Indian Retail Has a Lot to Cheer 

In contrast retail in India has a lot to cheer. India Brand Equity Retail accounts for over 10% of the country’s gross domestic product (GDP) and around 8% of the employment. India is the world’s fifth-largest global destination in the retail space. 

The size of the country's retail market is expected to touch USD 2 trillion by 2032, growing from USD 690 billion in 2021, according to a joint report by Anarock and Retailers Association of India (RAI). Free from fears of contagion last year’s festive season sales touched Rs.2.5 lakh crore nearly 2.5 times the previous year’s numbers. In 2022, 7 Indian cities added over 2.6 million sq ft of mall space, up 27 per cent from the preceding year, with nearly 25 million sq ft of mall space likely to ba added over the next 4 – 5 years 

The Elephant in the Room: Lost Opportunities and Sales Revenue

In their article headlined ‘Retailers Are Squandering Their Most Potent Weapons’, the article authors Marshall Fisher, Santiago Gallino, and Serguei Netessine point out:  

“As they fight for survival in the era of online shopping, brick-and-mortar retailers are cutting costs by slashing head counts and budgets for training. But that erodes their biggest edge over e-tailers: a live person customers can talk to face-to-face. 

For every dollar a retailer saves on staffing, it may be losing several dollars in revenues and gross profits if customers leave stores empty-handed because they can’t find a knowledgeable salesperson to help them” 

While this may not exactly apply to Indian large format retail, the opportunity cost of Customers and sales revenue lost due to inappropriate staffing and inadequate training could be huge

Revenue Impact of Undertrained In-Store Employees 

The article quotes a study done by Axonify, a provider of training software, which found that nearly one-third of retail store associates in US receive no formal training—the highest deficit in any of the industries surveyed. “Understaffing stores and undertraining workers was never a good idea, but it’s especially bad now, because it takes away the biggest advantage traditional stores have over e-tailers: a live person a customer can talk with face-to-face” 

Surveys done by authors Fisher, Gallino and Netessine revealed that improved staffing and adequate training, can add as much as 20% to the revenues of existing stores!

The article lays out a step-by-step approach for optimizing staffing and training. While it recommends a 3 step process that involves (i) analysing historical data, (ii) conducting experiments, and (iii) assessing the results, the actionable insights on training of in-store salespeople is of value and relevant to Indian retail. 

The training typically should include knowledge and skills covering products and processes. This means that a trained in-store sales staff would be strong on product knowledge and the selling process involved 

Here is a list of useful ideas gleaned from the results of surveys carried out by the authors shared in the article:

1. 1. Manage Staffing and training by the right numbers  – The authors point out that managers are taught to “manage by numbers.” But applying it unthinkingly to staffing and training is business school thinking gone wrong. Wonder how? Here’s the thing – For a retailer, the cost of payroll and training is clear-cut. But the positive revenue impact of having sufficient number of knowledgeable sales is much harder to pin down. So, the strategy should be to manage by the right numbers. That would mean quantifying not just the cost of training the sales staff but also the value they produce

2. 2. Typical stores likely to most benefit from better staffing and training – Stores or outlets most likely to benefit are those having: 

1. (i). greater sales potential (as indicated by average basket size and average income in their catchment area) and 
2. (ii). more intense competition (as indicated by the number of competing store in the catchment area) 

1. 3. Two critical drivers of Customer Satisfaction –
   (i) Can the Customer quickly find an associate who will provide the required assistance and 
   (ii) Is that associate knowledgeable and capable of helping? 

1. 4. Two surprising (counter intuitive) findings 

1. (i) Training improves sales in omnichannel models as well - Well trained associates help drive higher sales in Omnichannel models also by encouraging Customers 
2. (ii) Digital learning positively impacts sales – A research suvery of 8,000 sales associates done by the authors found that: 

• Online, voluntary self-guided training modules for retail associates had a positive impact on sales per associate. The model designed  to assess the effect of training found  that for every online module associates took, their sales rate increased by 1.8%.
• Average hourly sales of people who took the digital training were “a whopping 46% higher than those of people who abstained”

1. 5. Two main benefits reported by in-store salespeople receiving training

1. (i) Greater confidence in their own selling abilities and
2. (ii) General product and process understanding they could bring to selling offerings of different cateogories 

Fisher, Gallino and Netessine make a strong case that “it’s high time for retailers to … recognize that store employees are one of their best weapons in the battle for consumers’ business.” They are the mightly muscle waiting for organised retail to flex

You can read the Harvard Business Review article here