2018 Retail Assessment Reveals 10 Shocking Lacks In Best Practices

April 29, 2018

lacking retail customer service best practicesWhat is the current state of the retail industry? To no one’s surprise, most retailers see customer service as their most important challenge.

That’s because Amazon, singularly focused on knowing their customer and going above and beyond to exceed their needs, is stealing their customers.

That got me thinking…

Has this overwhelming fear of Amazon led retailers to focus on their own customers, to go above and beyond to exceed their needs?

That would make sense, right?

But the results from my Retail Assessment Tool proves otherwise.  The results from 1700 respondents show most are falling behind when it comes to being brilliant on the basics of customer service in a brick and mortar store.

No, this is not based on an exhaustive study of big box financials and forward looking statements; it is primarily comprised of non-publicly owned brick and mortar retailers. And while the full assessment consists of about 75 retail best practices questions, we’re only looking at 10 top responses in this report.

Discover your own score by taking the
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Financials


According to AEI , for the general retail sector, the average profit margin is only 2.3%. For grocery and food retail, it’s only 1.6%.  For balance, Walmart only made a 2.1% profit margin during the first three quarters of 2017.

Yes, it’s hard to make profits from reselling products in a brick and mortar store. Maybe that’s why…

74% of respondents indicated they are not taking money out of their business, but putting it in.

And while you could look at those results positively, that it’s a good thing to invest money into your business at an excited pace, you could worry that only about one-quarter of retailers are making money.

Operations

Knowledge is power. Online retail is obsessed with data as anyone who sells anything should be. How many clicks did it take before someone put an item in a cart? How many abandoned the cart without purchasing? If we move a product placement on the website or change the background, how does that affect conversion?

In a brick and mortar store, knowing your in-store analytics can help with merchandising, product mix, and evaluating your employees and their ability to sell the merchandise. As Bill McCarthy with ShopperTrak says, “Higher traffic counts mean nothing if your conversion rates remain lackluster.” Yet...

55% of respondents said they did not know the conversion rate of shoppers to customers.

While that could mean conversion rates are often misunderstood – and could actually be higher –  it could also mean many retailers are not stepping up to fight online by upgrading their retail technology to assess how effective they are at capturing the dollars in their own stores.

Physical Store

Customers notice dirty stores. The focus on presenting your products free from dust should be a priority. And while the old restaurant adage if you can lean you can clean sounds good, employees rarely do it on their own. Maybe that’s why...

56% of respondents answered they could not run a white glove across any shelf, rack, or product and not see dust on it.

Merchandising

How much profit a retailer makes is often determined by how quick their merchandise turns. The more days it takes for you to sell an item, the less profit you will make as employees and customers get bored with it and the item potentially gets dirty, shopworn, or damaged.

While sophisticated point-of-sale (POS) and Enterprise Resource Planning (ERP) systems can figure turn in real time, the basic formula is total sales divided by inventory on hand equals your merchandise turn.

An open-to-buy plan is a system for figuring how much you can buy based on how much you have sold. It also allows you to see what is turning fast so you can order in a few larger quantities and avoid the many smaller shipments costing more in freight.

The open-to-buy software is many times baked into your back office systems, but it requires constant monitoring to keep merchandise turns high, avoid out of stocks, and keep overbought inventory levels low.

Too much merchandise requires discounts to move and takes up space for popular new products. Yet...

69% of respondents say they either do not have an open-to-buy plan or are not using it.

Marketing

Any first year business major can tell you there are only three ways to make more money in your business: attracting new customers, getting your customers to buy more from you, and getting those customers to return more frequently. That’s it.

When new retailers open, there is usually a fanfare of promotion, but as the months go buy, that initial energy fades. There is a reason most people receive so much email or sponsored posts on social media,  marketers are actively soliciting you to either try them instead of a competitor, or incent you based on your previous purchases to return to their store.

To continue to attract new customers your website and social media must be creatively updated to show you are more than just a product warehouse, you are a great resource with helpful advice and information. Yet when it came to their own website...

64% admitted they do not include how-to-articles or creative tips on their website.

To get your current customers to return to you more often, you need to communicate with them regularly. One of the best ways to do that is with a newsletter where you push your information into their inbox. Yet…

60% of respondents do not send out a newsletter to their own list at least once a month.

If your employees have mastered the job of engaging with strangers and built enough trust so your sales are up, then as a smart retailer, you want to make sure your employees continue to develop those relationships and not drop the ball. Yet…

62% answered their employees do not regularly follow-up with their customers to get them back into their store through texts, emails, or calls.

I see that as most retail stores haven’t been trained to create an exceptional experience where the customer is glad to hear from them.

That of course leads to…

Training Retail Selling Skills

The great fallacy of working retail is that anyone can do it.

No, not anyone can do it.

Anyone can collect a paycheck, but to actually work the job of retail and help you move the merchandise for full price takes training. It takes hiring the right, trainable person, then giving them a clear, concise sales process, followed by a reward for doing it.

Simple, right? Do the job, you get rewarded. Yet...

53% retailers do not have a formalized method for hiring employees.

This could mean that they have one, it’s just not written down. But more likely it means hiring for who can fill the shift or hiring whoever had previous experience at a competitor.

Training is something you do; it is ongoing. Training is not something you did once. That takes time and money.

I shouldn’t be surprised that…

76% do not pay for outside retail sales training of their employees.

Many retailers still see training as an expense, not an investment.

But without training you end up settling for crumbs when you could have had the whole feast. You never want employees to just ask Anything else? at the close of the sale, but 57% of respondents don’t train that.

Which figures when...

53% of respondents said they do not have a retail sales process that is written down and followed by all employees.

Here’s just one example of why it is so important to train everyone....

Nowadays, when people run into each other, they just start talking; they don’t give a salutation.

And while that’s fine if you’re buds at a pub, it’s deadly in a retail store.

That’s because when an associate greets a shopper correctly, it triggers the shopper’s ears to stop and pay attention. Without that, they brush right past you and treat you like someone to be avoided.

That’s why retail sales training is so important; you will lose more sales than it costs you when you don’t train the soft skills of engaging a stranger.

When there is no standard retail sales training, it is a Can I help you? catch-as-catch-can customer experience comprised of whatever a distracted employee can serve up.

No wonder so many shoppers look at going to stores as work – because many employees are never challenged and trained what exceptional looks like in a world of half-price, this-weekend-only, bullshit sales at the mall.

And when those employees who do follow the training are rewarded, they do even better. Yet…

63% do not connect sales performance directly to wages..

It should be no surprise then that...

Only 30% of respondents use outside mystery shoppers to regularly check their customer service.  

One could say those remaining 70% don’t see the value in it or that since they don’t have training, they don’t want to hear the real reason shoppers aren’t returning – they just don’t want the experience you’re offering.

See also, 5 Retail Management Practices That Can Bring A Customer First Focus To Your Store

In Sum

A Microsoft/McKinsey report entitled Class Of 2030 said today's children will need strong social and emotional skills to succeed in the fourth Industrial Revolution economy. “These same human attributes are also two times as predictive of a student's academic success.”

To succeed against online competitors, brick and mortar stores need strong social and emotional skills from all their employees..all the time. 

That’s the only way stores will thrive.

Without it you’re just a warehouse for other people’s stuff.

According to Coresight Research, 1699 new brick and mortar stores opened so far this year. They are coming to market without the baggage many legacy retailers have. The future is bright for them because they understand that data, training, and implementation will help them grow, adapt, and compete. 

When the fundamentals are in place, smart retailers will track in-store purchases, online browsing, and online purchasing, so they can trace all the actions that led up to a sale. That will become table stakes for all retailers, no matter their size.

It’s easy to blame online retailers for destroying what may have been generations of stability for all kinds of retailers, yet as the Retail Assessment has shown, many of the tools retailers already have that could enable them to know their customers better, market to them better and yes, sell to them better simply aren’t being used.

Together, let's adapt for the age of the buyer. That means to compete with Amazon, you must leverage your fear of them and increase your own efforts to hold yourself accountable in order to grow your retail sales.

To see how the Retail Doctor can help your organization grow, click the button below.

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