In 2023, the retail industry experienced the largest decline in positive ratings among 25 business sectors, according to a recent Gallup poll of the American public. Thirty-six percent of Americans view the retail industry positively -- a record low -- while 28% view it negatively -- a record high. Notably, this drop has occurred even as the restaurant industry remains one of the most favorably viewed business sectors in the country.
Clearly, the public’s trust in retail management has been broken. And this has long-term impacts on the retail industry’s revenue growth, earnings and stock valuations. There’s no more powerful way to drive sustained business growth than by winning customers and deepening your relationship with them. Yet retail relations with the public are in crisis.
Some of this is no doubt due to the retail industry’s growing pains since the pandemic. Shoppers now expect multiple distribution channels. More distribution channels mean more complexity, and the failure of any one channel leaves customers frustrated. The increasing use of AI and self-checkout are surely leaving some customers angry as well.
And yet during the holiday season, shopping in person remains a ritual that many shoppers look forward to. According to a recent Shopify-Gallup poll, 59% of holiday shoppers plan to do their shopping in the months of November or December. And younger shoppers (aged 18-29) are more likely than older shoppers to say they plan to spend more this year on gifts than they did last year.
Although 93% of holiday shoppers plan to buy at least some gifts online this year, there are a few factors that affect their purchasing decisions. Thirty-nine percent of holiday shoppers say that the shipping and fulfillment experience (e.g., free shipping, faster shipping, or same-day pick-up or delivery) is the top reason they would choose one retailer over another for the same or a similar product. Twenty-three percent prefer to support small and local business, while 16% are looking for deals and promotions.
Customers are looking for holiday deals, but research also shows that customers are emotional decision-makers. Gallup has found that about 70% of decisions are based on emotional factors, and only 30% are based on rational factors. A clean and organized store, a festive atmosphere, and helpful associates play a role in the decisions customers make. But what else can retail companies and store managers do to restore trust and confidence with their customers during the holidays -- and over the long term?
The Customer-Employee Relationship
Based on Gallup’s decades-long research on what drives positive business outcomes, The Gallup Path outlines the most powerful levers for driving organic business growth. At the center are engaged customers -- customers who feel emotionally and psychologically connected to a product, service or brand and are likely to recommend it to others.
Fully engaged customers represent a 23% premium in share of wallet, profitability, revenue and relationship growth over the average customer.
Generating engaged customers is the north star of any successful business. And what engages customers? A personal experience with an engaged employee.
You can tell an employee is engaged when you interact with them: They are fully present. They believe in the products and services they are selling. They are willing to go the extra mile to solve customer problems. And they do all this even when a supervisor isn’t watching over their shoulder.
Engaged employees aren’t merely satisfied or content -- they are brand ambassadors, connected and committed to the purpose, values and culture of your retail business. These employees create remarkable, unique, personalized experiences that wow customers and get them coming back, spending more and telling their friends.
When customers strongly agree that they are surprised and delighted by their customer experience, they are five times as likely to be fully engaged.
How Better Managers Are Key to Better Customer Relationships
Employee engagement can happen by accident, but those accidents are uncommon. Only about one in three U.S. employees are engaged at work. The reality is that most retail managers likely have an employee engagement problem, and by fixing that problem, they can likely solve their customer problems as well.
When employees are engaged at work, they are 4.3 times as likely to feel extremely proud of the quality of products and services their organization offers -- and 4.2 times as likely to agree their organization always delivers on the promise it makes to customers.
In other words, employee engagement turns your employees into true believers who can win committed customers.
So, what’s the strongest lever for boosting engagement?
Gallup research shows that 70% of the variation in employee engagement is attributable to managers. A direct supervisor plays the primary role in how an employee feels about their workplace.
What can retail managers do to engage their teams during the holidays?
- Increase the frequency of check-ins with each employee. When it’s the busy season, quick -- but meaningful -- conversations are often forgotten. But they are crucial for individual engagement. Focus on clarifying expectations, removing barriers to performance, and making sure employees have the materials and equipment they need to work.
- Focus on strengths over weaknesses. Accountability is important, but so is feeling needed and valuable. By focusing on strengths, supervisors can often find creative and personalized ways to boost performance. During a fast-paced season, keeping strengths top of mind also helps employees focus on the next customer rather than dwell on the past.
- Recognize your people in the way they like best. When business is busy, it’s easy to forget to recognize great performance. Some people like being recognized in front of others, while some prefer peer-to-peer recognition. Create a recognition-rich environment.
Long-Term Strategy: Turn Your Managers Into Coaches
With the right kind of management development training that focuses on helping managers to become engagement experts, businesses can see significant gains in engagement.
An effective management training and development program should include the following:
- field-tested, science-backed best practices
- an immersive training journey beyond a single-day event
- a focus on developing a manager’s unique strengths
- an emphasis on coaching toward engagement, accountability and performance
- training on authentic conversations about goals, progress and wellbeing
- opportunities for hands-on practice and discussion afterward
The retail industry faces a daunting challenge: how to regain the trust and loyalty of the American public. Patrons have grown increasingly dissatisfied and distrustful of the industry, and the solution lies not in flashy marketing campaigns or price wars, but in the human element: the relationship between customers and employees. By investing in management training and development that fosters employee engagement, retail companies and store managers can create a culture of excellence that delivers exceptional customer experiences. Engaged employees are the key to engaged customers, and engaged customers are the key to retail success.
Motivate your employees to prioritize customer needs.
- Discover how a customer-centric approach can drive growth, profit and customer loyalty.
- Learn how focusing on employee and customer engagement is a lasting method for customer retention.
- Find out how your frontline managers impact employee retention, engagement and wellbeing.