Store Managers: Understaffed And Under Pressure

Store managers are often underpaid and overworked, which can lead to a negative feedback loop where they are incentivized to cut labor costs to maximize their bonuses. This can result in a cost-cutting doom loop, with devastating consequences for the business. In a retail world focused on omnichannel strategies, product and service innovations, IT investments, and technology-enabled stores, winning retailers are those who invest in their store managers and associates. Store associates are a retailer's most powerful asset, and their availability, knowledge, advice, assistance, and friendliness have a stronger influence on a shopper's likelihood to recommend a retailer than product assortment, the shopping environment, or even price.

Store managers are poorly compensated and rely on bonuses

Store managers are often poorly compensated and rely on bonuses to make their jobs worthwhile. This can create a problematic incentive structure, as managers are more likely to be concerned with their own bonuses than with the well-being of their employees.

For example, at Kroger, store managers are given bonuses based on meeting or exceeding metric goals. One of these metrics involves keeping labour hours in line with the labour forecast. While managers do not get bonuses for cutting hours per se, they are incentivised to do so in order to meet their other targets. This can lead to a situation where managers are viewed as "evil, greedy pigs" by their employees, who feel that their managers are more concerned with their bonuses than with the needs of the store and its workers.

Similarly, at Family Dollar, store managers are given bonuses of 1% of the store's profit for the year. However, one former employee claimed that despite winning the "great race program" three out of four quarters for the year, their bonus never exceeded $200. Another former employee stated that when they broke down their salary by the number of hours worked, they were making less than their employees.

In some cases, store managers may even be exempt from overtime pay, despite working long hours and performing a variety of tasks such as stocking shelves, cleaning, and repairing equipment. This can further contribute to a sense of unfairness and exploitation among store managers.

The situation of undercompensated store managers is not unique to any one company. A report in The Wall Street Journal found that major retailers such as Macy's, J.C. Penney, Kohl's, Nordstrom, Target, and Walmart have all cut staff in recent years. This has resulted in understaffed stores and unhappy, frustrated customers.

To address this issue, companies need to recognise the value of their store managers and invest in them accordingly. This may involve providing competitive salaries, performance-based bonuses, and opportunities for career development and growth. By treating store managers as valuable assets rather than expendable cogs in the wheel, companies can improve employee retention, job satisfaction, and ultimately, the customer experience.

Managers are pressured to cut labour costs

Store managers are pressured to cut labour costs for several reasons. Firstly, they may be incentivised by bonuses tied to meeting certain metrics and targets, such as sales goals and labour budgets. In some cases, managers are evaluated and compensated based on their ability to keep labour costs in line with forecasts or even reduce them. This pressure to minimise labour expenses can lead to understaffing, which can negatively impact the customer experience and result in decreased sales productivity.

Additionally, store managers face challenges due to the increasing demands on their associates' time. Associates are often responsible for a range of tasks, including assisting customers, searching for out-of-stock items online, and utilising new technologies like mobile checkout platforms. The time required to complete these duties can take away from their ability to provide high-quality customer service.

Furthermore, retailers are often under intense pressure from wage inflation, declining foot traffic, the need to fund digital investments, and, in some cases, the requirements of legislation such as the Affordable Care Act in the United States. As a result, store managers may feel compelled to make across-the-board cuts to labour hours to reduce expenses. However, this approach can be counterproductive, as it can lead to a decline in the quality of customer service, causing customers to defect to competitors, thereby further reducing sales productivity.

To break this "cost-cutting doom loop," retailers need to adopt a more thoughtful approach to store labour. This involves investing in understanding what matters to their customers, redesigning processes to maximise high-quality customer-facing time, and mobilising their field organisation to implement changes effectively. By taking these steps, retailers can lower costs while maintaining customer loyalty and improving operational efficiency.

Understaffing leads to poor customer service

In a competitive retail market, the personal touch and service that employees deliver can be a retailer's greatest asset and competitive advantage against online shopping. However, understaffing can lead to a lack of availability, knowledge, and assistance from store associates, negatively impacting the customer experience.

Retailers need to staff their stores adequately to maximize sales and profits, rather than solely focusing on minimizing costs. Understaffing can lead to overworked employees who are unable to provide good service, reinforcing management's negative perception of the value of staff. This can create a feedback loop where retailers continue to understaff and underinvest in their employees, resulting in a decline in service quality.

Additionally, retailers should invest in training and development programs for their employees. By improving the skills and knowledge of their staff, retailers can enhance the customer experience, increase sales, and improve employee retention.

To improve customer service and avoid the negative consequences of understaffing, retailers should adopt a thoughtful approach to store labor. This includes understanding what matters to their customers, zero-basing their store labor model, and mobilizing for change at the front line. By taking these steps, retailers can lower costs while maintaining customer loyalty and improving sales productivity.

Poor customer service results in lost sales

In a retail environment, store associates are a retailer's most powerful asset. Customer service in stores is the top factor affecting customer advocacy. A store associate's availability, knowledge, advice, assistance and friendliness exert a stronger influence on a shopper's likelihood to recommend a retailer than product assortment, the shopping environment, and even price.

On the other hand, poor service is a major contributor to customer defection. When shoppers are faced with long checkout lines or cannot find assistance, they will often leave the store without making a purchase. This results in lost sales for the retailer.

Retailers that underinvest in their store associates, either by not providing enough hours or by not providing adequate training and development, will suffer from decreased sales and customer loyalty. Overworked and understaffed employees will be unable to provide good service, leading to frustrated and unhappy customers.

Additionally, retailers with high turnover rates due to low job satisfaction may also contribute to poor customer service. High turnover can lead to a lack of experienced and knowledgeable staff, which can impact the quality of service provided to customers.

To improve sales and customer retention, retailers need to invest in their store associates by providing adequate staffing, training, and development opportunities. This will ensure that customers receive the assistance and service they need, leading to increased sales and customer loyalty.

Furthermore, retailers should also consider the impact of wage inflation and the need to fund digital investments when determining their store labor budgets. By taking a thoughtful approach to store labor, retailers can lower costs while keeping customers loyal.

Lack of training and development leads to a lack of incentive for employees

A lack of training and development for employees can lead to a multitude of issues, including a lack of incentive for employees. When employees are not provided with adequate training opportunities, they may feel undervalued, disengaged, and unmotivated. This can result in decreased productivity, increased errors, and higher staff turnover.

Firstly, inadequate training can lead to reduced skills and knowledge, hindering employees' ability to effectively perform their jobs. This, in turn, can impact their confidence and morale, as they may feel uncertain and insecure about their abilities. For example, sales representatives who lack product knowledge training may struggle to communicate the features and benefits of a product, resulting in missed sales opportunities.

Moreover, a lack of training can cause employees to miss out on growth and advancement opportunities. Training plays a crucial role in professional development, helping individuals acquire new skills and stay updated with industry trends. Without these opportunities, employees may feel that their career development is being neglected, leading to decreased motivation and job satisfaction.

In addition, insufficient training can create an unsafe work environment, particularly in industries with specific safety protocols and equipment handling procedures. By failing to provide safety training, employers not only risk legal repercussions but also increase the likelihood of accidents and injuries in the workplace.

Furthermore, when employees are not offered development opportunities, they may feel that their efforts are not valued or recognised by the company. This can lead to increased workplace stress, lower morale, and a sense of being unappreciated. As a result, employees may seek better opportunities elsewhere, contributing to higher staff turnover rates.

Finally, inadequate training can hinder effective communication, collaboration, and conflict resolution among employees. Well-trained employees are more likely to be engaged and motivated, fostering a positive work culture. On the other hand, a lack of training can lead to misunderstandings, reduced collaboration, and decreased productivity.

By investing in training and development, store managers can not only improve the performance and productivity of their employees but also create a culture of continuous learning and growth. This, in turn, can lead to higher job satisfaction, increased employee retention, and improved business outcomes.

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