Future of Retail: Companies That Profit By Investing in Employees
Ideally, a capitalist economy is constantly becoming more efficient. The benefits of that newly gained efficiency, however, are not always uniformly distributed. Sometimes it goes to business owners in the form of higher prices, sometimes to consumers in the form of lower prices, and other times to labor as increased wages.
You don’t have to be an economist to know that for the past generation, workers have gotten the short end of this particular stick. Corporate profits have gone steadily up, consumers have been offered an increasingly wide selection of affordable products, but wages for most of us have stagnated.
The reasons for this trend are familiar: Globalization has flooded the world labor market with cheap workers from China, India and elsewhere. Good paying manufacturing jobs have migrated overseas, while the U.S. has been left with low-wage, low-skill service jobs like that of a sales associate in the nation’s many retail outlets. Meanwhile, an era of global corporate competition has forced companies to ruthlessly seek to cut expenses wherever they can, keeping wages and benefits in these sorts of jobs depressingly low.
But what if the logic behind viewing retail labor as an expense to be cut, rather than as an asset to be invested in, is unsound? Zeynep Ton, a Professor of Operations Management at MIT’s Sloan School of Management, argues just that. Her research has shown that by underinvesting in their employees, retailers are actually making their operations much more inefficient, and therefore much less profitable.
This is an area that Ton has been studying for ten years, and what she has consistently found is that companies that buck the status quo and invest heavily in their workforce actually are able to not only compete with their competitors on service but on price too. In a paper she published in the Harvard Business Review earlier this year, she writes:“Highly successful retail chains — such as QuickTrip convenience stores, Mercadona and Trader Joe’s supermarkets, and Costco wholesale clubs — not only invest heavily in store employees, but also have the lowest prices in their industries, solid financial performance, and better customer service than their competitors.”
Read more: http://business.time.com/2012/06/18/future-of-retail-companies-that-profit-by-investing-in-employees/#ixzz1yjlIgRwF
Very interesting piece....and worth reading in it's entirety as we all interact with those in retail frequently.
= new reply since forum marked as read
Thanks for posting Sherman A1. Yes, as Duer 157099 posted up thread stated....it just makes sense. It sure the heck does!!! And as consumers, we have a lot more power in where we spend our dollar$ than most of us probably realize!!!
The market WILL follow the demand - this is basically an indisputable fact...and if this demand is geared towards and supported and spent on companies like the 4 listed in the article - others WILL follow suit as just a natural progression...not so much as a matter of ethics etc., (most could really care less, to be honest with you - ) but because competition is so fierce that it is just basically standard practice to try and emulate the policies and procedures of the more successful competition (determined in large part where we spend our money)...and if this now all of a sudden means that companies who invest in their employees, with higher pay, fuller and better training etc will result in a larger market share...the market WILL FOLLOW this demand...or else risk loss of precious market share.
It's up to us, basically. To go out of our way and make it a point to support those companies who support their employees!
As consumers, we ARE sitting with a royal flush in our hands by proxy of where we decide to shop...it's up to us to cash this in to make a difference!
What the J. D. Power & Associates Awards are to the auto industry, what the AAA ratings are to the hotel industry, herein is a prime and timely opportunity for the retail market to develop its own *awards* of standards of excellence and we hold the key by choosing to frequent those establishments that invest in their employees and pay them well in the process.
To reiterate...it just makes sense ~
on edit: Major kudos to these 4 courageous companies: Costco, Mercadona, Quick Trip & Trader Joe's who have enough wherewithal to buck the current system and stroll, walk, dance and click their heels to the drum of their own beat! 
