Are People Really Your Most Important Asset?: A View from the Retail Industry
By Thomas McElroy, Principal, Deloitte Consulting LLP
The retail industry is going through one of its most challenging periods in the last half century. An economic crisis, declining consumer confidence, rising prices for groceries and gasoline and a credit crunch have all combined to create a perfect storm. And because retailers employ more U.S. workers than any other industry, managing workforce costs while retaining talent is more critical than ever if they are to make it through these difficult times. So how can retailers weather the storm while still retaining their top talent? Effective talent management practices can help enable high-performing retailers to delight their customers, achieve their growth potential and drive bottom-line results, even in this economic downturn.
Retailers will tell you the environment for managing talent has never been more complex. Competitive pressures require them to differentiate themselves through the people in their organization. Meanwhile, economic pressures have forced them to deliver an ever-increasing return on their investment in people. In simple terms, this means that if retailers want to remain competitive, they must put a greater emphasis on managing talent.
Forward-thinking retailers are capitalizing on three simple strategies to manage through this period of economic uncertainty:
Focus cost reduction on low value activities while continuing to push a customer-focused agenda. Consumers have less to spend than in the past and their hesitance – or inability – to rely on credit has created a huge crunch in the retail market. While most retailers are examining their cost structure and looking for ways to take out SG&A, the smarter ones recognize that they must focus these efforts on process inefficiency and inventory cost reduction, not on taking out customer-focused labor hours.
Recognize the importance of employee engagement. Research and experience have shown a direct link between employee engagement and customer satisfaction, which translates into higher sales. Successful retailers consistently work to promote a culture that keeps employees engaged and inspires customers to buy from them.
Build analytic capability. Investments that retailers have made (and are making) in technology have given them access to new information that can drive more effective decision-making. Building the analytical capabilities to leverage this information is a top agenda item for retailers who are seeking to capitalize on every competitive advantage. Superior analytics can help you outmaneuver the competition and generate benefits that flow directly to the bottom line.
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Thomas McElroy is a principal with the retail practice of Deloitte Consulting LLP.
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