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Are You a Low-Touch Retailer in a High-Touch World?
 

You can't cost-cut your way to great service. A survey of retailers reveals where they invest to make sure they keep customers happy.

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A recent study by Retail Systems Research (RSR) looked at a common problem nearly all retailers face: the trade-off between labor costs and customer service. If you're in the retail industry, you immediately understand the difficulty. On one hand, consumers want good customer service. On the other, you need to be able to make a profit.

In other words, consumers like high-touch attention. The majority of retailers recognize that the workforce plays a more important role than ever before in delivering what shoppers want. According to a recent RSR survey, 82 percent of retailers said that over the last three years, the role of their workforce in enabling customer service has become more important.

RSR chart 1

Depending on the type of retail establishment, it may be that skilled employees are necessary. For example, if you sell fashion or other goods that have a "here today, gone tomorrow" quality--like consumer electronics--or sell traditional hard goods, such as appliances or cars, then you need salespeople who know what they are doing. Groceries? You need cashiers.

The difference is in how a business defines good customer service. For a grocer, it's having the products the customers want at a good price and getting them through a checkout line quickly. According to U.S. Department of Labor Statistics, 34 percent of employees at such businesses are cashiers, while only 1.9 percent are retail salespeople. Brand-focused stores have a significantly different spin. In fashion retail, 15.7 percent of employees are cashiers; 39.5 percent are retail salespeople.

RSR chart 2

If you're in an area that demands high-touch, how do you move toward that goal? It's the old story of putting your staffing where your mouth is. According to RSR, top retailers understand that better customer service requires a more skilled sales workforce and they have a greater allocation of employees in sales, versus cashiers or back office. They focus workforce management on increasing revenue and not solely watching labor expense. The latter is important, but if you don't have the right people working with the proper training, it won't matter, as you won't be making the sales, and the profits, you need anyway. You can't cost-cut your way to greatness.

RSR chart 3

And proper management of a workforce may require some technology, because so many retailers are bad at it, particularly once you get past basic time and attendance.

RSR chart 4

IMAGE: Noel Hendrickson/Getty
Last updated: Jan 23, 2013

ERIK SHERMAN's work has appeared in such publications as The Wall Street Journal, The New York Times Magazine, and Fortune. He also blogs for CBS MoneyWatch.
@ErikSherman




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