Cosmetic retail advice: hire more staff
Back in Australia this week after signing a deal with luxury US department stores Neiman Marcus and Bergdorf Goodman to carry his line of make-up and cosmetics, the first such deal for a local brand, Mr Perdis said Australian staff were in desperate need of a training and education program that extended beyond simply how to use a cash register.
"Department stores are going to have to bite the bullet further with increasing their staffing levels so that customers feel there is a reason to go in to them; it's expensive upfront but not expensive long term," Mr Perdis said.
"At the end of the day there has to be a major incentive for a woman to go in the department store and feel beautiful."
His comments come as the Australian retail landscape is shaken by the online shopping juggernaut, with websites, many of which are operated from overseas, continuing to dazzle consumers with massively discounted products.
Traditional bricks and mortar stores such as Myer and David Jones have been fighting a running battle with these sites for years, with the cosmetics and beauty category particularly vulnerable to online players and shoppers happily selecting their favourite foundation, lipstick or fragrance online.
Recent figures from the Commonwealth Bank show cosmetics and beauty had the second highest penetration by overseas websites compared to other retail segments, with 88 per cent market share snatched by foreign sites. This was second only to sporting and outdoor as a category that had 90 per cent overseas domination.
According to the National Australia Bank, online sales in Australia hit $12.8 billion in calendar 2012, up 23 per cent for the year, easily eclipsing growth of about 3 per cent for bricks and mortar shopfronts.
Mr Perdis, who has an exclusive distribution deal with David Jones, as well as 75 company-owned Napoleon concept stores in Australia, said better service levels would involve upfront costs that directors and shareholders needed to accept.
He urged David Jones boss Paul Zahra to resist the calls to further snip costs if that meant having less staff and less trained staff.
"Those people who are saying 'Paul you have to spend less and cut' will be the first who will point the finger at him if he doesn't get returns. And at some stage they will realise that like everything in the global economy, you have to actually reinvest in humanity to give you the returns."
David Jones was forced recently to lift its investment in staff after a decision to reduce staffing led to a flood of customer complaints and soft sales. As part of Mr Zahra's $160 million growth strategy the upmarket department store is reinvested in staffing including a 10.2 per cent lift to wages over three years.
"David Jones has come off a base where management before were reducing costs, meaning in staffing, Paul Zahra has put more staff in stores. But he needs to tell shareholders they need to go further with that and 'bite the bullet'," Mr Perdis said.
Mr Perdis said department stores should also improve the induction program for staff before they begin working on the cosmetics floor.
"They get inducted on how to use the cash register, on how to be polite, but they need to be inducted on how you close on a customer, how you give information to a customer, how you network through cross-selling."
Frequently Asked Questions about this Article…
Napoleon Perdis warns that department stores must 'bite the bullet' and invest in more and better-trained staff so customers have a clear reason to shop in-store. He says improved staffing and service can stop customers defecting to online retailers and, while expensive upfront, should pay off long term.
The article says online shopping is strongly impacting the cosmetics category: Commonwealth Bank figures show overseas websites hold 88% of the cosmetics and beauty market share, making it one of the most heavily penetrated retail segments. The National Australia Bank also reported Australian online sales hit $12.8 billion in 2012, up 23% for the year — far outpacing roughly 3% growth for bricks-and-mortar shops.
According to the article, David Jones reversed earlier staffing cuts after customer complaints and soft sales, putting more staff into stores as part of a $160 million growth strategy. That plan includes a 10.2% lift to wages over three years to improve service levels.
Perdis recommends induction and training that go beyond basic tasks like using a cash register. He says staff should be taught how to close sales, give product information, cross-sell and otherwise make customers feel beautiful — skills designed to improve conversion and in-store experience.
The article notes that traditional bricks-and-mortar stores such as Myer and David Jones have been battling online players for years. David Jones in particular has increased investment in staffing and wages under its growth strategy to counter the lure of heavily discounted overseas websites.
Perdis argues that reinvesting in 'humanity' — i.e., more and better-trained staff — is necessary to generate returns. The article supports this with David Jones' experience: cutting staff previously led to customer complaints and weaker sales, prompting the retailer to invest more in staff and wages.
Commonwealth Bank data cited in the article show sporting and outdoor goods have the highest overseas website penetration at 90%, with cosmetics and beauty second at 88% — indicating these categories are especially vulnerable to offshore online competition.
Investors should monitor how department stores respond to online competition — specifically whether management invests in staffing and training, executes growth strategies (like David Jones' $160 million plan), and how that impacts customer complaints, sales trends and wage costs. These factors can signal whether a retailer is prioritising long‑term in‑store recovery or short‑term cost cutting.
Call 1300 880 160
Start a chat
Schedule a call
