Retail apocalypse: Downsizing is a vicious circle

E-commerce takes a larger and larger share of the market shares. They're open 24 hours a day, tempting with low prices and fast deliveries, and they're good at tracking their customers throughout the customer journey. How can the physical stores compete with them?

Between 2014 and 2018, e-commerce increased by 200% and had annual sales of 26 trillion, while the physical retail trade only grew by 12%. Although physical stores are still the largest and have a turnover of 211 trillion, it still shows that they have a huge potential for growth.


Downsizing is a vicious circle

What advantages, if any, do the physical stores have then? A huge one! They're so lucky they actually get to meet their customers. A customer who wants to see and feel the products, and who'll be greeted by someone who can share their experiences. This great advantage is so obvious that it's unfortunately all too often forgotten.

In addition to a better working environment, enough employees at work increase sales and customer satisfaction. We know that in the long run, you benefit at aiming for recurring customers. It can be tempting to cut staffing, as it's an easy and quick saving. But too few employees will result in lost sales, resulting in lost customers, resulting in lost reputation. Downsizing also leads to lost competence, and will reduce the motivation and commitment of your employees. Downsizing is a vicious circle where one will seriously be able to save themselves bankrupt.

It's often the overlapping shifts that are cut first. Here, a lot of competence is lost in that the employees don't receive information and knowledge from each other. The management may hope that the employees will contribute to maintaining the transfer of competence by using their own free time, but this rather creates a culture in that the employees have to extend beyond their own work tasks.


Good employees

A tired and overworked employee is not a good employee. It also means that the period people want to be employed is shorter, and the commitment decreases. It spreads on to customers in the form of lost sales.

New hires cost a lot in both time and money. On average, a new employee costs around NOK 300,000 in addition to salary. That's because it takes time to build up competence, but also because the boss's own time, that they could have spent on sales, must be spent on training.

Streamlining as a consequence of few employees is often synonymous with the fact that more is expected for less. This can have the opposite effect of desirable. It's not just about customers wanting to enter the stores and that they'll find what they're looking for, but also the employees' pride and motivation at work.


Customers come to visit

Physical retail neglects the obvious, and forgets that the only advantage they have over e-commerce, is that they're so lucky that they get their customers to visit. They need to start using this to their advantage, and they need to evolve to take back the market share e-commerce is lurking for.

It can't be ignored that customers expect good customer service, that they can touch and feel the products, and that they get the help they need. There's no reason why customers should rather shop at home from their own sofa. Customers are your guests who must be welcomed in!


Aimy's solution

At Aimy, we want to challenge the established store chains to spend more money on staffing to earn more, rather than cut staffing, and thus save themselves to bankruptcy. It's not certain that you need to spend more money either, but to spend it at the right times based on the expected customer base. We know that satisfied employees do a better job that provides good conversion and customer satisfaction, and that the stores lose much more by having one too few at work rather than one too many. To save on staffing is to save yourself broke, and we want to change this mindset. With Aimy you'll be able to see immediate results.

In our analyzes, we see several cases where you can easily staff over the immediate profitability, as this in the long run will create good customer relationships with repeated sales. Increased customer satisfaction is a good investment for your store!

Few employees and low commitment spread to customers, which in turn means lost sales and red numbers in the accounts. Aimy wants to change this mindset among store managers. Are you ready for a change?


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