low service employees clearly doesn’t work, especially when product knowledge and service becomes critical to the shopping experience. How many times have you walked into an electronics store only to know more than the employees (Apple Store excluded)?

Retailers need to make the proper investment in their employees in terms of training on products, services and interpersonal/sales skills so that they can engage with shoppers. Otherwise, retail careers will continue to become less and less attractive and consumers will continue to use retail stores as showrooms.

Jonathan Marek
Guest
9 years 11 months ago
I think front-line retail jobs have been a great entry into the workforce for generations. They are likely to remain a great entry into the workforce, because I think they are likely to (on average) remain lower wage. Apart from specific stores in specialized sectors (i.e., the Apple store example), the economics of a large group of highly paid front-line staff just don’t go around. The emergence of mobile makes the economics harder, not easier. Having said that, I could imagine all kinds of mobile technologies that enable low paid, entering-the-workforce teens and young adults to be much more effective on the floor. Especially as the generation who hasn’t know life without Smart Phones (not just mobile phones) gets to working age. The next few years should present fantastic opportunities to test technology-enabled store ops, including testing compensation models as part of the process surrounding new technologies. Like most testing, many ideas won’t work. Like most testing, retailers that test broadly and crack the code on the right ideas early will win.
Ralph Jacobson
Guest
9 years 11 months ago

Customer service is just about the last differentiator that brick stores have vs. online stores. I do realize that stores have labor expense budgets to meet, and scheduling for traffic vs. scheduling for sales is actually a bit of a gamble. However, if the company agrees to try this method of scheduling for a trial period of time, while utilizing the best new tools for labor scheduling available today, I believe a business case will most often be made to agree with Nikki’s perspectives. As a former store manager in the ’80s, I would definitely be concerned that the sales would materialize if I scheduled primarily by traffic.

Liz Crawford
Guest
9 years 11 months ago

The quality of labor doesn’t need to change, but the role of the retail assistant does. If shoppers are getting their information ahead of time or in-aisle, digitally, then the store mission changes. The trip to the store becomes a mission to see, touch and try.

The role of the assistant becomes one of assisting in experiencing the merchandise and gauging the customer needs well enough to suggest additional or alternative merchandise.

Lee Kent
Guest
9 years 11 months ago

This is a topic we could talk about forever, so I’ll just keep my comments short. In-store experience will always depend on the store employees no matter how much technology is available. Stores need to determine what their customers want from that experience and hire, train, equip and PAY their employees to deliver that experience.

Marge Laney
Guest
9 years 11 months ago

Totally agree with Nikki that staffing based on sales is worthless and will result in a spiral of less coverage and declining sales. Staffing based on store traffic gives the retailer a much better chance to take advantage of sales opportunities. Apparel retailers especially have a great opportunity to drive sales if they can get the customer into the fitting room and service them while they are there.

As far as the notion that stores will become showrooms, I don’t think so, at least not the apparel store. The decision to buy is made when the customer tries on, period. Getting the customer into the fitting room and keeping them there by bringing them the right sizes and suggesting add-ons guarantees that the customer will make a decision, one way or the other, in the store.

Cathy Hotka
Guest
9 years 11 months ago

The old model needs immediate change and this generation of demanding employees just may pull it off. Retail work gets boring for them not just because it’s tedious, but because their input isn’t sought or valued. If stores had more leeway to respond to staff suggestions, they might be able to keep the employees they attract.

Christopher Krywulak
Guest
Christopher Krywulak
9 years 11 months ago

This is an interesting question, particularly for wireless and electronics retailers. At our annual Retail Summit last fall, we had a panelist (Jason Ellis of Spring Communications) who said they are beginning to hire salespeople differently, going after “nice over techie.” This does not mean that kindness and tech knowledge are mutually exclusive, however. It means that today’s consumer wants to deal with a salesperson that knows their stuff but is also patient and understanding… yes, like at the Apple Store.

vic gallese
Guest
9 years 11 months ago

Nikki is on the right track here. The track, though, has several critical rails:

Right people
Right place
Right time
Right behaviors

Most retailers who have “tested extra sales floor assistance” have not seen a measurable uptick in sales because they have not rigorously applied the above 4 principals.

Hire outgoing service people who truly are “in service,” place them in the service needs area of the store, ensure they are working Friday, Saturday and Sunday, and, to Ken’s point, give them alternatives to “may I help you” and watch the sales per hour rate jump!

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