The Retail Paradox: Save Money, Or Spend It On Customer Service?

By John Orr,  senior vice president of retail strategy and execution, Ceridian HCM.

It’s commonplace for companies to look to improve their workforce management strategies in an effort to strengthen their customer service initiatives – especially in the retail sector. Good service is the primary reason that successful merchants complete sales, and in a competitive sales environment, businesses seek to differentiate themselves from their competitors by providing superior consumer care.

However, a paradox has ham-stringed retailers in their attempt to make sound business decisions. On one hand, some retailers have been cutting labor to back into key metrics such as wage percent and overall labor costs. On the other hand, quality customer service coverage costs money, and often, retailers have cut for so long they have self- fulfilled their own death spiral prophecy: lower labor costs in store to recoup margin, lower service levels result, lost market share and less sales growth – repeat.

This concept was of recent focus in a webinar with myself and Paula Rosenblum, managing partner at Retail Systems Research.  Rosenblum explained this paradox, citing a 2013 report from RSR about workforce management, entitled “The Store Employee in the Customer Age.”

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