The founder, former CEO, and former Chairman of the Supervisory Board of one of the most important Germany-based DIY retail chains with today more than 40,000 employees running a 6.4bn Euro operation in more than a dozen countries once told me that you need to build „big boxes“ in that business in order to stay competitive. This conversation took place several years ago and he was right. DIY markets are getting bigger and bigger and smaller „boxes“ are being closed. If you want to survive in this business – not talking about growing – you need what retailers call „big boxes.“
The point here is, that big boxes may be a necessary condition for remaining an interesting player in the market in the eyes of the customer. However, this is far away from being a sufficient condition. To grow profitably in retail – not restricted to DIY – you not only need a big box, you need a big staff. And we are talking about „big“ not only in terms of quantity, but also in terms of quality. Customers want to find an employee when they have a question. Customers don’t want to be send to a couple of different employees in order to find the „real expert“ for their problem. Customers want to be served as a valuable counterpart in a business. Customers expect service.
Since controllers dominate a lot of discussions about how to grow profitably, we don’t need to be surprised that one of the first means to grow the bottom line is to cut costs. What controllers in retail operations are not often aware of is the fact that cutting cost in purchasing will end in dissatisfied customers because of poor product quality and that cutting costs in salaries often ends in dissatisfied customers due to no – or, even worse, poor – service.
Retail C-suite: Don’t let controllers tell you how to grow profitably. Don’t just build big boxes. Build big staff. Do it like the person I mentioned at the beginning of this article and hire enthusiastic people who want to serve and who are able to serve. That’s a good step on your way to profitable growth.
(c) 2012, Prof. Dr. Guido Quelle, Mandat Consulting Group