Another horrific gaffe in retail marketing – one which falls into the category of “grotesquely bad retail marketing decisions which will become a cautionary lesson in future marketing textbooks.” This spectacular gaffe involves a retailer of fashion-trendy and very colorful women’s athletic clothing, Fabletics – a company which started online in 2013 offering a subscription plan – somewhat controversial since the subscription charges were not always transparent, and branched out into brick and mortar locations. One of the founders is Kate Hudson, daughter of Goldie Hawn, so there probably has been some advantages to a celebrity connection; easy to get that one-on-one with Oprah Winfrey, I presume. The company appears to this point to have been pretty savvy in a competitive field, marketing-wise, so all props to them. I’m not a customer of theirs in any case; the gym and the jogging track are not places where I go to show off my fashion sense. I’m old-school in that I prefer to work out in grey sweatpants and a baggy tee shirt.
Customer Service
Covid-19, Remote Work, and Offshoring
The general attitude toward working from home has certainly changed over the last several years. In 2013, the then-CEO of Yahoo!, Marissa Mayer, banned work-from-home at her company. And in 2017, IBM established a similar ban. Both of these actions were based on perceived needs to improve productivity and collaboration at those companies
But in 2020, a lot of companies that moved to work-from home in the Covid-19 environment…because they had no choice if they wanted to continue operating at all…have apparently found it to be working to their satisfaction, and many though not all employees like it, too. And there is starting to be significant impact on where people choose to live…see these comments from the governor of New Hampshire, Chris Sununu. The term ‘zoomtowns’ has been applied to locations where people choose to live and work remotely, based on a locality’s attractive characteristics and good Internet connectivity.
I do think that a comprehensive work-from-home environment can result in losing something in terms of unplanned interactions…I’ve personally observed several significant product and business initiatives that resulted from such interactions, and there are also interesting historical cases. But such things are difficult to measure, and financial benefits and convenience of work-from-home are likely to prevail, perhaps excessively so in some cases. In any event, the Yahoo! and IBM approach of broad-scale top-down corporate edicts is unlikely to be a good one.
Another kind of remote work involves the use of people at remote locations…though not necessarily at home…to perform machine-control tasks that would previously have had to be done on-site. The robots being used by Federal Express at its Memphis facility sometimes encounter problems that they can’t solve…they can be ‘advised’ by humans located in San Antonio. There are projects underway to make municipal water treatment plants remotely operable, either for emergency backup (as in a pandemic) or for normal operations, and there are also initiatives focused on remote operation of other kinds of infrastructure, utility, and industrial facilities.
If something can be done by people who are remotely located within the United States, then in most cases it will also be doable by people who are remotely located in other parts of the world. In my 2019 post telemigration, I wrote about the increasing feasibility of offshoring services work, not only manufacturing. A lot of this has been going on for software development as well as for customer service.
It may turn out that, in many cases, remote work in the US turns out to be just a waystation on the road to remote work somewhere else.
Oh, FFS!
As if it wasn’t enough for the joyless, bitter scolds among the wokerati to have an absolute tizzy over the head of Goya Foods being civil and respectful of the office of the President of the US, another provider of excellent and relatively inexpensive foodstuffs is in their cross-hairs. Unlike the president of Goya Foods who basically told them to pound sand – and is now enjoying the economic benefits of having defied the wokerati – the management of Trader Joe’s is beating a sniveling and apologetic retreat, and promising to redo their policy of labeling their various ethnic food items with a suitably ethnic variation on ‘Trader Something-or-Other’. This was a bit of light-hearted bit of humor on their part, playing with naming stereotypes, but good lord, the grim and determined wokerati cannot abide any humor at all and so the whole concept must go. The Daughter Unit tells me, and the above link conforms, that the whole thing started as a petition by high school students, which doesn’t surprise me in the least. I suspect the responsible students are the earnest and censorious sorts, desperately trying to out-woke each other.
Frankly, the whole ‘Trader Joe’s’ South Sea Island – Tropical Paradise motif always struck me as a last gasp of the 1950s ‘Tiki Culture’ and about the only one which didn’t involve a bar decorated with fishing nets and dried starfish, and fru-fru drinks with little umbrellas in them. Trader Joe’s various products are high quality, reasonably priced, and the social-consciousness is laid on with a light hand, in pleasant contrast with the mountain of ostentatious correctitude and high prices offered at Whole Foods. There is a reason the latter is derisively known as “Whole Paycheck.” I can only think it’s only a matter of time before the social justice warriors go after Trader Joe’s for that bit of cultural appropriation as well.
At least the providers of groceries are not having as rotten a year due to the Chinese Commie Crud as Hollywood is. Theaters shut down, premieres cancelled, top-flight releases like Greyhound, with Tom Hanks and based on C.S. Foresters’ war novel The Good Shepherd diverted to release on streaming video, the fall-out from “Me Too” and Harvey Weinstein’s wholesale-level practice of the casting couch, the apparent urge among our producers of entertainment to whore after foreign audiences, and now looking to curry favor with the hot new trend of ‘anyone but white heterosexuals in front of the camera and behind it as well as behind it in any capacity’ … well, Establishment Hollywood has earned the foul reputation they richly deserve. Those of us in flyover country are watching old movies on DVD (from our own libraries, let it be known) or on streaming video, watching foreign films or series – practically anything other than grim parables and lectures by the wokerati.
Comment as you wish: what are you going to watch, now? The Daughter Unit and I are watching episodes of Are You Being Served? Which has the side benefit of being gloriously politically incorrect, and not featuring any masks or six-foot apart social distancing. (The Daughter Unit and I temped for a few months at an upscale department store over the holiday season some years ago. We consider ‘Served’ as nearly a documentary on retail sales at a certain level.)
Madness and Maddow
The Navy hospital ships promised by President Trump to deploy to New York and Los Angeles arrived on-station as ordered a few days ago. MSNBC’s Rachel Maddow, presumed for some obscure-to-me reason to be associated with the provision of news to the public, and most recently famed through peddling Russian conspiracy theories regarding Trump’s election for the past three years, had ridiculed the President’s proposed schedule as “nonsense. ” She, or whatever pronoun she goes by, had loudly and publicly claimed that it would be “weeks” before the hospital ships arrived. Instead, the hospital ships arrived more or less to schedule. A lesser news-person would have the decency to be embarrassed over how transparent a prediction-flop this was. Not this Maddow person, it appears. This is not a good thing, and not for the reason first assumed. PBS’ Yamiche “Rolie-Polie-Olie” Alcindor baldly admitted, and in nicer words, that the name of the game for the national establishment news media is “Get Trump!” and anything goes, fair or foul (mostly foul) will serve that end. Well, really – those of us who have been paying attention, especially for the last decade and a half (or longer) have known very well that the name of the game as far as the establishment national news media is concerned, is to enthusiastically smear Republicans and their conservative supporters (no matter how mild or harmless) the pretext, and to excuse Democrats and their supporters, no matter how vile the offense and actions. Nothing new here, move along. SSDD, as we used to say in my active duty days. (Same sh*t, Different Day.)
Book Review: The Good Jobs Strategy, by Zeynep Ton
Retail businesses are associated with low pay and high employee turnover–especially in the case of those retailers who offer low prices–and the same is largely true of customer-service call centers. It has been generally assumed that low wages in these operations are a necessary concomitant of low prices for consumers, and that only businesses serving a premium-price customer base can afford to pay high wages.
Comes now Zeynep Ton, arguing that the low-wage strategy is not the only one available to retailers and other customer-service businesses that need to offer low prices, and that indeed often–usually–it is not the best strategy. She draws connections between the pay and hiring strategy of a business and the operational basis on which it is managed. To wit:
Low pay and high turnover implies minimal employee training, because you can’t afford extensive training for employees who are going to leave in a matter of months. Minimal training implies less operational flexibility, because employees will not be cross-trained for other functions. An environment of high turnover and not-well-trained employees implies that employee functions must be strictly proceduralized, often to the point of excessive rigidity. And the lack of flexibility driven by minimal training and experience makes it harder to build in appropriate staffing “slack” to handle peak demand situations. The lack of slack and flexibility leads to endless emergency rescheduling of personnel, reducing morale and further increasing turnover. (She provides some vivid examples of what this endless and short-notice rescheduling can mean to the personal lives of employees.)
On the opposite site, higher pay can contribute to lower turnover, making more-extensive training economically viable. Better-trained employees can more easily perform multiple functions, so that absences or staffing imbalances have a less-harmful effect. Better-trained and more highly-motivated employees don’t need micromanagement, either by human managers or by systems and procedures.
Ho, hum, you say, what’s new?…people, especially consultants and professors, have been writing for years about why employees should be treated well and how it pays off to do so. How is this book different from a million of others?
The Good Jobs Strategy is, in my view, something quite different from the typical “just treat ’em right” sort of soft, warm, and cuddly advice often found in books and LinkedIn posts. The author ties the feasibility of the high-pay / high-expectations strategy to effective operational management, with the right systems, procedures, and incentives to enable such operational excellence.
An interesting example the author mentions is that of Home Depot. She credits much of the chain’s early success to its high-quality associates–“knowledgeable and helpful and willing to do whatever it took to help you, even if that meant explaining to you that you didn’t actually need what you came to buy.” The associates tended to be former plumbers, electricians, etc–and they were employed full-time. HD grew very rapidly–“customers were driving two hours to go to its stores and, once they experienced the service and great prices, they kept coming back”
But, with the growth came problems. There was a lack of discipline in the stores, in how the stores communicated with headquarters, how the company selected its products, and how it communicated with suppliers. “In 2000, bills and invoices were still processed by hand, and headquarters communicated to 1134 stores via fax because there was no companywide email.” In 2008, two senior IT executives (newly hired from Walmart) concluded that Home Depot’s IT systems were about where Walmart’s had been in 1991. In summary, HD had become “a classic example of a service company that did not fully appreciate the role of operations in making customers and investors happy…Operations are all those factory-like activities that a business has to carry out in order to provide whatever it is that it sells. ..In a retail store, for example, operations involves things like having the right product in the right place, having a fast checkout, and having a clean store.” Zeynep Ton says that internal measurement systems often don’t focus on such matters–at one retailer she worked with, “Twenty percent of the (store manager’s) score had to do with the store’s customer interactions.” In this chain, “mystery shoppers” would score the store on things like how the employees greeted customers and made eye contact. But, she notes, “kindness or friendliness won’t make up for operational incompetence. ..It is hard for your dry cleaner to make you happy if you can’t wear your favorite suit to an important interview because they didn’t get it cleaned on time.”
When Robert Nardelli became HD’s CEO in 2000, the systems and procedures problems were rapidly addressed. Gross margins and net profit margins increased substantially.
BUT, “the culture of cost-cutting was soon felt at the local level, where store employees, who were once at the center of Home Depot’s success and at the top of Home Depot’s inverted pyramid, became a cost to be minimized.” The company started hiring part-timers, in the name of both staffing flexibility and cost…the knowledge level of the typical employee encountered by a customer fell noticeably. By 2005, HD was ranked lower in customer satisfaction than was K-mart. Same-store sales growth fell and even became negative. Nardelli left the company in 2007.
Zeynep Ton summarizes: Operational designs don’t execute themselves. They depend on having the right people, and having those people motivated to do the right things.
The book discusses the actual complexity that exists in many seemingly-simple businesses, and the fact that individual employee decisions do make a difference. “If you are a supermarket employee shelving a case of toothpaste and all but two of the tubes fit on the shelf, should you take the two extras back to storage or would it be better to squeeze them onto the the shelf, even if it doesn’t look so good? If a tomato looks just a little soft, should you take it to the back room now or wait until it looks worse? Maybe it will be just fine for a customer who wants to make tomato sauce…it is hard, if not impossible, to make such work so simple and simple and standardized that anyone can do it without exercising judgment. Things happen in real time at retail stores, and employees have to learn to react.”
(It is incredibly refreshing to see a B-school professor thinking and writing at this level of detail and specificity)
One interesting company discussed in the book is QuikTrip, a large chain of convenience stores combined with gas stations. The company is very selective in its hiring….the author compares getting hired there with the difficulty of getting into an Ivy League college. In the Atlanta area, 90% of applicants don’t even quality for an interview, and of those who do, only one out of five is selected. Turnover rate among QuikTrip employees is only 13%, far lower than the industry as a whole. The chain emphasizes speed and flexibility…”QuikTrip’s fast checkout is a site to behold. One thing that makes it so fast is that any employee can use any register at any time without making the customer wait. If you regularly shop at a supermarket, you know it’s no fun waiting for the cashier do a changeover. The other thing that makes QuikTrip so fast is that employees have been trained to ring up three customer per minute.” She says that the employees can even calculate change in their heads!
Other examples discussed include Costco, Trader Joe’s, In-N-Out Burger, and the Spanish supermarket chain Mercadona.