By
Bob Phibbs
Updated May 29, 2024
Are you losing profit margins lately?
Much attention is being paid to online retail growth, which increased during the pandemic.
But what if that growth didn't stem entirely from consumer demand but from employees teaching shoppers how to game the system?
Last year, my buddy Matt, who liked Pottery Barn furniture, was renovating a second bedroom. He went to the store to buy all of the furniture for it, and when he approached a helpful retail sales worker, she taught him how to game the system.
She told Matt to go to the Pottery Barn site, add a few items to his cart, and wait. “A coupon for 20 percent off will arrive. But don’t do anything with it. Wait for the right offer.”
He was to add more products, close out his computer, and wait. Two days later, an email arrived offering 25 percent off. He remembered not to do anything but wait. A week later, he received a 30 percent off plus free shipping coupon.
The brand lost margin.
The employee lost a sale...
Then, Williams-Sonoma reported closing up to 25% of their stores.
The CEO said their focus is still physical retail, but they are aligning more resources online.
One has to wonder if they are looking at how one is depleting the other.
Another friend, Sheila, was looking to purchase a $1500 chandelier from another brick-and-mortar store when another young salesperson told her something similar. She was advised to put the fixture in her online cart and close it out.
She was told to keep checking to see if the price went down until she received a coupon. She purchased the chandelier last month for half off the original price – again with free shipping.
Why would retail employees give away the profit by doing something like that?
Because they are frugal and are drawn to savvy ways to save money.
What is happening is no less than the rewiring of how people buy. But also the seeds of a new culture.
Some consumers will do whatever it takes to get a cheaper price.
So what’s the answer?
Wondering how to increase profit margins?
At its core, there has to be a fundamental education for retail employees, regardless of their age.
They need to know how to engage customers without discounts.
Their job on the sales floor is not to find ways for their shoppers to game your system; it is their job to sell the products at the in-store price.
It is their job to enjoy building a sale and seeing it to its close.
It is their job to encourage discovery in the store, not the discovery of a discount.
A foundation of how exactly to execute a branded shopping experience must be taught over time with practice and role-play.
Beyond that, managers must inspect what they expect and know what their employees say to shoppers.
And those marketing managers who have created those online incentives that take people from your store to your site need to stop patting themselves on the back for how smart they are.
Your Retail Sales Strategy needs to understand that those offers are not only reducing your profit margin but also teaching your current brick-and-mortar shoppers to bypass your store and game the system on your website.
In Sum
Young people can quickly determine most systems' ins and outs and workarounds. Let me be clear: This is not about any one generation. It's about human nature.
If left rogue, that knowledge will be a fatal hit to your margins as a retailer.
You have to train each sales associate to believe that actual customer engagement will create an in-store purchasing environment shoppers will want to return to again and again.
Without detailed training, they will continue to send your shoppers online - and maybe even to a competitor with a better deal.
You have a choice.
Do you want to motivate your retail employees to make in-store sales, or are you content to let them cheat you out of the margins you deserve?
Can I solve this problem for you? Yes, here's how. Let's get started.
