Why “Good Jobs” Are Good for Retailers by Z

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lmost one-fifth of American workers have bad jobs. They endure low wages, poor benefits, schedules that change with little—if any—notice, and few opportunities for advancement.

The conventional wisdom is that many companies have no choice but to offer bad jobs—especially retailers whose business models entail competing on low prices. If retailers invest more in employees, customers will have to pay more, the assumption goes. Indeed, it is easy to conclude that employee-friendly Wegmans and the Container Store can offer great jobs only because their customers are willing to pay higher prices.

I have studied retail operations for more than 10 years and have found that the presumed trade-off between investment in employees and low prices can be broken.

Highly successful retail chains—such as Quik­Trip convenience stores, Mercadona and Trader Joe’s supermarkets, and Costco wholesale clubs—not only invest heavily in store employees but also have the lowest prices in their industries, solid financial performance, and better customer service than their competitors.

They have demonstrated that, even in the lowest-price segment of retail, bad jobs are not a cost-driven necessity but a choice. And they have proven that the key to breaking the trade-off is a combination of investment in the workforce and operational practices that benefit employees, customers, and the company. This article explains those practices.

Although my research has focused on retailing, I believe that the model these retailers have created can be applied in other service organizations where there are large fluctuations in customer traffic and employees perform both production and customer service tasks. These include hospitals, restaurants, banks, and hotels.
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Let employees make small decisions.

In most retail stores, merchandise planning is centralized and only managers can make decisions about product returns and customer complaints. But at companies that operate in a virtuous cycle, employees constantly make decisions. QuikTrip, Trader Joe’s, and Mercadona employees decide how many units of each item to order for their stores. How can large chains trust thousands of people to make inventory decisions? Every decision is small, corporate IT is designed to assist, and the decisions are monitored. Because empowering employees in these ways makes companies more responsive to local needs and preferences, it increases customer as well as employee satisfaction.


We’ve Seen This Before

Several decades ago, there was an intense debate about whether it was possible for low-cost products to be high quality. Many academics and practition­ers argued that investing in quality would increase costs. But some companies, starting with Toyota, showed that this was a false trade-off: Investing in people and processes actually drove quality up and costs down.

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