Can Global Chain Stores Kill the Sales Force?

The retail world has witnessed massive changes in the last century. One of the changes was the emergence of retail chains stores at the dawn of the 20th century. Since then, they have been growing all over the globe. As the number of chain stores multiplied, they captured a larger annual share of retail sales, and tens of thousands of locally owned business were forced to close. <br clear="none" /> <br clear="none" /> Chain stores, operating within all major retailing categories, offer consumers many advantages, which they seem to like. Consumer preference for chain stores may partially explain why, for example, Barnes & Noble and Borders Books capture half of all American bookstore sales; or why Home Depot and Lowe’s control nearly 40 percent of their segment; or, why Staples, Office Max, and Office Depot together account for 75 percent of all U.S. office supply sales. Currently, it is estimated that chain stores account for nearly one-third of all American retail sales.<br clear="none" /> <br clear="none" /> The growth is everywhere, and halted only somewhat by recent global recession. In 2008, Dunkin' Donuts opened 1,300 stores worldwide, at the rate of three-and-a-half stores every day. McDonald's Corporation's 2008 annual report stated that, at the end of 2008, there were 31,976 McDonald's in operation and the company anticipated opening 1,000 new restaurants and 200 McCafés, for a total of 1,200 new stores in 2009. In the grocery industry, U.S.-based company Wal-Mart Stores, Inc., opened 218 stores in 2008 and plans to open 340 more by the end of 2010. Today, Wal-Mart operates more than 8,000 stores worldwide, which makes the company the No. 1 retail chain of the world. In the European furniture industry, IKEA, a Sweden company, despite tougher times in several major markets, opened 21 stores in 11 countries in 2008 and anticipates opening some 20 new IKEA stores in 2009. In August 2008, IKEA operated 253 stores in 24 countries. And Spanish group Inditex which opened 573 stores in 2008 (at a rate of three stores every two days), currently runs more than 4,350 stores in 73 countries. <br clear="none" /> <br clear="none" /> Although much has been discussed about the effects of chain stores on small independent retailers, a big question remains: What is the impact of global retail chain stores' expansion on sales force size, structure, profile, and management?<br clear="none" /> <br clear="none" /> Several studies have shown that concentration in retailing has resulted in a reduction of the number of small stores, especially micro enterprises and small, medium enterprises (SMEs), and consequently, the number of salespeople needed to serve them. On the flip side, the number of retail chain stores keeps growing, which will result in an increase in the demand for "in-store" salespeople and a decrease of traditional sales jobs offers.<br clear="none" /> <br clear="none" /> Additionally, it' well known that chain stores operate with centralized and mass buying systems, which allows them to buy large amounts of merchandise at the best price. The stores' buying process looks much more like a form of negotiation than pure personal selling, since often, the large amount of money involved requires negotiating with the supplier at the company's highest level, leaving the salesperson useless. <br clear="none" /> <br clear="none" /> A last issue sales managers cannot ignore is the impact of the Internet and other communication tools in the selling process. Today, many companies favor the use of standard computerized processes to buy and interact with suppliers, thus bypassing salespeople.<br clear="none" /> But can all these changes actually kill the sales force?<br clear="none" /> <br clear="none" /> Of course, not! <br clear="none" /> <br clear="none" /> We may see a decrease in the size of some larger manufacturers' sales forces and an increase of store sales jobs; however, salespeople and sales managers should be aware of the nature of changes required and be prepared to make the necessary adjustments to their individual job roles in order to remain needed. Selling is all about the value salespeople build for the company.<br clear="none" /> <br clear="none" /> Managers have to consider carefully whether to hire salespeople with little or no sales experience, since companies often cannot afford to spend the time and money required to get an inexperienced seller up to speed. In the future, it's expected that, in the retail chain market, the nature of sales will become more consultative, requiring personal, interpersonal, technical, and organizational skills that most newbies don't have. <br clear="none" /> <br clear="none" /> Cognitive ability, personality, values, experience, and extreme personal motivation are crucial parts of the performance puzzle. Another piece is getting salespeople to be more sales-support-oriented and better team players. The best salespeople understand the importance of building a solid customer relationship, and they are willing to work with other team members to achieve common goals. The use of technology to their best advantage is another indicator of good salespeople. They will be comfortable using contact managers and E-CRM tools, so customer follow-ups never fall between the cracks.<br clear="none" /> <br clear="none" /> Human resources policies such as recruitment, selection, and training are critical aspects to address the need to attract people with the right characteristics and help them develop these after joining the firm. Not detecting a bad fit early in the hiring process can mean future turnover or the person's inability to perform according to the company’s needs.<br clear="none" /> <br clear="none" /> Just as in a weak economy, when companies must adopt more innovative strategies to compete for clients, in a smaller sales job market, sales professionals also should look for the best original strategies to compete for the best jobs. <br clear="none" /> <br clear="none" /> In conclusion, in a chain-dominated market, sales managers should be focused on market trends and changes and look at salespeople less as "the <i>salesperson</i>" and more as consultants for buyers, and negotiators and market researcher for sellers. <br clear="none" /> <br clear="none" /> <i>Paulo Alexandre de Oliveira Duarte is assistant professor and head of the Marketing Graduate Program at University of Beira Interior, Portugal. He holds a PhD. in Management and is associated researcher at NECE - Research Unit in Business Science. For more information, visit his <a href="" target="_blank">homepage</a>.</i>