advertisement
advertisement
advertisement

JCPenney Dumps Associate Sales Commissions

Written by Evan Schuman
May 10th, 2012

As JCPenney continues to recover from its self-inflicted nice-price-all-the-time effort, the chain’s latest cost-cutting move came this week when it quietly killed associate commissions and cut back many of their hours. Cost-cutting is fine, but killing commissions right now—as it desperately tries to fight off E-tail incursions in its stores—seems stunningly ill-advised.

As retailers complain about showrooming—and its posterchild, Amazon—the only meaningful way to fight back is to make the store experience so pleasant, efficient and fun that consumers would much prefer to shop than click away on a phone, tablet or laptop. The key is enthusiastic, well-informed and truly helpful associates. As JCPenney cuts their hours and their salaries—and, as of next year, some benefits—how joyful are its associates likely to be? And with no commission incentive, how motivated are they likely to be? This seems like an idea that an Amazon plant within JCPenney’s executive team must have concocted.

Historically, there have been those who argued that a generous salary can motivate associates just as much, with the added benefit of the associate not pressuring a customer to upsell if it wouldn’t help that customer. Note: You don’t think salaried retail sales reps will get pressured to upsell unnecessarily? You don’t think bonuses—and perhaps continued employment—won’t be leveraged?

Even if you buy into those legitimate arguments, they apply to generous salaries. It doesn’t speak to the removal of commissions at the same time as hours and salaries are being cut back, along with future reduced benefits.

JCPenney is arguing that this move will indeed make associates perform better. The chain doesn’t say why it expects that to happen. “Our new business model requires that we move away from a commission-based environment, so that every team member is motivated by meeting the needs of our customers,” said JCPenney spokesperson Kate Coultas.

“Therefore, our commission pay plans will move from a commission-based structure to a competitive hourly rate structure,” she said. “By bringing their compensation levels back to what they earned last year with commissions, team members can have a better sense of their incomes. This new, collaborative approach to taking care of our customers will not only enable our teams to be even more effective in winning the hearts and minds of our customers but, over time, will provide greater opportunities for personal growth and development.”

But by cutting back many full-timers to part-time and by reducing hours overall, it’s certainly likely that many associate incomes will fall and some will fall sharply. Coultas wouldn’t offer figures on how many associates will have their hours slashed. “In regards to how many associates will go from full-time to part-time, we don’t have a number or percentage. Our staffing levels vary store to store,” she said.

But if you want to combat showrooming, this is not the way to do it.

If you were willing to pay your associates more—as an investment in improving the store atmosphere—then a transition to a salary-only model could work.

Here’s why this is such a showrooming issue. The very nature of almost all E-Commerce sites is self-service. The sites are WYSIWYG. If you search for an XYZ27, that’s exactly what it will show you. If you want help deciding—or an expert associate to say that the product you want won’t do what you need it to do—few sites will help.


advertisement

Comments are closed.

Newsletters

StorefrontBacktalk delivers the latest retail technology news & analysis. Join more than 60,000 retail IT leaders who subscribe to our free weekly email. Sign up today!
advertisement

Most Recent Comments

Why Did Gonzales Hackers Like European Cards So Much Better?

I am still unclear about the core point here-- why higher value of European cards. Supply and demand, yes, makes sense. But the fact that the cards were chip and pin (EMV) should make them less valuable because that demonstrably reduces the ability to use them fraudulently. Did the author mean that the chip and pin cards could be used in a country where EMV is not implemented--the US--and this mis-match make it easier to us them since the issuing banks may not have as robust anti-fraud controls as non-EMV banks because they assumed EMV would do the fraud prevention for them Read more...
Two possible reasons that I can think of and have seen in the past - 1) Cards issued by European banks when used online cross border don't usually support AVS checks. So, when a European card is used with a billing address that's in the US, an ecom merchant wouldn't necessarily know that the shipping zip code doesn't match the billing code. 2) Also, in offline chip countries the card determines whether or not a transaction is approved, not the issuer. In my experience, European issuers haven't developed the same checks on authorization requests as US issuers. So, these cards might be more valuable because they are more likely to get approved. Read more...
A smart card slot in terminals doesn't mean there is a reader or that the reader is activated. Then, activated reader or not, the U.S. processors don't have apps certified or ready to load into those terminals to accept and process smart card transactions just yet. Don't get your card(t) before the terminal (horse). Read more...
The marketplace does speak. More fraud capacity translates to higher value for the stolen data. Because nearly 100% of all US transactions are authorized online in real time, we have less fraud regardless of whether the card is Magstripe only or chip and PIn. Hence, $10 prices for US cards vs $25 for the European counterparts. Read more...
@David True. The European cards have both an EMV chip AND a mag stripe. Europeans may generally use the chip for their transactions, but the insecure stripe remains vulnerable to skimming, whether it be from a false front on an ATM or a dishonest waiter with a handheld skimmer. If their stripe is skimmed, the track data can still be cloned and used fraudulently in the United States. If European banks only detect fraud from 9-5 GMT, that might explain why American criminals prefer them over American bank issued cards, who have fraud detection in place 24x7. Read more...

StorefrontBacktalk
Our apologies. Due to legal and security copyright issues, we can't facilitate the printing of Premium Content. If you absolutely need a hard copy, please contact customer service.