HBR article recap: The survival of the modern retail experience

Advocacy Marketing
Blog
Retail Insights


Jan.18.19


3 MIN READ

“An incompetent salesperson might be worse than no one at all.”

So say Marshall Fisher, Santiago Gallino, and Serguei Netessine, researchers and professors with the University of Pennsylvania’s Wharton School.

We tend to agree.

In their article appearing in the January-February 2019 issue of Harvard Business Review, the three (hereafter referred to simply as Marshall Fisher, or Fisher) outline their significant research efforts into how the modern retail experience can survive amidst a heavy ecommerce climate. Their answer?

Retail sales associates.

 

Cutting costs to stay open cuts profits

 

It’s simple. They’re the ultimate differentiator between the in-store experience and the ecommerce experience. They’re real people, with real faces you can engage with, with experience that should theoretically help you. But retailers are taking a different approach, and the researchers with the Fisher study argue that this approach doesn’t actually keep doors from closing.

Because labor costs account for such significant portions of a business’ budget, when margins must be met, hours are cut. Fisher argues that this reaction actually significantly hinders a company’s ability to sell more to the customers in-store, and to provide them a better experience. Outlined in the article is research that provides guidance for proper staffing (in other words, reallocating staffing where it’s needed, and removing it from locations that are overstaffed); their research saw significance in basket sizes across stores who understood how to appropriately optimize staffing.

 

An educated staff leads to increased sales

 

It’s not just the staffing, however, and the research outlined proves it. The other puzzle piece is the product knowledge sales associates possess. In fact, in a survey conducted by ExpertVoice last year, consumers state that having a knowledgeable retail sales associate assisting them means they’re more likely to make a purchase.

Nearly one-third of retail sales associates receive no formal training. Turnover rates are high, and it can be expensive to train — but brands and retailers need to invest in training their associates. Not only does it lead to higher sales, but it also leads to happier employees and fewer returns.

The Wharton school study spent two years following a rigorous training process with Dillard’s and ExpertVoice, and they found that for every online training content module taken, sales increased by 1.8%. In fact, associates who engaged with the content sold 46% more per hour than those who did not engage. Additionally, the employees surveyed stated they felt more confident in their own ability to recommend products to consumers by knowing more about the brand, the products, and even the category itself.

More stores are going to close in 2019, but when brands and retailers invest in the the sales associates who are having face-to-face interactions with consumers every day, they’ll see remarkable increases in sales. When able to provide educated, targeted, and personal recommendations to consumers, those consumers make full-price purchases, return less, and feel more loyal.

There’s more great data to dig into; learn more about the extensive research conducted into the value of an expert recommendation here.

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