Sport Chek, Canada's leading sporting goods chain, has eliminated commission for its store associates in favor of salaries in a bid to improve customer service. On a conference call last week, Bob Sartor, CEO of its parent, Forzani Group, said the chain has "really deployed those hours into making the stores look better and taking care of the consumer," and the move is already paying off.
"We have abandoned the sales commission system at Sport Chek and have worked hard to redirect our store teams from a hard-sell mentality on commission to one focusing on the customer experience, and by that I mean cleaner, better merchandised stores and helping the customer," said Mr. Sartor. "Our stores have never looked better and consumer feedback on the service experience is overwhelmingly positive."
The company has also seen a significant hike in positive customer letters.
"We've had a substantial increase, probably close to 100-fold, of the amount of customer letters that have been coming into me just congratulating that specific store on the service they've been getting. And prior to this year we haven't been getting too many of those letters into the system," said Tom Quinn, president and chief operating officer. "I also know when I'm out just working and talking to the various store managers, they are stepping up and making an exceptional effort with the business and clearly understand the focus of customer business. So if that's any indication, it's been very positive and it seems to be growing each month."
Forzani said the shift away from commission was partly responsible for "pretty good" third quarter results given the recessionary climate and an unseasonably warm spell across Western Canada for most of the quarter, as well as momentum so far in the fourth quarter. In the first five weeks of the fourth quarter, comps nudged ahead 0.1 percent at its corporate stores on top of comp increases in the prior year of 4.9 percent with store margins improving on both a rate and dollar basis.
The move by Sport Chek, with over 120 stores across Canada, comes as many retail sectors (autos, high-end clothing, footwear, etc.) as well as some of its competitors find that commission-based performance pay is the best way to motivate employees.
Discussion Questions: What are the pros and cons of putting store employees on commission versus straight salary? What retail channels are more suitable for commission-based structures than others?