Lessons from the world's biggest supermarket

Some time ago, I spent almost a year living and working in the USA. In that time I did most of my shopping at a massive chain of supermarkets called Walmart. 

Although Walmart don’t have a presence in the UK, they are the owners of the British supermarket Asda, and there are many similarities between the two supermarket chains. In fact, when you are inside a branch of Walmart in the USA, it feels a little bit like being inside a bigger version of Asda here in the UK.

The shopping experience at Walmart a few years ago was frustrating, to put it mildly. Customers routinely decried the empty shelves and under-staffed stores.

When shoppers needed help, it was difficult to find a member of staff. And even when there was one available, the worker was often poorly trained and not very helpful.

Walmart officially sell more groceries than any other store in the USA, but it seemed to achieve this title more because of low prices and convenience, not customer service. In fact, Walmart routinely received the lowest customer satisfaction ratings among all major grocery sellers.

It's fairly obvious why Walmart was viewed so badly by shoppers. The company was renowned for keeping costs down by hiring a bare minimum of workers, and for paying them low wages.

According to the New York Times: “Years of cost-cutting meant Walmart had become viewed as a last-ditch option for employment - not the place that ambitious people might want to work.”

In fact American shoppers were outraged (though not totally surprised) when in 2013 one Walmart store in Ohio launched a 'food drive' for needy employees. Ironically this is something that wouldn’t have been necessary if Walmart had been paying decent wages in the first place!

But two years ago things changed. Walmart launched a campaign to improve the customer shopping experience mainly by way of increasing the ranks of workers stocking shelves and interacting with shoppers. In early 2015 the company announced wage increases for 500,000 employees, and most stores brought back the popular ‘greeters’ who stand and welcome shoppers when they came through the front door.

Walmart also invested more time and money in training workers, and also made it easier for junior employees to move up the ranks to managerial positions.

These changes obviously increased costs for Walmart, which affected profits in the short-term, and caused Walmart’s share price to plunge during 2015.

But the moves are now paying off. In 2016 sales have rebounded and better employee pay (an increase of 16% since 2014) has coincided with much higher customer satisfaction.

The customer surveys that were so bad at the start of 2015 have improved, with satisfaction scores rising for 90 consecutive weeks. Surveys by external groups, such as investment bankers Cowen & Company, also point to more satisfied customers as well.

What we can learn from this?

The experience of Walmart over the last two years is proof, if it were needed, of something we have been saying for a long time here at The Customer Service Blog; that well-trained and well-paid employees, who are happy in their jobs, will ultimately lead to more satisfied customers and ultimately to higher profitability for the company.

This is also a lesson that needs to be learnt by some of the British cut-price retailers such as Lidl and Aldi (see article dated 18.10.16). Skimping on customer service might save you money in the short-term. But in the long-term, if you invest in staff training and providing exceptional customer service, then it will pay dividends, increase profitability, and create much more loyal customers.

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