With consumer spending under pressure in various major economies, retailers are particularly exposed right now. The tempation, as ever, will be to cut staffing. New research from Harvard Business School suggests that would be a bad idea.

Zeynep Ton, an assistant professor, studied one large retailer and found that there was a link between increased spending on staffing and increased profits. However, this wasn’t because of better customer service.

It was actually because extra payroll expenditure led to improvements in the fulfilment of some basic, behind-the-scenes tasks, such as ensuring that stock was on the sales floor and not the storeroom, returning unsold items and keeping display shelves tidy.

On a similar topic, one Wharton professor has criticised a new system for getting the most out of staff at the Ann Taylor clothing chain, saying the Darwinian software - which allocates prime shifts to the best sales people - was like “squeezing blood out of a turnip” .

October 2, 2008 2:39pm in B-schools, Hard times, Marketing/sales | Comment