INDUSTRY BUZZ: Retailers Try On New Sales Tactics - WSJ

An article in the Wall Street Journal's Management section this week says that companies are investing in training and adding financial incentives as motivation to get their store staff selling again. The article cites U.S. department store J.C. Penney as an example, noting that the company has given workers bonuses to promote better customer service, as the subsequent sales that come with the improved service. This is a move that is being seen across a broad range of retailers as consumers slowly return to their pre-recession spending. The WSJ asks this question, and ihr will do the same - In your opinion, what should managers be doing to encourage their sales staff to work harder?

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Retailers Try On New Sales Tactics
Penney, Macy's, Home Depot Push Top-Line Growth as Shoppers Slowly Return

By RACHEL DODES And DANA MATTIOLI

In a bid to boost sales as consumers cautiously reopen their wallets, some retailers are putting more emphasis on top-line growth in employees' incentive pay and training programs.

J.C. Penney & Co. plans a three-day conference in June to bolster store managers' sales skills, and in February gave workers bonuses to boost service and sales. Macy's Inc. is tying a greater portion of top executives' bonuses to sales growth. Home Depot Inc. this month is starting to train cashiers, not just floor staff, new sales techniques.


The moves reflect a broader shift. After two years of cutting costs and boosting efficiency to shore up profits, CEOs are trying to shift into growth mode. Improving sales is a particular challenge for retailers, which are on the front lines of recovering from a consumer-led recession.

Craig Rowley, senior vice president of consultancy Hay Group's retail consulting business, says about 20% more clients have requested his advice on sales training in the past six months, and that such training is increasingly for customer service—a big driver of sales—rather than tasks like restocking.

In March, many retailers reported strong sales at stores open at least a year, partly thanks to an early Easter and weak year-ago results, but they still face a steep climb back to pre-recession levels.

Until February, when Penney eked out a 1.2% gain, its monthly same-store sales had declined for more than two years. Now "our focus is driving top-line growth," Myron E. Ullman III, Penney's chief executive officer, said in a Feb. 19 conference call.

Penney will push that theme at a store-manager summit in June. Topics for the summits, held every two years, vary; past years have focused on themes including store associates' "engagement," or bond with their jobs. This year, the 1,100 managers gathered in Plano, Texas, will zero in on sales.

At the three-day meeting, groups of 80 to 100 managers will rotate through about a dozen one-hour sessions on "selling skills" for each of Penney's product categories, such as fine jewelry, furniture, clothing and intimates, says Mike Theilmann, Penney's executive vice president of human resources and administration. Store managers will develop an "action plan" for growing each product category at their store, he says.

To start the effort during the critical holiday shopping season, the company decided to make its 125,000 hourly associates eligible for bonuses aimed at boosting sales by improving their stores' customer service scores, the first time it had done so over the holidays.

"We really want to drive the top line, and we think the best way you can do that is by increasing customer service," said Mr. Theilmann.

In February, associates who met or exceeded targets earned an average of $300 each. For the quarter ended Jan. 30, Penney's same-store sales declined 4.5%, but by less than the year-earlier period, when they fell 10.8%. Penney may repeat the initiative this year.

At Macy's, the board increased the sales component of CEO Terry J. Lundgren's bonus, from 20% to 33% of the total payout for the year ending Jan. 29, 2011.

If Macy's sees its sales increase by 1% above the company's plan, Mr. Lundgren will earn an additional $1.65 million, or 110% of his base salary, according to a recent filing with the Securities and Exchange Commission.

Macy's has seen sales at stores open at least a year fall for three straight years. Its objective this year is to grow same-stores by 1% to 2%.

Mr. Lundgren says he viewed the bonus move as "a signal internally to management and to the entire organization that sales is what we are all about." Other senior executives in the company's central buying and planning office in New York saw a similar shift in their compensation packages, he said.

In 2009, when Mr. Lundgren's bonus was more weighted toward earnings and cash flow, "it was all about executing the strategy and getting organized to take advantage of the future when the consumer returned," he says.

This month, Home Depot, whose U.S. same-store sales for the quarter ended Jan. 31 fell 1.1%, started putting its 60,000 cashiers through a training program it previously only put floor staff through. Executives knew that many customers try to locate items themselves, without asking floor staff; those shoppers' only interaction with Home Depot staff is with cashiers. So Home Depot's now training cashiers to ask customers if they've found everything. If not, the cashiers are trained to call the department to see if the item's in stock.

"It's about building a strong relationship with you, so you come back, and that results in improved sales," says Thomas Spahr, vice president of learning with Home Depot.

SOURCE: Wall Street Journal