Retail Survival 101: Treating Employees Better

staff meeting
Employee Engagement
Companies that treat their employees well—and let their customers know about it—are well positioned to raise their brand value and profitability.

This article appeared originally in Customer Strategist. 

For retailers, 2017 will be remembered as the year of store closings. Nearly 13,000 stores are expected to shut their doors this year, compared with 4,000 in 2016, Bloomberg reports. The store closings are symptomatic of a larger trend: consumers are increasingly eschewing stores for online retailers that offer virtually endless aisles and fast deliveries.

Still, some retailers have managed to not only survive but thrive in the face of these challenges. How do those companies do it? Part of the secret can be traced to how they treat their employees. Companies that treat their employees well—and let their customers know about it—are well positioned to raise their brand value and profitability.
Retail employees have it tough. Low pay, unpredictable hours, minimal benefits—not to mention rude customers—make it a thankless job in many respects. Such an environment can cost businesses, suggests Zeynep Ton, a professor of operations management at MIT’s Sloan School of Management. Ton has done research that shows that by underinvesting in their employees, retailers are actually making their operations more inefficient, and therefore less profitable. “Successful retail chains,” Ton writes, “such as Quik­Trip convenience stores, Mercadona, and Trader Joe’s supermarkets, and Costco wholesale clubs—not only invest heavily in store employees but also have the lowest prices in their industries, solid financial performance, and better customer service than their competitors. They have demonstrated that, even in the lowest-price segment of retail, bad jobs are not a cost-driven necessity but a choice.”

Starbucks is another retailer that has developed a reputation for employee-friendly policies. While most retail companies only offer health insurance to workers who work 30 to 35 hours per week, Starbucks offers health insurance to part-time employees working an average of 20 hours per week. The company also covers college tuition for full- and part-time employees in a partnership with Arizona State University. "When we do the right thing for our employees, it's also the right thing for our business," Corey duBrowa, senior vice president of global communications at Starbucks, tells Adweek. "When employees are satisfied and engaged, the result is deeper customer connections and an elevated customer experience."

There are a few things employers can do to set employees up for success and help them stay motivated, adds Martin DeGhetto, executive vice president of customer management services at TeleTech. The first step in building an effective workforce is to hire the right people. “Making sure the people you hire are the right fit for the job on a short-term as well as long-term basis is important,” DeGhetto says. “Candidates with a variety of skills and experience can help get your business to the next level and are more likely to find fulfilling roles as they move within the company.”

Also, research has shown that the main reason people like or dislike their job depends on whether they feel they’re supported by their immediate supervisor, DeGhetto says. “This is why we require frontline managers to go through a specific training and certification process to make sure they know how to run a team, build employee morale, and provide coaching or discipline as needed.”

In short, running a business is an incredibly complex task that needs dedicated employees. A typical retail store, for instance, carries thousands of products, runs multiple promotions a week, and serves hundreds of customers a day. Technology can only do so much. Humans are still needed to oversee these actions. However, the store’s performance suffers when employees are poorly trained, inadequately paid, and unmotivated.And while treating employees well isn’t enough by itself to guarantee success, it is more important than ever for brick-and-mortar retailers to do so. The meteoric rise of e-commerce puts pressure on retailers to be more efficient and offer value to their customers. Interestingly, brick-and-mortar retailers made improvements to the customer experience faster than purely digital retailers. According to Forrester, 40 percent of traditional retailers’ CX index scores rose from 2015 to 2016 while only 1 percent fell. In contrast, just 18 percent of digital retailers improved, while 5 percent dropped.

But maintaining these gains is possible only if employees are engaged and willing to provide a superior customer experience. Today’s tough retail environment has already demonstrated that maintaining the status quo is an ineffective way to do business, so what do retailers have to lose by investing in their employees?