The case for investing in retail employees

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The evidence on the return on investment in retail employees is becoming more and more substantial.  See particularly Zeynep Ton’s work on QuickTrip and Mercadona:

“By investing in employees and giving them more responsibility, QuikTrip enjoys a competitive advantage in service and benefits from continuous process improvement.”

“For Mercadona, investment in employees is part and parcel of process and product improvement. In 2008, the chain invested four weeks of training time and €5,000 for each new store employee. “In the United States,” Ton points out, “the norm is only seven hours, and the difference shows.”

See also Marshall Fisher’s work on the same topic:

“On average, revenue increased by $10 for every additional dollar of payroll added to a store, and for some stores that were particularly understaffed, the revenue lift was as high as $28. At the 40% gross margins this retailer was earning on revenue, adding payroll was highly profitable, and fully supported by the numbers, once you had the right numbers.”

If investing in employees yields such big dividends, why don’t more retailers do it?

About Arie Goldshlager

Customer Insight, Customer Strategy, and Innovation Consultant
This entry was posted in Customer Experience, Customer Service, Frontline Employees and tagged , . Bookmark the permalink.

1 Response to The case for investing in retail employees

  1. Thanks for the hard numbers in the example! Good to find this post.

    And in general, glad you raised the issue! It boils down to two things… ownership and self-interest. Hope a post I wrote last year titled “Why it’s so hard for Companies to Treat Employees Like Assets” http://bit.ly/TnM506 adds to the discussion.

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