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A Positive Employee Experience is Good for Retailers’ Bottom Line [Op-Ed]

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By Solange Strom and Frederic Dimanche

Customer experience (CX) has been on every one’s lips for a long time. While it seems obvious that if you are in business, you are there to serve your clients, many retail organizations have only recently discovered the notion of elevated customer experience. And it’s not a moment too soon! In a world where goods can be found by anyone and shipped from anywhere, the customer experience, whether online or in physical stores, has become a key differentiator. However, research shows that too few organizations are nailing the CX. It seems inconsistent from store to store or from channel to channel and firms are finding it difficult to scale.

This difficulty perhaps results from the fact that the ability to deliver on customer experience is directly linked to the people who work in the organization. Simply put, as Richard Branson was famously quoted as saying, “Clients do not come first. Employees come first. If you take care of your employees, they will take care of the clients.”

In a tight labour market like the one we are currently experiencing, retailers who want to succeed in delivering memorable customer experiences cannot do so without focusing first on the experience of their employees. Doing so increases attractiveness for their organizations (it helps recruit staff), boosts staff retention and ultimately drives customer experience, ROI and profits. And while some might argue that turnover is high in retail and focusing on employees is a waste of money, it is exactly the reason why retailers must do so going forward.

Here are three reasons why it makes good business sense to focus on the employee experience.

It enhances your company’s attractiveness

Retailers let go of hundreds of employees during Covid, leading to severe labour shortages.  Customer-facing jobs were already known to have some of the lowest wages, but despite handling additional tasks such as fulfilling online orders, selling virtually, and managing curbside pickup, salaries remained largely unchanged. As a result, many left the industry, deepening the labour crisis.

Today, employees have the luxury of being more selective, driving employers to make long-needed salary adjustments. Several retailers are now offering higher wages to lure applicants as well as adding signing bonuses and going as far as promising to pay college tuition to store associates.

However, wages aren’t the only issue. The current shortages have also highlighted the deficiencies of the retail industry. When millions of people were dismissed as a result of the pandemic, they reassessed their lives and priorities. In many areas such as professional development, pay, flexibility, family life or a combination of all four, retail jobs just don’t measure up. Employees want better working conditions. Offering reasonable downtime or pledging advance scheduling and manageable work hours is what will ensure companies attract and retain the best talent.

In other words, employees want to feel welcome and respected. A recent study of retail associates found that a significant portion of retail workers have felt neglected and undervalued by their companies, especially during the pandemic. More than 42% indicated that they were considering leaving the industry entirely.

If retailers want to fill the growing number of vacancies on the sales floor, they must show their customer-facing employees that they are as valuable as any other employee who works in the company’s headquarters. They also have to strive to build a culture where retail is considered a serious profession, with training and growth opportunities, and not a side gig done while waiting for a “true career” to take off.

It helps increase talent retention

Retail’s talent drain was happening long before the pandemic with Canada’s turnover rates reaching upwards of 16%, making them the highest in North America. The crisis exacerbated the problem as retailers pivoted their attention to e-commerce, often at the expense of their customer-facing employees.

Yet despite the rise of online shopping, brick-and-mortar stores remain relevant with online retail still representing less than 15% of total retail sales. Unfortunately, many employees have grown disengaged. When faced with poorly paid jobs that require more from them than before, they want to understand what’s in it for them and more importantly, why they do what they do.

A Zipline report showed that only 24% of associates consider that retailers are doing enough to retain talent and build an ambitious retail workforce. Indeed, it is critical for retail organizations to make employees feel valued and cared for. They must show that they genuinely believe in fostering a culture of equality and diversity where all are encouraged and supported in their quest for success. This can be done by creating clear road maps for advancement and by offering training and development programs that make the sales roles more appealing and rewarding. As the world moves deeper into the digital revolution, the sales associate’s role keeps changing. Staff need to be able to serve clients as brand ambassadors while relying on technology to support tasks such as restocking and checkout. For them to feel confidently at ease in their jobs, retailers must prioritize investing in digital technologies that enhance human intelligence and focus on upskilling their teams in digital literacy, data analytics, and end-to-end customer experiences.

Upskilling teams and providing comprehensive career paths is the best way to retain top performing employees. As a 2019 Gartner survey revealed, in organizations where employees are fully satisfied with their employee experience, more than 60% intend to stay in the company, increasing retention significantly. Some retailers are already taking note: Best Buy is focusing on hiring more full-time employees, growing technology talent, and investing in helping employees develop specific expertise that will enhance their job descriptions.

Companies that recognize the importance of retaining qualified employees make a strategic decision that will pay dividends. They understand that delivering a positive employee experience is a key factor in employee retention.

It drives revenue

We all know that “happy employees make for happy customers.” If retailers are serious about managing profitable organizations, they must be serious about delivering exceptional customer experiences. And to do so, they must first and foremost build truly employee-centric organizations. It is not only good for employee retention and motivation, but it also helps improve customer satisfaction, and hence the bottom line.

A recent Harvard Business Review Analytic Services survey stated that 55% of executives believe it is impossible to provide great customer experience without providing great employee experience (EX). There is a clear correlation between EX and CX. A Temkin Group report directly linked success in customer experience to employee engagement, showing that companies that excel at customer experience are also those who have 1.5 times as many engaged employees as customer experience laggards.

There is little doubt that employee-centred companies will improve customer experiences. Not only are engaged employees more likely to recommend their company’s products and services but they also tend to go above and beyond without being asked to deliver better service. When companies focus on employees, the customer experience improves.

When employees are fully satisfied with their work experience, almost 80% intend to stay in the company, increasing retention significantly. But what is even more compelling is that firms with highly engaged workforces outperform their peers by 147% in earnings per share.

While focusing on the employee experience helps increase companies’ attractiveness and drives employee retention, it also helps grow the bottom line. Isn’t that what all retailers want?

Conclusion

The retail sector has made a lot of money by taking advantage of cheap labor. The pandemic has exposed deep cracks in the system. People who have been mistreated and underpaid are willing to give the sector up. The current crisis requires entirely rethinking the business model, putting far greater value on the people.

Physical stores are critical in delivering a human experience and telling a brand’s story better than any advertisement could. If front line workers are responsible for a portion of the brand’s marketing, shouldn’t we re-evaluate the budgets allocated to Marketing versus Learning and Development and perhaps ensure that a significant amount is spent on the latter? What if organizations looked at their human capital as part of the marketing team?

Customer experiences will make or break retail businesses. So why is training client-facing staff to deliver on the experience not part of the marketing budget? Luxury retail brands in North America alone spend over $5.5 Billion in marketing and more specifically in advertising. It should be easy to find a few hundred thousand dollars to develop super stars to represent the brand and create quality experiences in stores.

Solange Strom
Solange Strom

Solange Strom, Program Director R.I.S.E to Excellence

A visionary retail leader and entrepreneur, Solange Strom has over 20 years of experience helming global brands in North America, leading with a client-focused approach long before it was popular. Known for consistently driving exceptional growth through employee-centric strategies, she has leveraged her expertise to develop innovative training programs for retail’s customer-facing teams, helping them exceed expectations and build successful outcomes. Solange is currently the program director for R.I.S.E to Excellence, an in-depth retail education program focused on supporting Canadian retailers in their quest to achieve excellence in service, both online and in their physical spaces.

Photo: Frederic Dimanche

Frédéric Dimanche, Director & Professor, Ted Rogers School of Hospitality and Tourism Management, Ryerson University.

Dr. Frederic Dimanche is a Professor and Director of the Ted Rogers School of Hospitality and Tourism Management. He has thirty years of professional and academic experience in service marketing and consumer behaviour, particularly in hospitality and tourism. He has also contributed as a guest lecturer or as a consultant to universities, private companies and national or regional tourism organizations in several countries.

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