Value employees to win over customers

Articles
July 23, 2012

Value employees to win over customers

Food retailers at high and low ends of the price spectrum that limit staff turnover make stores more compelling.

Part-timers in supermarkets have regularly turned over at more than 100% per year. Even in a slow economy, however, the rate persists at 44.1% annually, compared with 11.2% for full-timers, and 8.4% for retail headquarters and corporate staff, according to the Food Marketing Institute.

Staff churn is highest among the larger chains operating more than100 stores. This imposes costs to recruit and train replacements, and to pay overtime to existing staff.

Besides these impediments to store productivity, The Lempert Report sees a potentially vast hidden cost to retailers in the loss of personal connections to shoppers. Store staffers are the face and personality of the chain to shoppers interacting with them. Lose them, and stores lose ground in building a familiarity that breeds repeat trips. Stores also diminish a workforce that operates complex stores efficiently.

Costco and Trader Joe’s appear to understand this. They value their employees and pay them relatively well to help create positive environments that keep turnover down—all while keeping prices low and profiting by keeping stores appealing to shoppers. Continuity of well-trained staff is becoming more important, since smartphone-equipped shoppers armed with product and price information demand more responsiveness at the store level.

Deloitte consultant Allison Paul told TIME Magazine:  “There’s been a shift from retailers pushing goods to consumers being able to pull what they want from a variety of different places that didn’t exist five years ago. Retailers are recognizing that their key differentiator could be that person standing in the store.”

Even Apple stores—known for their pristine design, exemplary products and enthusiastic staffers—decided to raise employee salaries by 25%, up from the current hourly rates of $9 to $15 for salespeople to as much as $30 for tech support workers, according to figures in The Wall Street Journal. An internal company review found staff discontent with wage levels, and the company responded, the paper reported. 

In our view, food retailers at both the high- and low-end of the wage spectrum could benefit by valuing employees—not only with more live-able wages, but with career development opportunities that will enable workers to help their stores stand apart.