Idea in Brief
The Problem
To compete with online rivals, brick-and-mortar retailers are reducing costs by cutting the number of store employees and money for training. This undermines one of their big advantages over e-tailers: knowledgeable salespeople who can help customers face-to-face.
The Root Cause
Payroll is a big variable cost that can be trimmed quickly. And given the high turnover that plagues retailers, spending on training can appear to be a waste.
The Solution
Determine how many workers and how much training each store needs to optimize revenues and profits, using new methods that involve analyzing historical data, conducting experiments, tracking the training and sales of individuals or teams, and offering incentives.
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.