In a recent article in The Washington Post, Minimum Wages are Rising, Pay for Experienced Retail Workers is Not, the authors write,“Retailers have made headlines for raising their minimum hourly wages in quick succession — CVS to $11, Costco to $13, Target to $15 by 2020 — while 29 states and the District now require that employers pay more than the federal minimum wage of $7.25 per hour. But economists say those gains have not translated to higher wages among mid-level workers.” Are loyal and experienced retail associates being compensated fairly? It appears to me that retailers do not see the value in having well-trained, seasoned employees. Who is providing strategy and advice to retailers? Is it understood that retail associates are the only people who speak to and service customers, a retailer’s most critical asset?
I recently attended a retail conference. One of the panelists was asked to describe the future of retail. Their answer? Unmanned stores! I was horrified, but not surprised. Retailers are consumed with technological advances, and even though they talk about the customer experience, the trend does not include the interaction and connection between a customer and a sales associate, two human beings. The retail associate is taking a back seat in the customer experience scenario. In my opinion, this is the wrong track to take and retailers are missing their opportunity to create the glue between the customer and their business.
As per Indeed, one of the leading employment search engines, the typical tenure for a retail associate is less than a year. I realize that this number might be influenced by part-time and seasonal hires, but how many times have you gone back to the same store location and were able to find the same person who helped you on your last visit?
Even on-line only retailers such as Amazon, Warby Parker, Bonobos have opened physical stores. The rationale: customers want to see and touch the product. We are also now in the era of experiential selling and many stores being built or refurbished are showcasing expensive artwork, sculptures, waterfalls, yoga studios, etc. If you attend the National Retail Federation’s Big Show in January, you will find thousands of vendor booths displaying the latest technology advances. I believe in comfortable, feel-good environments and technology that enhances the customer experience. However, some companies are allocating increased budgets to create a more attractive and tech savvy environment while decreasing the expenditure for hiring better associates and providing them with training and benefits. Not a win for the retailer.
Retailers are spending significant dollars to get traffic into the door. This includes social media outreach, multi-channel marketing campaigns and expanding loyalty programs. If a retailer is focusing on increased traffic, but not investing in their staff, it’s a waste of resources. Getting customers to visit your physical locations make sense, but not having experienced help to leverage the brick and mortar asset doesn’t compute.
Most marketeers are talking about the importance of establishing an emotional bond with consumers. I agree. But where is that bond the strongest? Specifically, between two people; the customer and the associate. It’s Mary, the sales associate, who has built a strong human connection with Sally, her customer. Mary knows Sally’s needs and can sell what’s most appropriate for her. If Mary leaves for a better paying job, the emotional connection is lost and the customer, Sally, is now forced to find another Mary at a competitor.
Retailers need to rethink how they hire, train, compensate and retain experienced and tenured retail associates to service their customers, the ultimate asset.
What do you think?
Hi Richard: to state the obvious, retailing is a highly competitive industry. Assuming that retailers are responding to consumer preferences through “allocating increased budgets to create a more attractive and tech savvy environment while decreasing the expenditure for hiring better associates and providing them with training and benefits,” why would this not be a win for the retailer as well as consumers?
If retailers are making such investments despite the objections of their core customers, or against their preferences, do you have information derived from a formal survey or study that concludes the same – that they are implementing projects in direct opposition to what their customers want?
I ask this because Microsoft has expanded its pilot program for automated stores, an apparent response to Amazon’s success and expansion of the initiative (see https://www.reuters.com/article/us-microsoft-store-exclusive/exclusive-microsoft-takes-aim-at-amazon-with-push-for-checkout-free-retail-idUSKBN1JA0D5). While I’d readily offer that companies don’t always make sound financial decisions, or effectively serve the best interests of their customers, I also recognize that pilot programs such as automated stores often get killed quickly when they don’t produce the desired results – and that includes being favored by customers.
Hi Andrew, thanks again for taking the time to comment on my blog and provide a link to the article on Microsoft. I always value your commentary. I do think customers do want stores to utilize the latest technology such as 360 mirrors in the dressing rooms, etc. Most want a nice atmosphere too. However, brands as Marshalls, TJ Max and Home Goods (TJX Companies) do just fine almost looking like big warehouses, but their merchandising and prices are great. We shop there all of the time. I think every shopper who has a question about the inventory, the quality of the goods, etc. would like to easily find a sales associate who is knowledgeable and displays amazing skills. I did notice that Amazon said they currently have no plans to eliminate the cashiers at Whole Foods with the Amazon Go System. In my personal opinion, grocery stores can clearly benefit from having cashiers who remember them and call them by name, The grocery industry as many industries has become highly competitive, the only difference is the human connection. AI will never smile like a person. Richard