Between closures, downsizing, and lost revenue, the COVID-19 pandemic has devastated the retail industry, hastening the ongoing retail apocalypse. In April 2020 the industry’s employment level hit a record low for the first time since December 2009.1 Since April 2020, employment rates have increased drastically, reaching 41,100 jobs added in February 2021.2 However, even as more jobs are added, many businesses continue to downsize or close. In 2020, a record number of major chains closed, resulting in the highest vacancy rate since 2015 and the first drop in retail rent for the first time in nine years.3 As of March, more than 1,000 stores had already closed in 2021, with about 9,000 more expected to close by year-end.4
As brick-and-mortar stores diminished in number, e-commerce sales grew to $861.12 billion in 2020, an amount that was not expected until 2022.5 With the dramatic shift toward e-commerce come new forecasted trends, such as livestreaming (e.g., try-on sessions), robotics technology (e.g., food delivery robots), new purposes for malls (e.g., microfulfillment centers), and virtual fitting rooms.6
As consumer shopping preferences and industry trends change, organizations will need leaders who are agile, adaptable, and open to the changes. If an organization cannot keep up with these accelerated changes, the organization may very well find itself a statistic. Reliable and well-validated personality assessments can help organizations develop their existing leaders by identifying the strengths and weaknesses that will allow them to meet consumer demands and keep up with trends. Using personality, Hogan can also help organizations select leaders who can easily pivot to stay ahead of the industry changes.
While the retail industry is in such flux, organizations can’t afford to lose customers by hiring people who provide poor customer service — whether due to having a poor temperament, being inactively helpful, or demonstrating low self-awareness. In fact, 65% of customers end their relationship with a business and switch to a different brand after experiencing poor customer service.7 Worse, acquiring new customers can cost five times as much as it does to retain existing customers.8 Using personality assessment, organizations can select applicants who will excel in areas such as customer service or sales. Hogan can help organizations identify which candidates will maintain a positive temperament, help customers actively, be strategically self-aware, and ultimately, keep customers satisfied.
Hogan has helped numerous companies in the retail industry improve their selection of well-qualified candidates and their leadership development initiatives. For example, a global retailer increased sales by 61%after implementing Hogan’s solutions into its selection procedures. The following case study explains how.
Case Study: Increasing Annual Sales by 61%
The global retailer, which specializes in high-quality fashion and homeware, approached ThreeFish Consulting, an authorized distributor of Hogan’s assessments in India, for help in identifying talent for the role of store manager. After developing an understanding of the retailer’s needs, ThreeFish recommended a custom personality assessment solution from Hogan. While Hogan does offer prevalidated, off-the-shelf personality solutions, this retail company was growing rapidly and needed an individualized solution.
The research process to create the custom profile involved several steps. Hogan started with a job analysis to better understand the critical job requirements for store managers at this retail company. The job analysis allowed ThreeFish to identify key traits of store managers who would excel in the position and support the company’s continued growth. Next, Hogan and ThreeFish collected performance data for current store managers through a criterion-related validity study. Hogan analyzed validity evidence for the store manager position, comparing successful store managers from similar companies in the retail industry. Through this step, Hogan found a significant relationship between personality and performance in the store manager job.
By going through these steps of collecting validity evidence and performance data, Hogan was able to create a personality profile to identify store managers who would be responsible and honest, drive results and sales, encourage customer loyalty, and lead others effectively.
The global retailer wanted to ensure a strong return on investment by implementing the custom personality profile in selection procedures. Based on the criterion evidence, store managers who fit the profile were rated five times greater on overall effectiveness and other critical competencies than store managers who did not fit the profile. Additionally, store managers who fit the custom profile received higher store performance ratings.
With more effective store managers in place, the global retailer can improve the bottom line of its stores. Hogan’s research indicates an annual sales increase of 61% as a result of using the profile to select store managers. This increase in sales translates to millions of dollars in revenue.
This is just one of many success stories demonstrating how Hogan has helped companies in the retail industry improve. For decades, Hogan has collected performance data from millions of working adults to help select higher-performing candidates for all kinds of jobs, ultimately helping clients realize strong returns on their investments. Investing in selection and development tools that have been backed by scientific rigor can help retailers avoid being part of the retail apocalypse “death” count. As the retail industry shifts and new skills are required, finding the right and best candidates is critical not just to survive but thrive.
Download our Retail Industry Spotlight to learn more about how Hogan helps retail organizations improve their talent strategies.
References
- Statista (2021, March). Monthly Employment in the Retail Industry in the United States from 2009 to 2021. Statista. https://www.statista.com/statistics/1081368/monthly-retail-employment-us/
- Franck, T. (2021, March 5). Here’s Where the Jobs Are – in One Chart. CNBC EVOLVE. https://www.cnbc.com/2021/03/05/where-the-jobs-are-february-2021-chart.html
- Cheng, A. (2021, January 13). U.S. 2021 Retail Vacancy Rate May Rise to 7-Year High After Record Store Closings. Forbes. https://www.forbes.com/sites/andriacheng/2021/01/13/us-2021-retail-vacancy-rate-may-rise-to-7-year-high-after-record-store-closings/?sh=12da310668e8
- Meisenzahl, M. (2021, March 17). More Than 1000 Stores Are Closing in 2021 as the Retail Apocalypse Drags On. Here’s the Full List. Insider. https://www.businessinsider.com/stores-closing-in-2021-list-2021-3
- Ali, F. (2021, January 29). US Ecommerce Grows 44.0% in 2020. Digital Commerce 360. https://www.digitalcommerce360.com/article/us-ecommerce-sales/
- Reda, S. (2020, December 2). Retail in 2021: What Will Endure and What’s Going to Change? National Retail Federation.https://nrf.com/blog/retail-2021-what-will-endure-and-whats-going-change
- Harold, F. (2021, May 25). Must-know Customer Service Statistics of 2021 (So Far). Khoros. https://khoros.com/blog/must-know-customer-service-statistics
- Landis, T. (2021, April 20). Customer Retention Marketing vs. Customer Acquisition Marketing. Outbound Engine. https://www.outboundengine.com/blog/customer-retention-marketing-vs-customer-acquisition-marketing/