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The Future Of The Luxury In-Store Workforce

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RSR Research – and pretty much every pundit in the known universe – have been talking about the shift in the retail workforce for the past year. COVID was the accelerant that turned the embers of “our workforce is important to our retailing success” to a raging fire.

Like most analysts, during the height of the pandemic in the U.S., we focused on mass merchants, grocers, and to an extent, omnichannel apparel retailers. We know that job roles changed, and Retail Winners were far more apt to give bonuses and raises to their in-store and distribution center employees (at the time of our analysis, in September, the numbers were 77% of Retail Winners vs. 45% of all others). We even saw that 52% of fashion/apparel retailers, whose in-store businesses were at a crawl, if they were open at all giving bonuses and raises, even as they also laid off in-store personnel.

None of this really addressed the luxury retailer. Those retailers already knew the importance of their in-store workforce. Many of those employees can earn hefty commissions, and their job, to steal a phrase from Jack Mitchell and his seminal work “Hug Your Customers” has always been to attend to their customers’ every need. For those of you who may have forgotten, Mr. Mitchell is also Chairman of the Mitchell Stores, which operate high end clothing establishments in the Northeast. This may help:

Under his leadership, the Mitchell Stores have become well known for employee engagement and longevity and providing exceptional customer service and high-quality merchandise in an exciting, friendly, and visually dynamic atmosphere. Jack is an active leader on the floor listening and learning alongside his brother Bill, wife Linda, his three sons and three nephews. Mitchell Stores is a case study at Harvard Business School.

Ironically, Mr. Mitchell’s second book, “Hug Your People: The Proven Way to Hire, Inspire, and Recognize Your Employees and Achieve Remarkable Results” didn’t receive nearly the airplay that Hug Your Customers did. Why? Well, as we’ve said many times before, retailers are really good at talking the talk about improving hiring, training and retention strategies – they tell us so in virtually every benchmark that we write – and not so good at walking the walk. The numbers don’t lie. It was always easy for retailers to write off Mr. Mitchell’s concept of hugging the employee to “well, at his company’s margins, he can afford to!” But that just isn’t true…and if it was once, it sure isn’t anymore.

To my delight, last week’s Business Of Fashion (paywall) decided to turn its attention to this very topic , in a piece titled “The Retail Workforce of the Future.” Of course, as a fashion-oriented publication, the focus was on luxury fashion retailing. The article pointed out several things:

  • Even in the world of luxury retail, associates are often underpaid
  • The number of salesperson and cashier jobs is expected to fall by almost 4% between 2018 and 2028
  • The pandemic drove layoffs of nearly 1 million clothing store workers in the US in 2020

Despite all of this, the article clearly said, “The retail workforce is almost more important than in pre-pandemic days.” And there’s your accelerant at work. Across all segments of fashion retail, filling on-line orders has become more important. Facetime and Zoom is a critical selling tool at the high end, with the article claiming one associate was able to sell $30,000 in a virtual private appointment! Another portent of the future.

This begs the question: how will luxury retailers find, train and retain the kind of associate that’s tech savvy enough to do a virtual sell, able to know her customers’ tastes and sizes, and be willing and able to do the picking and packing of that merchandise (along with processing returns) with a smile?

The answer isn’t much different than it was before the pandemic…but the urgency has been raised by several notches: find the right talent with a mix of left- and right-brained skills and pay them what they’re worth. Establish career paths for them. Praise is great, but it really doesn’t supplant money in their pocket and a modicum of security for their futures.

I confess, I thought luxury retail was dead. It may just be having the pre-death surge I’ve heard about on medical TV dramas, but there does seem to be a serious pent-up demand for now.

So, at the end of the day, the luxury in-store workforce isn’t much different than all the other in-store workforces. If you want them, you’re going to have to woo them. And pay them. And train them.

How will luxury retailers make this new business model work? Likely they will continue to cut back on the workforce, perhaps raise commissions and keep base pay low. That way, the workforce eats what it kills. But, there really must be spiffs if they’re packing and shipping product that they were not involved in selling at all.

You know, when I was a practitioner, I was never fond of “employee of the month” awards. I’m still not. In my not-so-humble opinion, it serves no valuable purpose. Hire, train, pay, retain and career-path those people you believe will help the in-store experience. As with technology, if it’s not working, fail fast. If it’s working, use it! People are an important asset. Everywhere.

And, as a total aside, please pray for the people of India. Losing 350,000 people in one day to the pandemic is tragic by any measure. As an aside, India was, I believe, the last place smallpox remained extant. It was almost gone when I lived there a long time ago, even though I met many people who clearly had smallpox scars. Then, a couple of years later, it was over. Let’s hope we can see the same results there now. This has to end.

Newsletter Articles April 27, 2021
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