The talent revolution needed in retail
Can automation actually replace people in retail? Far from it. There are many critical areas where sales people need to step in to make the shopper experience more satisfying and rewarding than can be achieved through automation
The role of planning and technology in improving sales and profitability in retail, primarily by improving availability of product on shelf, has been discussed in detail in this column before. These “hard” factors are important and so are the automated tools that can best take these decisions, edging out people with Excel spreadsheets and gut feel. People are not at their best when trying to deal with large volumes of data or with optimisation. Can automation actually replace people in retail? Far from it. Ensuring the availability on shelf is not the only reason for a loss of sale. A customer might not be clear on what she or he wants. Without help, no selection would take place. A purchase decision may be put off because product features are not clear. Perhaps there are doubts on how to maintain an item. These doubts are not always articulated. They may not even be clearly framed in the minds of the shopper. This is where sales people need to step in.
The criticality of front line sales
With the onset of e-commerce blitz in this country, the retail experience is becoming a key differentiator to get people to shop in brick and mortar stores. This “experience” is created by many factors including branding, layouts and innovations in display and promotion. However, probably the single most important factor is the human interaction that takes place between the shopper and the sales person.
Earlier last year, a study was conducted by the Retailers Association of India and BCG, a consultancy. The study looked at the potential and challenges of the retail industry in India going forward to 2020. While the study is best known for the projections of sales volumes and growth rates, the report also has a section with the views of CEOs of retail companies on their leading challenges. The topic of talent and specifically that of front line sales people was a common theme. In the words of B.S. Nagesh, Founder & Non-Executive Vice Chairman of Shoppers Stop, “… big data cannot replace customer touchpoints. We need to ensure we continue to talk to our customers”.
This is probably why the fashion industry, the ultimate in crystal ball gazing, relies on people and their reading rather than today’s much touted big data approach. Statistics works best with large populations. It often stumbles when the sample size becomes small. Imagine how limited such technologies can be when faced with the individual shopper.
Being able to predict the behaviour of the individual is very much the target of the online world. Today an Amazon or a Google can figure out where you went online, what you looked at and even, in the case of Google, what doubts you have as shown up in your search pattern. Despite their formidable capabilities, even they will find it tough to figure out how to address the individual shoppers’ concerns and help them to decide. This is an area of the buying process where “people” still reign supreme.
But where are the people?
The challenge in front line sales is exactly that – a good sales person can have a huge impact on getting customers to buy. Unfortunately, good sales people are far and few between. In the same report, various CEOs have commented that front line sales is a top capability concern. This is definitely the case with complex products, like mobile phones. Sathish Babu, Founder and CEO of Univercell, says “just talking about features or price is not good enough, the staff has to be able to tell a story.” It is even the case with expensive categories, like jewellery. Interestingly, the same concern has been voiced in categories such as apparel and shoes.
Today, the sales person’s job is less about taking things out of shelves to show the customer and more about guiding the customer to take a decision. This requires good listening skills, selling the value of the product, crystallising the customers concerns and addressing those concerns. Th ink back on your own personal trip to a retail store and consider how good sales people are doing this. In most cases, sales people fail at this moment-of-truth and revert to the idea that says a good sales person can sell snow to an eskimo. All it takes is to push the customer to buy. Shoppers today can see through this, don’t fall for it and usually get put off.
Today, sales people do not come cheap. Estimates vary by category, but salary cost can vary from 20% to 30% of gross margins. This is a big amount and it would be critical for companies to improve productivity. Since this is a fast-growing industry, it is always short of talent and companies cannot expect to draw from an existing pool of experienced people. As J. Suresh, MD & CEO, Arvind Lifestyle Brands, said “Given the talent shortage … [there is a ] need to hire those with raw talent and then groom them”. This is a pragmatic approach and can definitely be done, given the time.
Unfortunately, there may not be enough time available. In a survey done in Asia about a year ago, LinkedIn said that 52% of people with 1-10 years experience expected a promotion within 2 years. The number inflated to 82% if only students and people with less than one year experience were considered. People are not willing to wait. As a young economy, aspiration levels are as high as patience is low. So, even if companies are willing to invest behind developing people, there is a strong risk that the people will not be there once developed.
The IT industry has faced this challenge of job-hopping for a long time. An industry where skilled people are at a premium, it is common for experienced people to demand and get significant salary hikes whenever they move jobs. The industry has worked hard to increase the “stickiness” of jobs, by enhancing other aspects of the workplace. In 2015, the Great Places to Work survey listed four IT companies in the top 10. In comparison, there was only one entry from the retail industry. In the top 100, the retail industry had only 7 companies. What is needed is a method that both accelerates development on the job to justify more rapid growth and also create a higher degree of trust and engagement at the workplace. This might sound like a tall order, but it has been done – in the world of manufacturing.
An idea from the world of manufacturing
Factory workers have very monotonous jobs. This was immortalised in the 1936 Charlie Chaplin movie, Modern Times. It is difficult for people to work in such mind numbing environments, where all that was really needed was for a set of limbs to operate machines.
The Japanese worked out methods that would also engage their minds. They brought in concepts like Quality Circles and Kaizen. These concepts were game changers in the workplace. Machine operators used their experience and knowledge to help improve the quality and efficiency of shop floor activities in small ways. The cumulative effect of all these small improvements, one on top of the other, was to get huge jumps in productivity. At the same time, people became more skilled in their work. The groups work together in a learning environment, without the expense of trainers. Their effort was directed to driving continuous improvement in the shop floor – to improve quality, productivity or reduce cost.
These techniques are not restricted to environments where there are machines. They can be applied to processes as well. A team of people working together can help improve their own sales technique by using a structured process and do it on the job. It requires some facilitation to get it started, but once it gets hold the process is self-sustaining.
The good part is that this kind of improvement process addresses both the need to accelerate learning and developing new capabilities for the employee as well as helping to increase productivity and output for the company. Most employees find that their learning accelerates in such low pressure group environments, where there is a free exchange of ideas and mutual support. The engagement also brings a sense of ownership and participation, moving people away from a transactional approach at work to one where they feel they have contributed – building a sense of ownership.
The author is Partner & Managing Director – Indian Operations, CGN & Associates India Pvt Ltd