Retailers have a Renewed Focus on Customer Service

The minimum wage issue is a hot topic right now, with a lot of the focus around social and economic impacts for both retailers and employees.  While these are clearly important areas of discussion, there is another aspect to this – customer service.

As the ability to shop for virtually any item, at any time, in any place becomes mainstream, what will differentiate retailers and keep them successful if they’re not competing on price and product? Customer service!

Costco and Nordstrom are two examples that are cited frequently that show the link between higher pay and better service.  The theory goes that higher pay makes for happier and more engaged employees thus leading to better service and increased customer satisfaction (and of course, higher sales).

These retailers, among others, realize that investment in labor has some real benefits. They are running counter to the historical retail industry trend of reducing expenses by cutting people and/or paying them less.

Retailers are starting to realize that the place to save money is no longer in cutting staff.  It is smarter to invest in employees in order to make the connection with customers stronger.  And it’s more than just about raising pay.  JCPenney recently announced an initiative to reduce paperwork and communications from HQ in order to free up managers to spend more time focusing on the customer.

And the all-CAPS rant about customers being “on fire” by the CEO of Restoration Hardware shows the focus on customer service is a priority at the highest levels, even though it may be a little vague to simply say “The goal is delight.”

Retail still relies heavily on person-to-person interaction, both during and after the sale and by having the right number of employees who have the training, tools and appropriate level of pay needed to provide outstanding service will become more important than ever.

As always, I appreciate your insights and opinions.  Please share your comments below.

Todd

Todd was recently the founder and CEO of Jade Group, a retail consulting firm. Through his career he has been an IT Executive at companies such as Women’s Specialty Retail Group, United Retail and 9 West as well as a consulting Manager at Deloitte & Touche. Todd has extensive expertise in private equity acquisitions and has been an advisor to some of the largest private equity firms in the U.S. Todd’s expertise includes store systems, logistics, warehousing and distribution, merchandising, demand forecasting, fulfillment and business intelligence.

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