Retail is failing its employees – and its customers, too!

26.01.2022 | Business Consulting

TL;DR Retailers need to elevate the importance of their employees and customer service in order to perform better.

Retailers are failing their employees – and their customers, too!
A few years ago, Authentic Consult had the distinct privilege of helping a large retailer find its way to positive customer service, after it had spent almost its entire history of being a “self-help” hypermarket chain. This turned out to be a very large undertaking that included 5 years of cultural change, training, performance tracking & leadership development throughout HQ and the 350 stores that the retailer operated across Germany.

What we found was a collective mentality of solely focussing on keeping shelves stocked, but basically ignoring customers. This was not only the mentality of employees, but was company-wide standard practice. Leaders from the top-down placed a premium on attributes such as product availability, cleanliness, product placement, aggressive pricing and advertising, but paid little attention to customer service and employee well-being, resulting in low pay, long hours and poor people-management.

To be fair, this tends to be an industry-wide phenomenon not only in Germany, but worldwide. Retail employees have been designated as essential workers during the current Covid-19 pandemic, but still are paid low wages (everywhere) and customer service is not top of mind for most companies. Instead, the focus continues to be on product pricing, placement, listing and store cleanliness. While all of these are certainly important, we contend, based on research and practical experience, that retail is missing out on a huge opportunity to engage their employees, improve customer service and to increase revenue, customer satisfaction and overall profitability.

* * *

Based on research conducted over the past decades, the renowned Gallup Organization has found that highly engaged employees significantly outperform actively disengaged employees. Publicly traded …”companies with an average of 9.3 engaged employees for every actively disengaged employee experienced 147% higher earnings per share (EPS) compared with their competition”.

So, what is missing in retail? Better pay (performance-based) and better leadership. Based on our own experience, there tends to be a huge performance variance in stores and even in teams, based primarily due to the way these team leaders and store managers treat their employees and focus, or not, on customer service. Within the same company and using employee and customer engagement metrics, we have shown that by changing the corporate (leadership) culture and focussing on both employee engagement & customer service at the people level (employee-customer interaction) we can achieve a higher rate of Reduction of Performance Variance (RPV).

* * *

Conclusion. The final result of the engagement with the aforementioned retailer was that it turned its business around, as well as increasing key metrics such as:

customer satisfaction;
customer repeat visits;
sales per receipt;
lower costs through process improvements;
increased productivity;
and improved employés engagement.

By the end of the intervention, it was designated Germany´s “most customer-oriented retail company” and achieved the turnaround it had worked so hard to get to. The principles outlined above apply not only to supermarkets, but to any retail organization, our experience has shown.

1 Jim Harter, Ph.D.

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