Growth of on­line sales forc­ing re­tail­ers to re­view em­ployee com­mis­sions

The Hamilton Spectator - - BUSINESS - ROSS MAROW­ITS

Ris­ing on­line sales are prompt­ing some Cana­dian re­tail­ers to con­sider over­haul­ing the com­mis­sion struc­tures that mo­ti­vate their store em­ploy­ees to de­liver strong cus­tomer service.

Cloth­ing re­tailer Le Chateau said it’s re­view­ing its op­tions due to the growth of show­room­ing — a prac­tice where shop­pers browse in­store but then or­der on­line — be­cause it de­prives em­ploy­ees of com­mis­sions.

“All of the re­tail­ers are try­ing to find out how to re­cal­i­brate,” said Franco Roc­chi, Le Chateau’s se­nior vice-pres­i­dent of sales and op­er­a­tions.

One op­tion un­der con­sid­er­a­tion is al­lo­cat­ing com­mis­sions from on­line sales to stores near the shop­per’s home.

The Re­tail Coun­cil of Canada said de­sign­ing a good com­pen­sa­tion strat­egy is chal­leng­ing. It’s es­pe­cially dif­fi­cult fig­ur­ing out how to di­vide store re­wards among in­di­vid­ual sales as­so­ciates, said se­nior vice-pres­i­dent Michael Le­Blanc.

“This con­cept of at­tri­bu­tion is a re­ally gnarly one for re­tail­ers,” he said, adding there is no “one-siz­e­fits-all so­lu­tion.” Op­tions vary by type of re­tailer, store for­mat, the role of sales as­so­ciates and the com­pany’s fi­nan­cial po­si­tion. How ecom­merce is in­te­grated into its op­er­a­tions and fits within its pri­or­i­ties is another con­sid­er­a­tion.

“Re­tail­ers are look­ing at this be­cause the cus­tomer is say­ing: ‘I’m go­ing to be more ag­nos­tic than I used to be about where I shop,’” Le­Blanc said.

Lux­ury menswear re­tail­ers such as Harry Rosen pay com­mis­sions to em­ploy­ees, even when the reg­u­lar cus­tomers to whom they’re as­signed make on­line pur­chases, said in­dus­try ob­servers.

Com­mis­sions are typ­i­cally paid as a per­cent­age of sales by firms in au­to­mo­tive, elec­tron­ics, fur­ni­ture and high-end ap­parel, while other sec­tors pay vary­ing de­grees of in­di­vid­ual com­pen­sa­tion.

The trend in the U.S. is to­ward team re­wards, with bonuses based on the store’s per­for­mance, in or­der to avoid the high-pres­sure tac­tics that cus­tomers loath, said Jim Oka­mura, a Cana­dian re­tail con­sul­tant based in Chicago who an­a­lyzes both mar­kets.

Home ren­o­va­tion re­tailer Lowe’s said its stores, in­clud­ing those from its re­cent takeover of Rona, don’t pay in­di­vid­ual com­mis­sions.

“Our peo­ple are mo­ti­vated by the de­sire to pro­vide a good cus­tomer ex­pe­ri­ence,” said spokesper­son Valerie Gon­zalo.

RYAN REMIORZ, THE CANA­DIAN PRESS

Le Chateau says it is re­view­ing its op­tions re­gard­ing com­mis­sions for store staff due to in­creas­ing on­line sales.

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