Retailers Are Squandering Their Most Potent Weapons

As they fight for survival in the era of online shopping, brick-and-mortar retailers are turning to an age-old strategy: cutting expenditures on workers. In the U.S. department store segment, for example, head count per store has fallen by more than 10% over the past decade, while wages per employee have dropped by 4%. And payroll isn’t the only thing being trimmed: Training budgets have been chopped as well. A survey by Axonify, a provider of training software, found that nearly one-third of retail store associates receive no formal training—the highest deficit in any of the industries surveyed. Understaffing stores and undertraining workers was never a good idea, but it’s especially bad now, because it takes away the biggest advantage traditional stores have over e-tailers: a live person a customer can talk with face-to-face. The root of the problem is that most retailers don’t know how to determine the optimal amount of staffing and training for individual stores. In this article we’ll lay out a method for doing that. When applied systematically, it can add as much as 20% to the revenues of existing stores, we’ve found. Moreover, if staffing increases in some stores are matched by cuts in others, and vendors cover the cost of product training, the higher sales cost little or nothing to generate, so most of the gross profits on that improvement drops to the bottom line. Read more at Harvard Business Review.