Daily Dose of iQ: "Retailers Should Invest More in Employees"

Jan 04, 2012 — Allan Pulga

Zeynep Ton, who teaches Operations Management at MIT, wrote a column a couple weeks ago for the Harvard Business Review, encouraging retailers to invest in their employees.

She describes the case of Doug Rauch, former president at Trader Joe's, a fervent believer in employee investment.

Rauch says consumers' desire for everyday human interaction has prevented online grocers from succeeding, even though supermarkets compete on the basis of price. As a result, he invests in his staff and sees returns including "high profits, excellent operational metrics, and a reputation for great customer service," Ton writes.

"Many in the business community still see employees in low-cost retail as interchangeable parts," Ton adds. "These people miss two things."

1. Even in low-cost retail, it takes a lot of human effort and judgment to get the right product to the right location at the right time and to make an efficient transaction.

Ton says the low-paid employee -- not the inventory management software -- notices when a shelf is messy, or that some of the products are in the wrong place, or some lettuce has gone bad, or can tell the difference between different types of produce during checkout. "When retailers don't invest in human capital, operational execution suffers."

2. Even in low-cost retail, there is still interaction between customers and employees.

"It's the employee who notices a customer standing in the aisle looking lost and offers help," Ton writes. "It's the employee who can read from a familiar customer's face that he's had a bad day and could use a friendly smile. It's also the employee who can turn a customer off -- maybe permanently -- by being rude or even just not very helpful. It's the people who make you want to shop here even though you can easily buy the same stuff there."

The brick-and-mortar store isn't going anywhere. The majority of us, as social beings, will continue to go and buy things in person. And when we do, we want to interact with salespeople who are friendly, knowledgeable, helpful and efficient. So, invest in your store staff to ensure they're all of the above.

Topics: Retail Operations, Workplace Culture, Mobile Industry, Customer Experience, e-Commerce

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