Online sales forcing retailers to review commissions

MONTREAL 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 in-store 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 e-commerce 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.