Store fulfillment is creating associate tension

By Tom Ryan, RetailWire

The following appears courtesy of RetailWire.com, an online discussion forum for the retail industry.

Using the store as a fulfillment center—both for buy online/ship from store and buy online/pick up in-store—is creating service challenges and associate pushback, according to Andrea Weiss, cofounder of O Alliance, the retail consultancy.

Weiss, who previously held executive posts for The Limited, Guess and Ann Taylor, recently spoke at a Manhattan press briefing as part of the release of "Retail Transformation Underway: Achieving Customer-Centric Commerce," a new report O Alliance developed in partnership with Revmetrix focusing on omnichannel challenges.

Part of the challenge involves how to fairly incentivize in-store staff to support online sales with the goal of satisfying customer's expectations to "buy anywhere, pick up anywhere."

Weiss said many retailers continue to debate compensation structures for associates who lose productive hours or commissions doing online fulfillment in stores.

In the case of ship from store, store associates often send out poorly wrapped or poorly packaged items, either because they have not been properly trained or do not see their primary work duty as being a warehouse associate. In some cases, associates will hold back "best sellers" rather than fulfill online orders to ensure the items are available for their clients, Weiss has heard.

"Commission-based associates are the most likely to engage in this behavior, as they often feel that they no longer have the opportunity to sell 'the best inventory,'" said Weiss.

The best scenario, believes Weiss, is to allocate payroll for staff specifically hired, trained, compensated and reviewed for shipping standards versus sales associate standards. She said, "This allows for higher degrees of control, quality of execution and accountability."

If a retailer decides a store can't afford dedicated fulfillment staff, management could offer a pick-and-pack incentive to ensure compliance and reduce negative behaviors.

"Full commission may not be warranted, but unless dedicated hourly staff role is created to handle store-level fulfillment, some form of pick and pack incentive must be created to align associate behaviors with the new omnichannel expectation created by store fulfillment," said Weiss.

Discussion Questions: Should or can stores afford in-store staff dedicated to support omnichannel fulfillment? What level of pick-and-pack incentive would encourage in-store staffs to adequately support omnichannel fulfillment?

Comments from the RetailWire BrainTrust:

Consumers want omnichannel. Retail employee compensation is not structured for omnichannel. There's a basic conflict. If retailers want to implement an omnichannel policy, they need to examine employee compensation and align it to fit consumer expectations or they are going to hire and have two classes of employees in stores. When these types of conflicts happen, consumers usually win, so retailers better start looking at how they will successfully meet consumer expectations.
-Max Goldberg, President, Max Goldberg & Associates

I have an acquaintance who sells shoes in a local department store, and who found herself spending time during the holiday season fulfilling BOPIS orders instead of serving customers in her own department. The company paid her time-and-a-half but the extra income didn't offset her lost commission on her shoe sales. The program didn't help the store's reputation for customer service nor associate morale.

Retailers (as in this example) need to figure out the true costs of omnichannel initiatives like BOPIS or ship-from-store in an environment where brick-and-mortar sales are flat or worse. They are compounding the sales problem by stealing store payroll to execute tasks unrelated to serving the customer or restocking the selling floor. Companies may push back by saying, "We can't afford to add payroll," but growing evidence suggests that they can't afford not to, either.
-Dick Seesel, Principal, Retailing In Focus LLC

It really has to be a hybrid in that if an employee is walking the floor pulling goods, customers are going to ask them questions. And they'd better answer those questions or risk losing the customers. There really is no wiser choice.

The only way dedicated staff works IMO is if you make your back room bigger and create a mini-warehouse there—one that makes it easier to pull goods and get them out to the BOPIS customers. THAT is the way of new store design, where the back of the house expands and the front of house does two things; 1) gets better/more experiential and 2) gets smaller.

For existing stores, however, hybrid staff is the way ... until BOPIS goes over 30 percent, that is. And if the employees are complaining about that, you've got the wrong employees.
-Lee Peterson, EVP Brand, Strategy & Design, WD Partners

First, let us agree that when this madness called BOPIS and BOSS started, it sounded like a very accommodating idea, which it is, but few if anyone paid attention to its unintended consequences. We have three dynamics at work here.

First, in an omnichannel world, compensation and bonuses have to be directly related—at least in a significant part—to the performance of the entire enterprise, because it is now the entire enterprise acting as one entity to satisfy the consumer and everyone has a part to play.

Second, when retailers take on the responsibility to ship from the store, or have product waiting in-store, someone has to pay for the work. If retailers want the store associates to be serving the customer and selling, they can't be fetching, wrapping and shipping. This calls for an (unintended) added function and payroll expense.

Last, like with every other function, and especially those that are customer facing, it is imperative to train the personnel who are charged with the function. Ironically, while on one hand we have been trying through in-store systems to alleviate the administrative tasks of store managers so that they could spend more time on the selling floor, we unwittingly created a situation which, in fact, takes associates off the selling floor to support the new paradigm.
-Bob Amster, Principal, Retail Technology Group

For brick-and-mortar retailers who are facing a transformation to fulfill orders made online, it's time to adjust. It is impractical to expect floor salespeople to now assume this new responsibility ... however, retailers must also be careful that personnel hired to perform this "new" role do not diminish the in-store experience. A delicate balance to say the least.

For those retailers that embrace this transformation and put the right people in the right places, rewards will follow. For those that fail to adjust, the consumers will find another way to purchase these products and never return to the retailer.

The decision has been made by consumers and the choice is clear for retailers—support omnichannel fulfillment properly and positively! There is no time to wait and see.
-Dave Wendland, Vice President, Hamacher Resource Group

Many retailers are not taking cross-channel fulfillment seriously, and that is a huge risk. According to our research, most retailers understand that consumers want flexible fulfillment options and they are trying to support these options as best they can. However, for those retailers that say they offer cross-channel fulfillment options, most indicate that they are not working well.

Over-promising and under-delivering on these complex orders will alienate customers and risk losing their future business. Of the retailers we have surveyed and in discussions with our clients, most are not doing anything to compensate or encourage store associates to adequately fulfill omnichannel orders.

I strongly believe that retailers are going to have to either have dedicated staff to support fulfillment (for high volume stores) or provide associates incentives/bonuses or commissions on the orders. Best practice is to treat these sales as if they came from the store location. Many of the systems on the market today employ a model that allows the stores to claim the sale and drive it based on the on-hand quantity. In a real-time retail environment the inventory is typically up to date, but in a store and forward polling environment some algorithm is typically used to issue the store level offer (based on QTY as of last night and location).

Most employees, especially commissioned employees, are motivated by one thing—money!
-Ken Morris, Principal, Boston Retail Partners

Read the entire RetailWire discussion...

Suggested Articles

Costco changes up its menu items, and Alibaba and Guess partner for a physical store.

Janey Whiteside, Walmart's new chief customer officer, is well acquainted with the importance of customer service in modern retail.

Whole Foods will offer deals on Amazon's Prime Day, and tariffs against China are causing pricing hikes.