How to invest in your employees while remaining profitable

Desi Mind Meld .2 hours ago

Zeynep Ton, assistant professor at MIT Sloan looks into the retailing’s vicious cycle of cutting costs, operational mistakes, and loss in profit. Her research has shown that by underinvesting in their employees, retailers are actually making their operations much more inefficient, and therefore much less profitable.

Highly successful retail chains such as QuikTrip convenience stores, Mercadona and Trader Joe’s supermarkets, and +Costco wholesale clubs 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.

They have demonstrated that, even in the lowest-price segment of retail, bad jobs are not a cost-driven necessity but a choice. And they have proven that the key to breaking the trade-off is a combination of investment in the workforce and operational practices that benefit employees, customers, and the company.

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Why "Good Jobs" Are Good for Retailers
Idea in Brief. Retailers have long believed that the only way to compete on price is to offer workers low wages, poor benefits, constantly changing schedules, and little opportunity for advancement. B... 0    0 Powered by socialditto

Desi Mind Meld6 hours ago

Zeynep Ton, assistant professor at MIT Sloan looks into the retailing’s vicious cycle of cutting costs, operational mistakes, and loss in profit. Her research has shown that by underinvesting in their employees, retailers are actually making their operations much more inefficient, and therefore much less profitable.

Highly successful retail chains such as QuikTrip convenience stores, Mercadona and Trader Joe’s supermarkets, and Costco wholesale clubs 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.

They have demonstrated that, even in the lowest-price segment of retail, bad jobs are not a cost-driven necessity but a choice. And they have proven that the key to breaking the trade-off is a combination of investment in the workforce and operational practices that benefit employees, customers, and the company.

Why "Good Jobs" Are Good for Retailers
The US needs better jobs, not just more jobs. Service businesses including low-price retailers that currently don’t invest adequately in their workers could be part of the solution.

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Future of Retail: Companies that profit by investing in employees

Desi Mind Meld .2 hours ago

What if the logic behind viewing retail labor as an expense to be cut, rather than as an asset to be invested in, is unsound? Zeynep Ton, a Professor of Operations Management at MIT’s Sloan School of Management, argues just that. Her research has shown that by underinvesting in their employees, retailers are actually making their operations much more inefficient, and therefore much less profitable.

After studying this topic for ten years, Ton has consistently found that companies that buck the status quo and invest heavily in their workforce actually are able to not only compete with their competitors on service but on price too.

Running a modern retail store is an incredibly complex task. The reason retailers Ton studied were able to spend much more on labor and still compete on price is that there are all sorts of efficiencies that become unlocked once you have a highly trained, highly motivated workforce.

While investing in human resources may have always been a good strategy, it is one that is more important now than ever for brick-and-mortar retailers. The headlong rise of e-commerce has put extreme pressure on retailers to become more efficient, and to justify their existence to customers. Those who want huge selection, low prices, and no service can find that online, without the hassle of leaving their living rooms.

The retail landscape is increasingly dominated by stores that have adapted to this new reality. Retail success stories like Lululemon and Apple have highly trained, engaging and engaged sales associates who offer a unique expertise that will motivate a shopper to eschew the convenience of the Internet shopping for a traditional brick-and mortar experience.

I hope +Best Buy is listening.

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Future of Retail: Companies That Profit By Investing in Employees
Research has shown that by underinvesting in their employees, retailers are actually making their operations much more inefficient, and therefore much less profitable 0    0 Powered by socialditto

Desi Mind Meld6 hours ago

What if the logic behind viewing retail labor as an expense to be cut, rather than as an asset to be invested in, is unsound? Zeynep Ton, a Professor of Operations Management at MIT’s Sloan School of Management, argues just that. Her research has shown that by underinvesting in their employees, retailers are actually making their operations much more inefficient, and therefore much less profitable.

After studying this topic for ten years, Ton has consistently found that companies that buck the status quo and invest heavily in their workforce actually are able to not only compete with their competitors on service but on price too.

Running a modern retail store is an incredibly complex task. The reason retailers Ton studied were able to spend much more on labor and still compete on price is that there are all sorts of efficiencies that become unlocked once you have a highly trained, highly motivated workforce.

While investing in human resources may have always been a good strategy, it is one that is more important now than ever for brick-and-mortar retailers. The headlong rise of e-commerce has put extreme pressure on retailers to become more efficient, and to justify their existence to customers. Those who want huge selection, low prices, and no service can find that online, without the hassle of leaving their living rooms.

The retail landscape is increasingly dominated by stores that have adapted to this new reality. Retail success stories like Lululemon and Apple have highly trained, engaging and engaged sales associates who offer a unique expertise that will motivate a shopper to eschew the convenience of the Internet shopping for a traditional brick-and mortar experience.

I hope Best Buy is listening.

Future of Retail: Companies That Profit By Investing in Employees
Research has shown that by underinvesting in their employees, retailers are actually making their operations much more inefficient, and therefore much less profitable

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