Tokyo-based Uniqlo opened an enormous new store on Manhattan’s Fifth Avenue last October, and then opened another huge store on 34th Street a week later. The retailer’s goal is to be the world’s largest apparel retailer and its strategy is to open large stores in prominent locations in big cities.
But it also has a reputation for employing small armies for each of its stores—and for spending a lot of time and money on training. In a recent issue of the New Yorker, James Surowiecki noted that Uniqlo planned to have 400 people working at the NYC flagship at any given time. He cites a Harvard Business Review study that finds discount retailer that spend more on their workforce (training, wages and number of workers on the floor) actually boast more sales per square foot—and per employee. As the New Yorker points out, this can help avoid the dreaded “phantom stock-out,” in which customers can’t find something that’s actually in the store.
Pros: Lots of highly trained sales people at your store can ensure that every customer gets his needs met, which can mean not only avoiding missed sales but also developing relationships with customers. And more staff per square foot gives you a better handle on your merchandise, what’s selling and what’s not—as well as reducing theft.
Cons: If you have too many sales people on the floor, they can get bored. If they get bored, they may tend to gather in groups, looking unapproachable to customers in need. On the other hand, sales people who swarm customers can be off-putting. Attempts at good service, if mishandled, can appear pushy. And the training has to be effective, not just lengthy. Over-trained staff can start to sound like robots—as they sometimes do at Uniqlo.
Another potential problem is with scheduling. According to a study done by the Retail Action Project and the City University of New York (download the PDF here), many large retailers are alienating their sellers by forcing them to compete with each other for sales, not for commission, but for more hours.
Conclusions: Uniqlo may look large, but their assortment isn’t unlimited. In fact, much of it is repeated throughout different floors. The strategy seems to be to provide a dazzling amount of product in a dizzyingly large space with ample sales associates. But the big lesson is in cost-cutting: it doesn’t pay when it comes to your sellers.