To minimum wage or not to minimum wage, that is the question.
This week’s headline news of Aldi increasing their pay structure made me think. As a retailer,
would I want to pay the minimum wage, the living wage, London weighting, an extra 10% ...
or just blow that whole pay structure out of the water and hire the very best people for the
job, which would mean that their salary is determined by supply and demand?
There are a few examples of where that has worked extremely well – staff in Apple stores
tend to have taken a step back in seniority when joining, but have maintained their previous
salary level – Apple gives great service. And Costco are paying well over the odds with the
result of a great shopping experience, extremely helpful and friendly staff and virtually no
staff turnover.
I can hear the collective sigh from all finance directors and budget holders, thinking that they
cannot increase the payroll-to-sales ratio in stores any further, as it has invariably already
taken a hammering due to lower level in-store sales and increased online turnover.
Playing devil’s advocate, let’s assume that online turnover continues to grow at the detriment
of in-store sales (pretty likely in my opinion), this will mean that an increasing number of
stores will become unprofitable and will close (even more likely).
One option open to most retailers is to improve the in-store customer experience and fight
the bricks and mortar sales decline with extrovert staff who want to be there, who can relate
to customers and who will make the shopping experience stand out from the dreary
experience one receives in most stores.
We all know that one store where the service was excellent, where that shop assistant was
just brilliant and where you walked out with a smile on your face. And here is the problem,
why can we only remember one such store?
I think now is the time to be bold and hire the staff you want (not just those you can get), pay
over the odds, train to within an inch of their life and measure results. Just one such hero in
each store will have a huge effect on morale, if managed properly, and give the other staff
something to aim for. Raise the bar, create memorable experiences for customers and you
may find that the extra spend on wages will be outweighed by the extra sales and margin.
These are investment hires, so a return on investment is required, it is eminently
measurable, so why hesitate?
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