Does ever earlier seasonal madness tempt you to keep your doors open during holidays? An MIT professor explains why that's probably a bad idea.
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Black Friday bargain hunters wait in line at Toys "R" Us, which opened at 9 p.m. Thanksgiving Day, November 24, 2011, in New York City.
For years, the day after Thanksgiving has been dedicated to the shopping madness known as Black Friday. But this year, as The New York Times reported, opening-hours creep meant more and more retailers were letting in shoppers ever earlier--even on turkey day itself.
Stores were motivated by the hope that longer hours would lead to higher sales. "The lesson of 2011 was clear: Earlier shopping hours were good for the top line," reports the Times.
If you're a small business in the retail space, you might look at this trend and conclude that you, too, need to keep up with this opening-hours arms race and open on holidays. But that would be a mistake, argued Zeynep Ton, a professor of operations at MIT's Sloan School of Management, on the HBR Blog Network recently.
Opening on holidays may sound like a tempting way to juice profits, but it can backfire for retailers, she writes:
When retailers make decisions such as opening stores on Thanksgiving, without even a clear benefit to the companies or their customers, retail employees are once again reminded of how little their companies care about their lives and well being'.
What retailers don't realize is that their "lean and mean" treatment of employees isn't even helping their bottom lines. If you study the longer-term consequences of treating employees this way as I have, you find that when retailers do not invest in their people, their operations suffer and their stores are full of problems such as products in the wrong place or with the wrong price, obsolete products on the shelves, and long checkout lines. These problems reduce sales and profits. Many retail chains base their labor budgets on sales; so when sales decline, so do labor budgets. Then retailers invest even less in their people and the vicious cycle continues.
Everyone suffers. Companies leave a lot of money on the table. Customers get bad service and higher prices due to inefficiencies. The employees suffer most. But retail employees are a huge segment of our society, so our society suffers as well. A study conducted in the early 2000s found that Walmart employees in California were receiving $86 million in public assistance a year.
Want more details on the research showing that skimping on employee pay, benefits, and training in retail doesn't pay off? The New Yorker's James Surowiecki wrote an excellent summation of the latest findings earlier this year, while Freakonomics author Stephen Dubner has offered a personal perspective on how badly treated employees affect shoppers (and how much they purchase).
If you're in retail, what relationship, if any, between well-treated employees and sales do you observe?
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