BONUS PLAN AT MACY’S AIMS TO CORRECT GAPS IN CUSTOMER SERVICE
Byline: David Moin
NEW YORK — The often frustrating search for service, a fact of shopping life at most department stores, may soon be alleviated at most units of Macy’s East.
Determined to improve the performance of its sales staff — and not coincidentally do the same for its volume — Macy’s East said Friday that it will roll out a “selling performance plan” next month, providing about 5,000 sales associates who are paid by the hour with bonuses if they sell more goods.
The plan, tested in 19 Macy’s stores last fall with 2,000 associates, will be expanded to 27 more units on Sunday and another 35 sometime this summer. Because of union considerations, it will not, however, be put into effect at the unit where complaints about service resonate loudest — the Herald Square flagship. Nor will it take hold, at least for a couple of years, at the Parkchester unit in the Bronx or the stores in Rego Park and White Plains, N.Y.
Macy’s explained that the workers in those stores are covered by a contract with Local 1S of the Retail Wholesale and Department Store Union that does not expire until 1999. However, the majority of the 91-unit Macy’s East chain will convert to the plan, which will be implemented in several key departments: women’s apparel, accessories, hosiery, jewelry, children’s wear and intimate apparel, as well as domestics, housewares, tabletop, gifts and men’s apparel, excluding men’s clothing.
Departments where workers are generally paid by commission will not convert to the plan. They include furniture, bedding, floor coverings, shoes, men’s clothing, cosmetics and fragrances. Some specialized selling areas, including furs, bridal, Macy’s by Appointment personal shopping, marketplace/food and leased departments also will not participate in the SP plan.
It’s been particularly difficult for Macy’s to focus on service due to all the turmoil it endured in the Nineties, including its two-year bankruptcy and the Federated Department Stores takeover in 1994 that pulled the chain out of bankruptcy. There has been enormous pressure to cut costs, including some old bonus arrangements.
In addition to bolstering service, the plan could lift Macy’s East’s same-store sales, which dropped 2.1 percent last year.
“This should help,” said Howard Eilenberg of LJR/Redbook Research on Friday. “But you have to be careful that clerks aren’t elbowing each other out of the way to get the business.”
“I love the idea,” added Kurt Barnard, president of Barnard Enterprises Inc. retail consulting, Scotch Plains, N.J. “The question is, what took them so long?”
Barnard, echoing the comments of many veteran shoppers, observed that helpful sales associates — or any sales associates, for that matter — have been hard to find in many Macy’s departments in recent years.
“All too often, sales associates without incentive targets couldn’t care less about customers,” he said. “At a full-service department store like Macy’s, customers expect to find helpful, knowledgeable sales people.”
Barnard further noted that the new Macy’s program can instill the retailer’s associates with some competitive spirit, motivating them to write notes to special customers about new merchandise and store events, for instance.
“Suddenly they become partners with the store,” he said. “I have no doubt this will increase Macy’s volume and profitability.”
“The lack of service may be particular to the New York area,” Eilenberg said. “Prior to the acquisition by Federated, Macy’s had a reputation for poor service. They just felt that having the right merchandise was the all-important thing and that people would be willing to put up with terrible service to get great merchandise.”
While that may have once been true, “times have changed,” he said. “There’s a desire on the part of the customer to receive better service. I’ve seen retailers try to provide it with some degree of success and then drop their initiatives. This shows that the circle comes around again.
“Nordstrom has so dominated the service issue, Macy’s is perhaps trying to emulate them,” Eilenberg said. “It’s a worthwhile effort on their part.”
A Macy’s spokeswoman said the program should create “a happier work force” and that commissions do not necessarily enhance selling performance and customer service levels. Seasonal fluctuations in the business affect the earning power of sales associates and that makes them go through roller-coaster periods of anxiety.
“They prefer more predictable, stable earnings,” she said.
In a statement, James Andress, Macy’s senior vice president of human resources and consumer affairs, said the company was “enthusiastic” about the results in the 19 pilot stores, adding, “We believe the SP plan is good for both sales associates and for the company. It provides quarterly and semiannual incentives based upon sales productivity, which helps drive sales and service while regularly rewarding associates for their efforts.”
Employees at the 19 stores had been paid by commission until the plan was implemented. At the newly affected stores, workers are paid by the hour.
New sales goals for the participating associates will be set at the beginning of each quarter, Macy’s said. Twice annually, the associates may receive an adjustment to their hourly rate based on performance.