Retailing at the Crossroads - The Croner Company

Posted on Nov 19, 2012 by in Recent Developments

Technology is driving a revolution that is changing the entire face of the retail landscape. The internet has changed the way retailers interact with their customers and the way their customers purchase. A total of 74% of shoppers now buy goods online from at least one retailer, and 84% of consumers indicated in a recent study that they are more likely to become loyal customers of retailers with integrated, multiple channels. In 2011, smartphone owners and mobile ecommerce grew about 25%, with ecommerce up 17% even in a slow economy. The writing is on the wall.

The greatest problem for most retailers is that they do not realize that they are already or need to become digital companies. In addition, many traditional brick-and-mortar companies don’t know what the digital employee wants from an employer or how exactly to pay digital positions. The values and expectations of the digital employee are not the same as the traditional retail worker! It is time to consider new strategies in order to compete in the new world of ecommerce.

In a recent custom survey of multi-channel retailers, The Croner Company identified three retail company profiles:

1. “Savvy” – holistic, with a customer-focused view; executing creative strategies to provide their customers a seamless experience;

2. “Developing Quickly” – pursuing many great ideas; starting implementation; improving digital integration; and

3. “Developing Slowly” – where stores and digital divisions are managed separately; starting to understand the need for integration; and searching for clear strategies.

In whatever category your business falls, now is the time to examine how best to move forward.

What to Do?

Our data suggest that retailers will need to match prevailing compensation practices in both retailing and digital markets, but do not need to match practices with the “newsmakers” such as Google and Facebook. They will need to be flexible in compensating key digital leaders and key digital employees. In particular, they will need to focus compensation resources on middle levels of management and individual contributors in digital, both to attract talent and to ensure it has resources to create and sustain a leading digital presence.

Change does not need to be traumatic, but needs to start. Here are some ideas:

1. Identify core digital divisions or functions and articulate specific comparable markets;

2. For base salary, adopt or continue a highly market-based approach, setting base salary range midpoints against specific labor markets, enabling comparable salaries;

3. For short- and long-term incentive opportunities, consider creating multiple eligibility approaches / profiles within the company. Identify and ensure that incentive eligibility, for digital reflects industry practices;

4. Focus compensation resources on middle management and senior and professional individual contributors.

If you would like to discuss how to implement these strategies within your company, please call us at 415-485-5526.