Catch-22: Lower retail sales so decreased store staff

[disneysteve]

I noticed something while doing some shopping today. Stores are being affected by the economy and seeing fewer shoppers coming in ready to spend. As a result, sales are down. To cut back expenses, they reduce their sales staff. However, that makes the remaining shoppers upset and less willing to shop there because of the lousy service.

I went to the craft shop today. When I approached the check-out, there were at least 20 customers in line. The store has 8 registers. Three were open. And this was mid-day on Saturday, peak time there. Plus all week they were distributing 50% off coupons good today only, so they had to know to expect a crowd. I heard lots of people complaining in line that they hate coming to the store lately because they never have enough registers open.

Later, I was at a department store and went to look in the shoe department because I need a new pair of brown shoes. There were quite a few customers in the department. I found a pair I wanted to try on, only to realize that there was exactly one clerk handling the entire shoe department - men, women and kids. I wasn't about to stand there for 30 minutes waiting my turn so I left, and they lost a potential sale, and I'm sure I'm not the only one.

It just made me wonder if stores cutting staff really saves them any money. If a $10/hour clerk would allow them to make $100/hour more in sales, seems like it would be a good deal.

[Joan.of.the.Arch]

I had similar thoughts today. I went to Macy's for a pair of earrings. I waited for a long time to get someone to take my money. The two clerks at two register areas never even made eye contact, they were so busy with stuff other than customers! At the other register areas in the jewelry section there were no clerks. I waited so long that my feet were tired from just standing there. I also wanted to view something in the locked cases, but there was no help. I eventually put the earrings back on the open rack and left the store. So no red jade earrings for me, and no sale for Macy's.

[atomicrc11]

Same thing happened to me today. Went to Macy's and the service was sub-par. I had to go to a different section of the store to check out and the saleman was less than stellar. He didn't even offer any of the coupons they were having as promotions today, which were donate $5 to charity and get 20% off your purchase. I needed some new pants and a belt so it was very worth it, but it was like pulling teeth. It didn't used to be like this.

[Bookie]

Is this anything new? I've been grousing for years about stores so poorly staffed that I can get my daily exercise wandering around looking for help. The future will belong to self-service operations where you find your merchandise, lug it to the checkout stand, scan it into the system, bag it with your very own hands, and load it out to your car.

What happened to the world of my youth where your gas was pumped, your shoes were fetched and fitted, your measurements were taken, and your meals were served?

I miss the human contact.

[FrugalFish]

I've noticed this more and more recently. When the housing market started to tank in this area, service at Home Depot and Lowe's became unbelievably bad. As often as we enjoy doing projects, we stopped going in there unless we really need something, because aside from the self-check lanes, they were lucky to have even one full service lane open. Self serve doesn't work very well when you have a 4x8 sheet of plywood, or things like bricks and bolts that have to be looked up in a book or on the computer. The last time we went to buy this sort of large project material, we had to check out through the garden center because it was the only register that was open for full service. That irritates me to no end and it has probably cost them a great deal in projects that I can't be bothered to do because it's such a hassle to shop there.

I've commented a lot to DH that it's at time like these, when the economy ain't so hot, that customer service needs to be job 1. Treat me well and I'm more likely to spend my hard earned cash at your store...

[thkgranny]

Is this anything new? I've been grousing for years about stores so poorly staffed that I can get my daily exercise wandering around looking for help. The future will belong to self-service operations where you find your merchandise, lug it to the checkout stand, scan it into the system, bag it with your very own hands, and load it out to your car.

What happened to the world of my youth where your gas was pumped, your shoes were fetched and fitted, your measurements were taken, and your meals were served?

I miss the human contact.

I feel the same way. With these mega-stores, it is only going to get worse while they push the smaller businesses where you can get customer service out. I guess we're lucky here to have ONE gas station that will pump your gas, and ONE consignment store that delivers the customer service of yesteryear.

Of course it seems everyone is in such a hurry these days and that is reflected by businesses with self-checkout lanes at banks, stores, gas stations and drive-thru lanes at restaurants.

I even feel sorry for the clerks/cashiers who are trying to sincerely help everyone when they have that long line. I can imagine their frustration with having to carry the extra load when they are one of the good employees and the staff has been cut.

[osadg]

I've noticed this happening a lot more recently too! I've gotten so used to waiting in lines that when my husband and I are both shopping together, once we're close to being done, one of us goes to the register to wait while the other continues shopping. Whats unbelievable is that not once have we held up the line.
I nearly always try to go to the self check out because most of the groceries stores in our area, only keep one register open, and so even the self-check out lines are getting ridiculous.
Just this last week I was at home depot buying my ONE item, and I went through self check out. There was no one there manning the registers and of course something happened and the machine said I needed an assistant. After I waited around for awhile the ONE gal working the registers came over and apologized. She said she was the only clerk working. WHAT?!?!? One person on registers and self check out registers?!?
I'm baffled at how lousy service is becoming.

[jIM_Ohio]

Remember this the next time a politician votes to increase the minimum wage.

Cost of labor is usually one of 3 largest expenses for any business (rent and cost of goods/services are the other two). Increasing the minimum cost of one of 3 largest expenses is recipe for bad business.

My stance on minimum wage has long been that people willing to work for 3-6 months without issue (absence or behavior) can often get raises and move up quickly.

My BIL started working at a sams club when he was 18 (minimum age to work at a wearhouse) and he was an assistant manager within 2 years and probably even sooner than that (10 years later he is store manager clearing 6 figures).

Minimum wage is among the reasons that retailers will need to cut back hours of employees.

[disneysteve]

Minimum wage is among the reasons that retailers will need to cut back hours of employees.

That may be true, Jim, but the point I was making was that by cutting back on employee hours, the retailer is shooting himself in the foot. Business is down so he cuts staff which decreases business even more. The way to improve business isn't to reduce customer service. That's counter-productive.

My wife was in retail management years ago. She often told me that corporate would force her to cut hours and then come back to her at the end of the month/quarter and want to know why sales were down so much. They just didn't seem to get that if you have less help on the sales floor, you make fewer sales.

If there isn't a clerk to go in the storeroom and get me the shoes I want to try on, I won't be buying the shoes. If there isn't a clerk at the jewelry counter to show Joan the earrings she's interested in purchasing, she won't be purchasing them. If there isn't a clerk at Best Buy to answer your questions about which computer would best suit your needs, chances are you're going to leave without buying a computer.

Stores can't have it both ways. They can't cut hours and cut staff and still expect to make the sales.

[mom-from-missouri]

I
It just made me wonder if stores cutting staff really saves them any money. If a $10/hour clerk would allow them to make $100/hour more in sales, seems like it would be a good deal.

$10 an hour?? They are only paying $6.65 around here--even places like JC Penney (37 miles from me) is paying min wage.

I've been looking for a job-normally places hire seasonal temp help for Oct thru Christmas. The stores that did last year have told me they aren't this year.

[jIM_Ohio]

That may be true, Jim, but the point I was making was that by cutting back on employee hours, the retailer is shooting himself in the foot. Business is down so he cuts staff which decreases business even more. The way to improve business isn't to reduce customer service. That's counter-productive.

My wife was in retail management years ago. She often told me that corporate would force her to cut hours and then come back to her at the end of the month/quarter and want to know why sales were down so much. They just didn't seem to get that if you have less help on the sales floor, you make fewer sales.

If there isn't a clerk to go in the storeroom and get me the shoes I want to try on, I won't be buying the shoes. If there isn't a clerk at the jewelry counter to show Joan the earrings she's interested in purchasing, she won't be purchasing them. If there isn't a clerk at Best Buy to answer your questions about which computer would best suit your needs, chances are you're going to leave without buying a computer.

Stores can't have it both ways. They can't cut hours and cut staff and still expect to make the sales.

I understand no sales people=no sales.

My point was the corporate people making decisions are making it because that six hour shift is costing them (let's guess) $42 in wages. But remember another 6.2% of that is owed (SS) and medicare on top of that. So that $42 is now $46 or $50.

I agree with you- that one six hour shift should easily be able to make $150-$400 in revenue per shift. But unless there is enough profit margin built into the $150 ($50 in wages plus lease, plus corporate) the store is losing money until sales boom and hit around $700 or $1000 per employee per 6 hour shift.

A $25 item on the shelf is probably priced (guessing) around $5 over cost (so profit of around $5). That is a 25% markup. So in reality to justify the expense of an employee the store needs to sell around 10 items to pay the employees wage (including the hidden SS taxes paid by employer), plus maybe 20 items to pay the store lease for that day (not sure what it costs per day to have a store in the mall, guessing $100/day=37k per year), plus there needs to be a cut which goes to corporate.

Corporate is protecting themselves- they know they cannot get the the revenue and profit to maintain the store, so they keep costs to a minimum to weather the storm.

The better answer is to cut the corporate overhead. But corporate makes the decisions so they protect their jobs.

This is why smaller retailers will probably do better in times like this- less bureocracy will make better decisions.

[disneysteve]

This is why smaller retailers will probably do better in times like this- less bureocracy will make better decisions.

I agree. A small business, independently owned, can react much more effectively to changing market conditions, particularly tuned in to local conditions.

In a blog entry today, someone posted about restaurant closures. Around here, the only closures have been national chains and franchises, like Bennigan's. Independent restaurants are doing fine with more opening all the time. They are able to tailor things to the local market conditions better, not have onerous franchise fees to pay and not have a distant corporate bureaucracy to deal with. I'm sure the same is true of retail stores.

[Toyguy1963]

This is very true at the store I work for. Our sales are down because in part of the bad economy. But also because the store is expanding and the construction is discouraging the customers from coming in.

But because of it being slower I have been cut down about 8 hours a week. One full day of pay. Some people didn't get cut as much but some got cut
much more than I did. My first thought is how are we supposed to live? I know things are slow and that business is supposed to make money. But don't they or shouldn't they have some responsibilty towards their employees. Especially in my particular case. Even though sales are down the store makes very good money and we have even been getting bonus checks every quarter for awhile.

Anyways, I also see our customers very upset and sometimes leaving because of not enough workers. I sometimes have to mix paint then run over and cut fabric and then get chewed out by a redneck waiting in Sporting good to look at a gun. Its pretty ridiculous and businesses should be ashamed of themselves for their emplyees sakes and for the customers. Sorry if I ranted a little but your post was something that hit home with me in a number of ways. Hey I can't even afford to buy much of anything in my store right at the moment so that hurts sales caudse I'm a customer too.

[kork13]

i dont think so,,may be no may be yes

Well, the sad reality is that it often is true.... especially in smaller businesses, if the owner is employing, among others, 5 employees at minimum wage (round to $8, so $40/hr to pay all five employees), if minimum wage is increased $2/hr, the effect will be 5 times the increase for the owner. He's now paying 5 people what he would previously have been paying 6 people for the same level of work (now $50/hr for all 5). So, in order to keep his business budget, he lets one go so he's now losing the same amount as before ($40/hr) in payroll to his remaining employees.

It's a bit over-simplified, but that's basically the gist of what happens... And in places where minimum wage is even higher (in Oregon, it's mandated by the state to be like... $11/hr right now), it amplifies the effect.