There’s nothing wrong with wanting to save a buck. That’s why so many of us choose to shop at big-box stores that deal in such a high volume they can afford to sell their products closer to cost. Those narrower profit margins still translate to larger profits overall due to scale, and that’s okay because we pay less in the end, so it’s a win-win. Right?
As you likely suspect, there’s always a catch. As you’ve shopped at those megastores, you might have noticed a consistent trend that should give you pause about paying a little less. Hasn’t customer service quality really nosedived? Doesn’t it seem like most employees are uninterested, and that’s even if you can find one without having to search the entire store?
The high cost of thin margins is that these companies have to control their costs in other ways. According to Business Insider, labor costs account “for 60% of corporate expenses, and it’s only getting more expensive.” To maintain profitability and stay competitive with the pressure of online sales—especially in the face of next-day delivery (and same-day in metropolitan areas!)—these companies are eager to cut costs somewhere. You don’t need an accounting degree to know which expenditure is the obvious one to trim.
To reduce payroll, there are several tactics a business can employ. Not offering many full-time positions, for example, means that a store can have a large pool of workers to patch together a work schedule but not worry about having to pay most of them benefits. Another is to understaff most shifts throughout the week—you’ve undoubtedly noticed how some big-box stores have a dozen or more cashier lines, but there only ever seems to be a few cashiers working at a time. Still another method is to fall into the revolving-door of turning-and-burning employees, meaning that the staff is almost always undertrained, underpaid, and overworked. This all translates to lower quality employees because most of the high-qualified, driven ones seek better opportunities.
When a staff is composed of underqualified and unhappy part-timers who likely have one foot out the door, it’s no surprise that customer service has hit rock bottom, is it? You can even hear how sheepish some customers sound when they admit to even shopping at those places, no?
As you consider how your small business should compete in a world of supercenters and online retail, how do you lure in those cost-conscious consumers? You can try to chase thin margins with a low-quality workforce to try to look like all the other guys, but we suggest there’s a better way. Build value. Make your customers want to spend a little extra because of the high quality of service and attention they’ll receive at your business. Instead of gutting your payroll, we suggest investing into it to make your staff and your business the envy of your community, a place which people are proud to shop.
Start by targeting development: proper training and accountability will transform most employees into stars. The best tool out there for this endeavor is mystery shopping because this kind of test forces you to identify what you expect your staff to be capable of, what kind of demeanor they should have, and what vision they need to live up to. Frequent and consistent testing will hone your employees’ skills and ensure you have a people your customers want to work with. The net result is a higher-skilled and happier staff, satisfied patrons, and—yes—wider margins.
Want to get started right away and stand out from the crowd? We don’t blame you. You can reach out to us at The Brandt Group today by using our webform here, where you can tell us a little bit about your company and what you hope to achieve. We’ll be in touch, and together we’ll help you develop your business into one anybody would be proud to shop with.
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