With most of the of country suffering through the recession, the big supermarkets continued their relentless growth, says Dan Todaro, managing director at Gekko. He writes:
All too often in this country it feels like every time a shop closes, every time a building is demolished and with every new urban development a new Tesco Metro or Sainsbury’s Local springs up. It can be good news for locals, bringing jobs to the area as well as the convenience of having a nearby supermarket. Yet there is a downside. In the race to not fall behind their competitors, the big five supermarkets – Tesco, Sainsbury’s, Asda, Morrisons and The Co-Op – are at risk of overlooking what should be the most important facet of their business. The customer.
Research we recently put together at Gekko highlights that the average number of stores amongst the big five supermarkets has increased by 11% in the last three years, yet the average number of staff has fallen by over 9%.
Tesco, with the largest market share of the big five, had 431 more stores in 2013 than they had in 2011, yet the number of employees didn’t rise proportionately. This might be, in part, owing to more effective streamlining of the customer journey and the implementation of efficient technologies to save supermarkets time and money. Yet the overall picture is one of massive expansion with modest increases in staff numbers and there’s a real risk that customers are being abandoned between walking in the door and leaving with their purchases.
The big supermarkets are playing a dangerous game by drawing an increasingly fine line between maximising profits with persistent expansion and ensuring the consumer experience is positive.
It was recently announced that this expansion is slowing a little, with the amount of new supermarket space proposed for the UK falling to the lowest level since the financial crisis. However that’s still 15.22m square feet being proposed, with 2.47m square feet under construction.
It’s mind-boggling that in a country already filled with supermarkets, a space over forty times the size of St Paul’s Cathedral is currently being converted to this purpose. Nonetheless, the slowing growth of space gives the big grocery chains an opportunity to make sure their recruitment levels catch up with the number of stores recently opened.
If you’re looking for a certain product in a supermarket or need to know which products are included in a deal, you still need a member of staff rather than Google or an app. The human touch still plays a huge role in-store.
It isn’t just that supermarkets need to hire more staff, they also need to invest in providing them with the appropriate training to be a real selling point for the company. Great staff can make the difference between a consumer buying or not buying a product; between a consumer buying one item or five items. Most importantly, they can make the difference between whether they choose to come back to the store again and again, or go elsewhere.
The best-loved brands ensure their stores are filled with highly trained, helpful staff. And big supermarkets need to learn from this approach.
The big chains also need to recognise that consumers respond to great customer service and that often requires having sufficient staff to deal with enquiries and help with any problems. We’ve all stood around waiting for help to arrive when the self-service checkout is having an off day. It can take an age for someone to be free to come and help. It’s enough to turn consumers off.
Given the competition that exists between the big supermarkets, they can’t afford for consumers to start voting with their feet after yet another delay to buy their shopping. Major grocery chains have to ensure that they maintain standards in-store by matching their investment in expansion with a proportionate investment in staff. Otherwise they risk driving consumers elsewhere.
Indeed, one of the reasons some people prefer to shop with independent retailers is for the personal touch and knowledge of products that you can often struggle to find in many major retailers.
Tesco might have the biggest market share, but in a Which? consumer survey last year it was voted the least popular supermarket. By contrast, Waitrose – which operates with investment in staff seemingly at the centre of what they do – came top.
Given Tesco’s recent fall in profits, maybe it’s time to invest in more well-trained staff, instead of seemingly infinite store expansion. In what is arguably one of the most dynamic industries which is constantly reinventing itself to meet the needs of consumers, staff is a critical factor to success.
The big supermarkets must invest properly in staff or risk losing customers.