Retail Jobs Don't Need to Stink

Last Updated May 26, 2011 8:00 AM EDT

Jobs in retail, especially ones that interact with customers and in operations, are typically low paying, and with few if any benefits. Work hours are unpredictable and not always available. Next time you walk into a grocery store or mall shop, check out all those happy faces behind the counters.

This situation is totally ironic, given that these people, with a little investment on your part, can bring you more sales and higher profit. Oh, and much happier employees.

That's the message from Harvard Business School professor Zeynep Ton, who takes offense at how poorly many retail employees are treated. She's studied a number of companies, the latest being QuikTrip, that take a different approach. These stores invest in their employees by giving them more training, responsibility and leeway to perform their jobs.

It's paid off. QuikTrip's by-store profit in 2010 was almost double that of its top competitors. And here's the kicker. It accomplished these numbers even though it offers above-average wages, job security, and benefits including health, paid vacation and performance bonuses. Other chains following this employee-first practice include Trader Joe's, Costco and Mercadona.

But how does a low-price, volume retailer afford such extravagance with staffers? Ton is an expert in the unglamorous area of retail operations, and it is there that she finds way for stores to improve money-saving, business-generating efficiencies.

One example: standardized store design. Instead of customizing stores in each location, QuikTrip uses a standard design that allows staff to float from one location to the other as needed. The store also carries a limited product variety. These two things add up to reduced complexity, which allows staff to be more productive with fewer errors.

QuikTrip also makes extensive use of cross-training, so employees can do a variety of jobs, as needed. It hires "relief employees," a crew of floaters who do not report to a specific store but rather fill in for associates who get sick, take a vacation, or have an emergency. Employees are also involved in regular process improvement programs, where they learn from each other and create improvements that can be adopted across the chain.

"In retail chains with hundreds or thousands of stores, retailers struggle to learn from employees who see problems, talk to customers, and have great ideas for improvement," Ton tells HBS Working Knowledge. "But retailers like QuikTrip and Mercadona have created ways to institutionalize improvement. And employees greatly appreciate the fact that their voice is heard."

So if I read this virtuous circle correctly, the process improvements and operational simplicity make for more productive and engaged employees, which produces more and happier customers, which raises profits, which fund higher compensation and training for employees, who make the store even better.

"By putting customers and employees before profits, QT enjoys long-term returns that puts it ahead of the competition," Ton says.

Many of us have worked in retail at one time or another, and can probably confirm Ton's observations about the conditions in some retail segments. What do you think of this new model where operational employees are empowered rather than devoured?

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(Photo by Flickr user shodan, CC 2.0)
  • Sean Silverthorne

    Sean Silverthorne is the editor of HBS Working Knowledge, which provides a first look at the research and ideas of Harvard Business School faculty. Working Knowledge, which won a Webby award in 2007, currently records 4 million unique visitors a year. He has been with HBS since 2001.

    Silverthorne has 28 years experience in print and online journalism. Before arriving at HBS, he was a senior editor at CNET and executive editor of ZDNET News. While at At Ziff-Davis, Silverthorne also worked on the daily technology TV show The Site, and was a senior editor at PC Week Inside, which chronicled the business of the technology industry. He has held several reporting and editing roles on a variety of newspapers, and was Investor Business Daily's first journalist based in Silicon Valley.