The Deadly Sins Of Retailers. - Why are some brick and mortar retailers failing?

INTRODUCTION:

Brick and Mortar stores are struggling. The pandemic changed the landscape of retail stores. There is no point in arguing how the government paid people more to stay home than to go to work. That ship has already sailed. The retail industry must now deal with the results. Why don't we take a look at this further?

THE STRUGGLE:

Even before the pandemic, retailers have struggled to stay ahead of the online retail market. Staying home and having things delivered directly to your home for free within a few days is a great convenience compared to going out to a store. Especially in inclement weather, you don't have to contend with traffic and parking. Especially if you do not need it immediately; however, that is only one part of the puzzle. Some still like to go out and shop in brick-and-mortar stores or malls and receive personalized service. It's a way of getting out of the house. We will be discussing more on personalized later in this post.

However, some items are easier to buy in a store, and some people like to see the item upfront before they purchase it. Everyone has different shopping preferences. Take me for an example. I am tall, and not all clothes fit correctly, depending on the brand. Therefore, I will go to a clothing store for suits and other items. However, I have two websites where their clothes fit perfectly, and I buy from them. In addition, many people are against self-checkout. Self-checkout is a way for stores to cut costs by needing fewer staff.

We all have experienced long lines waiting to eat at a restaurant after the pandemic restrictions were lifted because restaurants could not hire help. No one wanted to work. Why would they when they can make more sitting at home? Due to this and other reasons, many stores could not recover or survive in those areas where lockdowns occurred and were forced to close permanently. Some large chain stores converted to online sales only because they could not compete due to a lack of staffing and high operating expenses.

Inflation is also a factor. As the costs of moving goods rise, that increase is passed along to the consumer. Yes, it is a rat race and a difficult scale to balance for many businesses. I owned a retail store for 17 years. I opened it during one of the most challenging times for businesses to survive. Within the first three years, I thought I would never make it and thought of closing a few times until I learned the secret, which I will discuss shortly. The struggle for these stores is real.

However, some degree of this struggle is due to their own doing by their operating choices. We live in a different world now. With the popularity of the internet and the information available to us, people can find a do-it-yourself video on just about anything. People can research and learn about products. It hasn't been that long since these tools were unavailable, and people needed to rely on the advice of salespeople. Also, many years ago, salespeople were more knowledgeable about the products sold where they worked than they are today. How many of you remember doing your own tune-ups, oil changes, or brakes on your car? There was enough room to work when you lifted the hood over your engine. Now, you lift the hood, and there is barely room for a mouse to fit in the engine compartment.

The cost of many things has risen. People are starting to do more repairs or projects themselves. Why not? As I said, there is a do-it-yourself video for almost anything. Therefore, since people can research these things, consumers are far more educated than they were decades ago. Often, a customer enters a store and knows more about what they seek than the salesperson selling the products. Yes, we will be discussing that.

MISTAKES:

What mistakes are retailers making that are causing them to fail? Although this concept does not apply to every retailer, every business must tailor their business practices towards what they do; for example, a food store doesn't have to worry about the same things a specialty store, such as an auto parts store, has to worry about. Some retailers do not require skilled labor—meaning employees who know about the products they sell or have experience in that area. For others, that is critical to the success of their business.

In some industries, people can be hired and trained to do their work. However, in other areas, a retailer needs to hire experienced staff. For example, my business was a two-radio commercial radio business with a retail storefront component. I had to hire people who were state-licensed installers and federally licensed-repair technicians. The on-the-job training was only limited to the types of products I sold. They can learn; however, they must acquire the basic knowledge already.

My primary mistake was having a higher turnover of people because of the wages I was paying. Of course, my business model was the same as many other retailers, having the lowest overhead and the highest profit margins. That was a disaster in the making. People were coming into my place of business who knew more about the products I sold than those selling them—an actual recipe for failure. And I came close to that. My father told me, "You need to pay your people a rate where you can hire knowledgeable people. Stop trying to make so much on an individual sale and make your money on volume." When a customer lacks confidence in the people in a retail store, there is no winning. Only losing a customer and word of mouth can destroy a business. Now, there are online reviews for companies to contend with. It's a new world.

My father's advice was the best business advice I could receive. I regrouped, lowered by margins, hired people at a comparable rate to others in the same field, and it worked. My sales volume increased dramatically, and my profits began to soar. Of course, this did not happen overnight. It took time, but I had a successful business with an excellent reputation. My staff did not leave to work elsewhere, my turnover rate of employees was negligible, and the experience and knowledge of my team increased. We now knew more than the customers coming into our store.

Knowledge and experience don't come cheap. No retailer in a specialized field can afford or expect to hire skilled and knowledgeable people and pay them the same or less than an employee can make flipping burgers in a fast food chain unless you want a staff full of "greeters" at the front door. No customer will trust any business specializing in products where the people working there have little to no knowledge about what they are selling. That is not opinion; that is a fact. Think about your shopping experiences, and you can answer that for yourself. In business, you must spend money to make money. The trick is spending it wisely.

Admittedly, no person will know everything about every product, and no one expects that. However, a customer expects they can at least find the correct answer.

CAUSE AND EFFECT:

We must remember there are other determining factors as well. The cost of operations is a big one. However, the fight to keep high-profit margins will be in vain if you pay crappy wages. YOU WILL FAIL. Crime is another factor. Can any business survive when anyone can walk into a store and walk out with whatever they want, and the store can do nothing about it? We hear about this every day in the news. This causes people to be afraid to go shopping in a store. This further promotes online ordering and sales.

However, the most significant cause is difficulty in hiring workers. Some people are afraid to switch jobs. When we look at some of the major stores that have been around for decades that have closed, people are scared to change jobs, and in many cases, the money is equal or less. In addition, with so many more people acquiring degrees, those job salaries have decreased simply because there is an ample amount of people in the job market now with college degrees. Also, people have become accustomed to working from home and do not want to return to an office. Many companies have closed their offices and support people working from home. Then, we have the case of outsourcing. Hiring call centers from other countries because the wage scales are much cheaper. However, the customer service end of it is, at best, subpar.

For brick-and-mortar stores, this is a snowballing effect. One that will not get better until wages get better. Larger chain stores will continue to cut back by closing more locations due to crime and lack of foot traffic. The smaller mom-and-pop shops will continue to close. The small shops can not keep up with all the taxes and insurance they must pay. More skilled labor is being hired as subcontractors so business owners do not have to pay taxes, insurance, and other requirements such as benefits. Many stores that hire have switched to more part-time employees compared to full-time employees to save on benefits.

Companies want more for less. They hire fewer staff and less knowledgeable staff. This results in poor customer service. Here is an excellent article to read by VOX.

IN CLOSING:

This is a post that many retailers should take notice of. These problems can be fixed, and maybe we can get more people shopping in stores again—a favorite old pastime for many. There will always be things we need to go to a store for. How many stores will be there, and how far do we need to travel to get there? We see shopping plazas opening all around us. They are filled with restaurants, fast food establishments, ice cream shops, specialty and home goods stores, and home improvement stores. People will always go there. The big chains are not moving in anymore.

There is an old saying when it comes to skilled labor and experience."You can get it good, and you can get it cheap, but you can't get it good and cheap."

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