EXPERT VIEW: Employees are crucial to the retail game

Consumers demand more expertise and knowledge from shop employees, and the quality of the advice is becoming a significant factor in the buying decision process, writes Taco de Groot, CEO of Amsterdam-listed retail REIT Vastned, in this column.

The retail world has been transformed in the past decade. Changing consumer behaviour and knowledge, sparked by new technology, means that retail stores must stand out from their competitors. Employees will play a vital role in this mission, because they will often be at the forefront of this change. However, most retailers have not fundamentally re-evaluated their approach, and this constitutes a missed opportunity.

Across Europe the retail sector has been hit hard in the past five years, resulting in an ever-growing number of empty shops. According to recent research from JLL, this year’s retail sales are forecast to see only moderate growth of 0.7% in the eurozone, not the uplift necessary to drive up revenues dramatically. The UK-based Centre for Retail Research gave a clear warning last year. It predicted that the total number of occupied shops in the UK will fall by a staggering 22% by 2018, while the share of online sales is set to grow to 21.5% from 12.7% in 2012.

These are frightening numbers for traditional retailers, which have often opted for solutions like expanding the number of shops, entering new markets and even more price reductions. It is, however, highly unlikely that these measures will be profitable in the long run. Opening
more shops will not necessarily lead to rising profit; new markets within Europe are often subject to the same difficult conditions; and playing the price card could easily erode brand attraction.

There are, however, other options for retailers to improve their business. Two major changes will help to attract consumers to the stores: rethink the shop formula and invest in employees. It is very fashionable to focus on the importance of customer experience in shops and this is indeed having a strong influence on consumer behaviour. Nevertheless, creating an enjoyable experience is based on a successful retail formula and the quality of the employees.

A NEW TYPE OF SALESPERSON
I believe that employees are crucial for the future of retail stores. Consumers demand more expertise and knowledge from shop employees, and the quality of the advice is becoming a significant factor in the buying decision process. No longer will we rely on salespeople who, when asked for advice, simply read out the details that are already displayed next to the product. We can all relate to the example of a salesman who just reads out the text on the packaging – which we can read ourselves – instead of giving the customer in-depth information and asking relevant questions.

The era of this kind of salesperson is over. Retail employees must become advisers who educate consumers and whose knowledge clearly differentiates their shop from those of their competitors. Good examples of this approach are Spanish cosmetics company Etnia and Dutch health store chain De Tuinen, which are investing heavily in training their in-store employees. These companies focus on increasing the knowledge of products and client focus amongst employees, with the aim of improving the overall quality of advice and assistance.

The battle for customers in the store retail space over the coming years will be fought and won through and by employees. Retailers will have to invest in the education of their employees to attract potential customers. Successful retailers will be the ones which develop their employees into advisers with both the skills to provide great customer service andthe deep knowledge necessary to advise shoppers effectively.

Building compelling and attractive customer propositions will be pivotal for retailers in the coming years if they want to survive, let alone increase their profits. Etnia and De Tuinen are great examples, but moreretailers are coming to the same conclusion. This is the way forward for retail shops in their bid to attract more customers and convert their visits into actual sales. Physical stores are increasingly becoming a marketing tool for retail brands and this positive effect could be eroded by the behaviour of employees on the sales floor. If retailers want to be successful the path they should take is clear: embrace their employees!