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Customer Service Is King

BY Katherine Boccaccio

Customer service is getting its due, as more and more retailers are betting on enhanced experience and improved productivity to drive top-line sales. According to a recent benchmark survey, “The State of Retail Workforce Management,” conducted by Retail Systems Research (RSR) and sponsored by workforce-management-solution provider Kronos, Chelmsford, Mass., retailers have realized that today’s customers demand quality, convenience and personalized service over price.

Seventy-eight percent of the 160 global retail responders said that quality and consistency of customer service, and driving store sales, are the top business issues they are looking to improve through work-force-management technology.

John Anderson, global practice leader of retail at Kronos, said that this new survey may well signal the end of the low-price model in retail. “Retailers have traditionally competed somewhat on product selection and mostly on price, using deep-discounting strategies to increase store traffic,” Anderson said. Yet, he continued, mounting competition from other retailers as well as e-commerce channels are forcing retailers to abandon strategies that focus exclusively on product selection and price and, instead, focus on customer service and the in-store experience.

“The customer experience in a retail environment is highly dependent on the quality of the retailer’s work force, and the way that work force is managed,” said Anderson. While, in previous years, retailers sought ways to remove labor costs from the business, today’s merchants are emphasizing putting labor back into stores—by either maximizing the effectiveness of labor or adding employees.

Survey results showed that 66% of respondents offer “high touch” customer service, and 78% said their work force has become more important as a customer-service strategy over the last three years. Just 2% admitted that their work force has become less important.

“The work force has long been thought of as the retailer’s largest controllable expense,” said Anderson, “and it is now being regarded as the retailer’s most strategic asset. The work force is the primary interface between the retailer and the marketplace, and the work force enables the retailer to deliver on its brand promise.”

Survey respondents avowed high standards for managing their work forces—61% said they saw effective workforce management as key to driving customer satisfaction; 55% said workforce management provided the opportunity to increase sales; 44% felt it would improve employee productivity; and 37% saw workforce management as a way to reduce labor costs.

The research, however, found no clear pattern when analyzing the anticipated value from improving work-force quality. Forty-three percent of respondents felt that work-force quality improvements would result in increased opportunities for personal development and training; 42% said it would lead to more effective planning of work-force needs; and 36% believed improving work-force quality would result in better monitoring of employee progress, development and performance.

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Lampert, the Eli Manning of retail?

BY CSA STAFF

HOFFMAN ESTATES, Ill. The New York Giants triumph over the highly favored New England Patriots in the Super Bowl earlier this month, has become an example of coming from the bottom to win it all. Sears Holdings chairman Edward Lampert is one of the latest to use the Giants win, even going as far to compare himself, and the leaders of his company, to quarterback Eli Manning.

The Giants analogy, and Eli Manning comparison, is applied mainly to the company’s Kmart division. In a letter to investors, posted on the Sears Holdings investor relations Web site, Lampert said during Kmart’s bankruptcy in 2002, the unit was “like an undrafted free agent who nobody thought had a chance to play in the big leagues.” Lampert went on to say, “Like Eli Manning, we know what it’s like to be underestimated and questioned, but we intend to keep working on our game to achieve our full potential.”

Sears Holdings reported net income of $426 million, or $3.17 per diluted share, for the fourth quarter ended Feb. 2, compared with net income of $811 million, or $5.27 per diluted share, for the fourth quarter ended Feb. 3, 2007. For the fiscal year ended Feb. 2, 2008, net income was $826 million, or $5.70 per diluted share compared with net income of $1.5 billion, or $9.58 per diluted share, for the fiscal year ended Feb. 3, 2007.

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Circuit City investor seeks to replace board

BY CSA STAFF

RICHMOND, Va. Circuit City Stores today acknowledged that it has received two proposals from shareholder Wattles Capital Management regarding its board of directors. Wattles holds approximately 6.5% of the outstanding shares of the company’s common stock.

Circuit City reported that Wattles proposed the idea of replacing the company’s Circuit City 12-member board of directors with its own nominees. Circuit City said its board of directors will review carefully the shareholder’s proposals and the qualifications of the nominees in accordance with its fiduciary duties, mindful that the proposal would give the shareholder absolute control of the entire board, which would be disproportionate to its relative ownership of the company’s shares.

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