May 14, 2016

Guest Blog: Where Have All The Great Retail Store Managers Gone?

Do you know what percentage of your store managers are high performers vs. average performers? Well, it makes all the difference. In this blog, our partner in online training, Bill Rooney, Director of 6one5 Consulting, tells us the shocking differences in profits for retailers that result from high performing store managers, and ways to ensure that you are hiring top quality talent.


Where Have all the Great Retail Store Managers Gone? 

I recently received a call from a retail executive of a fast expanding global fashion retailer and the conversation went like this:

“We are looking to source top performing retail store managers and assistant store managers to support our growth strategy and we can’t find them. We are running out of options. Can you help?” The executive then half jokingly said that sourcing high performing store managers was like trying to find a unicorn… they don’t exist. “If I find one, I am going to study them and see if we can clone them.” In this half-joke lies part of the solution to sourcing high performing managers, a problem that is becoming chronic across the retail industry.

A maximum of 25% of the retail store management population are high performers. Our experience suggests that the number can be as low as 15% in retailers where there is high store manager turnover or in retailers who de-power the responsibility of their store management – the “give me robots” style of head office management. If you de-power the store management role, talented store managers won’t stick around as they are not challenged and motivated.

These figures may come as a surprise and you likely have some questions for me. Here are common Q&A:

How accurate is this figure of 25% maximum of retail store management being high performers?
Very accurate. We use a global assessment tool called “ProfileXT” used by retailers like Walmart, Goodyear, Kmart, Vodafone and many others toidentify high performing managers in their organizations. Literally millions of managers have been assessed and measured against these benchmarks within their own corporations.

What is the difference in performance between a High Performing Store Manager and an Average Store Manager
You can expect an increase in sales of around20% for a store if you replace an average store manager with a high performing manager, accordstore managering to a retail executive with many years of experience across multiple retail categories.

Global research by gallup corporation proved that managers who have high levels of employee and customer engagement outperform those who have low levels of engagement by 3.4 times across financial metrics. High performing store managers score highly in both areas of engagement. Another executive from a 250 store group took the time and effort to measure the cost of replacing above-average store managers. It was $50,000 over 3 months in lost sales and replacement costs.

Implications for Retailers Looking to Boost their Store Management Talent Pool

1. Recruitment
If only 25% of store managers are high performers, then only 25% of store managers recruited will be high performers. If your recruitment processes involves “traditional” methods of selection by interview, resume and reference check, then this number will be lower due to the low success rate of these traditional methods (between 14% for interviews and 26% using reference checking).

2. Learning and Development
The only way to improve the capability and performance of your average and below-average store managers is to develop them.

The 4 drivers of performance are knowledge, skill, tools and desire. If a store manager is underperforming it is because they have a gap in one or more of these areas. These gaps can be enterprise-wide or applicable to the individual. Traditional training methods on their own won’t close all these gaps.

Retailers have been reluctant to invest in their people and, often when they do, they deliver poor results. In my article, The Retail Talent Gap, in the last edition of Inside Retail, I set out the reasons for these poor results.

One of our partners is talking to a fashion retailer in South Africa with 20,000 odd staff and their annual spend on training and development is $12 million dollars. Compare this to a well known retailer who will remain nameless with in excess of 20,000 staff and currently doesn’t have anyone in Learning and Development. The good news is that they are currently looking for one role! Between these extremes the default position of the majority of retailers is to do nothing.

3. Execution of In-store Strategy
With low levels of highly capable store managers, any execution of transformation or strategy projects in-store take longer, are more costly and need to be kept simple to implement.

When an American convenience store group tried to implement a complex in-store strategy with their many stores which involved advanced merchandising and selling skills, the project failed. They commissioned Harvard University to conduct research on the reasons for failure. What they discovered was that in stores, where the retail teams had higher levels of acumen and capability, the initiative produced excellent results. However, overall the project was dragged down by the majority of stores that lacked strong store management teams and staff.

So What is the Solution to the Problem?

The solution is multifaceted.

1. Sourcing/Recruiting
Social media and staff referrals, including LinkedIn, are great ways to source outside candidates. Often recruiting from the existing external store management pool means you are employing other retailers’ failures, so try other industries and channels.

We have worked with a recruitment software that captures all candidates that apply for a job – both successful and unsuccessful ones. All candidates are rated and only the resumes of high performers are retained. Over time, a pool of high quality candidates is accumulated in the database that can be regularly communicated with about the retailers brand values. There is even a special loyalty program that generates a substantial profit. The key here is to capture these resumes in an easy searchable database rather than to keep advertising continually for new candidates.

2. Job Fit Profiling
To ensure you recruit and promote proven high performers, we recommend you use a Job Fit assessment to match external and internal candiates to “high performer” benchmarks. These are in excess of 75% accurate which means you increase your chances of selecting the right candidate by 300%. Over time, your talent pool will increase substantially.

3. Source Graduates
The role of store and assistant store managers have become a lot more challenging over the last decade and the roles are deserving of more sophisticated candidates – in other words, graduates.

One of the larger supermarket retailers has developed a 2-year store management program that is predominantly on-the-job and supplemented by webinars and some face-to-face training. Only university graduates can apply. At Aldi Supermarkets you have to have a degree to be a store manager and normally an MBA to be a Regional Manager.

4. Rapid Development of Internal Candidates
We are surprised by how many retailers pass over existing sales and service staff or supervisors for promotion. The typical refrain is, “there is no talent there”. Funny, because we have found quite the opposite. There is plenty of talent in most retailer staff – they just remain undiscovered due to poor talent identification systems.
Once you have identified this internal and external talent pool, you then need a way to rapidly develop them. The first mistake made here is to assume that existing managers, new hires and internal candidates have a standard base learning of retail fundamentals. Our experience is that this is not the case. Without this base learning, it is difficult to build the level of the whole store management team to achieve above-average performance.

Our Retail Store Managers Program

We have designed a retail store managers program that has been delivered to over 30,000 store managers globally. We have found that the keys to our clients’ successes have been:

  • The rapid development of managers so they can produce higher store profits and justify the investment in them.
  • High quality proven content delivered via modern methods (apps/eLearning) to keep costs down.
  • They need to have an understanding of all aspects of retail including finance, visual merchandise, category management and buying – not just sales and leadership and coaching skills. High performers have a “merchant mentality” and a “passion for retail” that comes from this integrated learning approach.
  • Measurement of store performance improvement
  •  Incentives tied to increases in controllable profit and commensurate to the job role
  • Training on retail fundamentals that are then applied to their own stores. 70% of the training is on the job.
  • Mentoring and coaching support
  • Increase in networking opportunities and communications between managers.
  • Fail fast. If managers exhibit the wrong attitude or behaviours they are exited from the program.

Summary

Everyone is looking for a simple answer to sourcing and recruiting new candiates. Unfortunately, this will not solve the problem and, on average, your business will underperform its potential by up to 20%.

Unfortunately no retailer is measured on not reaching this potential and certainly underperforming staff and lower productivity is not an expense line on the profit and loss.

Maybe the answer is to clone one of those “unicorn” high performing store manager… that is, if you can find one.


LHR is the Canadian partner of 6one5 Retail Consulting, which is a specialist management consultancy, instructional design, and training business that focuses on improving sales productivity for clients. Contact us for details about our online program.

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