Authored by Cathy Chandhok, Chief Marketing Officer
Careers in retail have a reputation for being “bad jobs” with the average retail cashier in America making about $10 an hour, according to the Bureau of Labor Statistics. The average retail sales worker makes $12 an hour, and one in three retail jobs is part-time. Workers’ schedules are often erratic, with few or no benefits.
Zeynep Ton, a professor of Operations at MIT Sloan School of Management, spent over a decade researching supply chain management in the retail industry and found that retail workers were not just poorly paid, but poorly trained. Morale was low, and turnover was high with customer service largely nonexistent. Executives at these companies told her that this “vicious cycle “--operating with employees who were paid as little as possible as labor was such a big part of their overhead-- was the only way they could guarantee low prices.
The problems that resulted were an unavoidable by-product of a low-price business model.
“There is, in fact, a good jobs strategy,“ says Ton, “even in low-cost retail, that combines high investment in employees with a set of operational decisions that deliver value to employers, customers and investors.”
In her book, The Good Jobs Strategy: How the Smartest Companies Invest in Employees to Lower Costs and Boost Profits, Ton gives examples of how four retailers deploy the Good Job Strategy and use operations to deliver good jobs to employees, strong returns to investors, low prices and good service to customers all at the same time.
Operating in a Virtuous Cycle
When retailers begin to view labor as a driver of sales and profits and not as a cost to be minimized, they create a virtuous cycle. Investment in employees is the perfect answer to the retail conundrum; it improves operational execution, increasing sales and profits, ensuring a larger labor budget, which could mean more investments for in store employees.
Model retailers complement their investment in employees with the following operational practices:
The secret to staying great: Seizing Strategic Opportunities
Retailers that operate in a Virtuous Cycle 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. In the end, this model combination of operations and investment in employees allows companies to earn more than competitors, create jobs that give dignity and respect to employees and still provide low prices and better customer service to customers. Companies that use this this strategy, mentioned in the book are Costco and Zappos among many others.
The above excerpt is a summation of the book ‘The Good Jobs Strategy’ by Zeynep Ton. To know more about how Infogain combines digital transformation with retail value chain accelerators and automation to enhance the NextGen retailing reach out to us at email@example.com