Cuts to inventory, staff numbers, service standards and staff training are coming up short, particularly in the prevailing economy and marketplace. And particularly if they are aimed at cutting costs in the long-term.

Initiatives that save money are proving to be false economies. At all times a retailer is – and should be – in business to make money. That requires investment. Cutbacks are having widespread impacts on retailers’ images, reputations, competitiveness, behaviour, relationships, loyalty and staff morale.

Automation of processes, including telephone answering, online interactions, service enquires and at supermarket checkouts is having a major impact on consumer perceptions, selections, preferences and satisfaction.

And interestingly, much of the professionally structured and conducted attitudinal research is highlighting the resulting deficiencies – loss-factors in sales, competitiveness, relationships and profitability.

Sadly, deficient, poorly designed and administered quantitative surveys are asking the wrong questions and, not surprisingly, are eliciting the wrong, if not misleading answers.

Disturbingly, too many management teams seem unaware, ignorant of the damage that is being inflicted on their operations and standings by a regime of cutbacks.

In the absence of on-going training, development, monitoring and refinement, staff members tend to take shortcuts. In many instances, they are following the lead set by the leaders and managers in the business, who are driven to save costs. Customer centricity has been re-prioritised.

Enhancing and growing investment in your people, skills, processes, systems and communication initiatives need to be imperatives for all retailers. Cutbacks inevitably lead to disconnection, and with it relationships, repeat business, loyalty and referrals are compromised.

Put simply, there are few cutbacks that increase sales, profitability, customer satisfaction and staff morale. They can, and do, result in retailers taking “haircuts”, – short-back-and-sides.

Barry Urquhart runs Marketing Focus and is a business strategist, consumer behaviour analyst and keynote speaker. He can be contacted at Urquhart@marketingfocus.net.au or on 0419 835 555. 

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