Retailers are hurting, especially as shoppers buy more products online. But the sales associate role in this quandary receives less attention. As working in retail has developed from a career to a gig economy job, brands, retailers and customers are confronting the unfortunate effects of this shift. At today’s juncture, the sales associate is one of the most underutilized tools in a brand’s toolkit.  Providing high-quality service in-store is one of the most effective practices to drive a company’s sales, but today, subpar in-store service has significantly affected the shopping experience, lowering sales and fueling the shift to e-commerce. We spotlight the sales associate and stylist roles here to examine how they are changing—both online and offline—and offer solutions for companies to evolve these positions in a fast-changing commercial environment.

Why We Wrote This

Sales associates are the infantry for a brand or retailer. They are essential to the success of the overall mission but are often neglected and considered stagnant workers. However, as retail continues shifting into the experience economy, having high-quality service is an increasing differentiator. At the same time, there is ample proof that the more training and career progression a company gives its workers, the better they perform. While the rest of the world moves towards informal, gig-economy employment, it’s worth considering if retail needs to go in the opposite direction.
— Richie Siegel, Founder and Head Analyst, Loose Threads

With nearly 10% of American workers performing sales associate jobs, it’s vital that brands and retailers responsibly leverage this human capital by thinking through their career progression and stop underestimating the role they play in a brand’s success. Investing in these workers and giving them flexibility is not only the right thing to do but can also be the key to improving the retail store experience and falling profits. Treating these workers, especially female associates, like commodities will no longer cut it.
— Janet Acosta, Strategy and Insight Lead, Loose Threads

Trailblazers

  • Sephora is giving sales associates independence and lets them determine their career paths, leading to higher foot-traffic and sales.
  • JCPenney is launching the Project Cinderella initiative in its “Salon by Instyle” concept-stores, helping to elevate both the working experience for stylists and the salon experience for customers.
  • Glossier is turning regular women into product experts and brand advocates by letting them earn commission on sales.
  • Girl Scouts continues to modernize its distributed sales consultant model, holding on to its 7% share of the cookie market.
  • Stitch Fix mixed deep data science with the human touch to break through a sea of online styling competition.
  • Screenshop, an app heralded by Kim Kardashian, allows shoppers to use celebrities as their stylists and takes a portion of online shopping sales for itself.

Stragglers  

  • Avon is struggling to remain relevant in the United States with its traditional sales consultant model, having to turn to nascent, untapped international markets for growth.
  • LuLaRoe is attempting to bring the distributed sales consultant model online, but selling itself as a full-time career option approaches Ponzi-scheme territory, leading to a backlash.
  • Trunk Club made an initial dent in the online styling space, only to succumb to competition when it failed to take advantage of technology and put its data to use.

How We Got Here

1) The degradation of retail work is intrinsically linked to the degradation of the consumer shopper experience.

Although the current decline in store foot traffic is the result of several forces—including a shift to e-commerce, new direct-to-consumer companies, Amazon, and other issues like discounting and oversaturation—there is no doubt that the plight of the sales associate has also adversely affected the success of retail.

Throughout most of the 20th century, working in retail was a career, not just a job. But as consumerism boomed in the ‘80s and ‘90s, retail roles started looking more like part-time jobs in the gig economy. Retailers began to focus on scaling and increasing sales, and in this framework, human capital became a means to an end. Companies stopped thinking through the careers and livelihoods of their employees, who now mainly existed to fill spaces, man cash registers, clean up messes, and hit strict sales quotas—with the acknowledgement that they were dispensable. Increasingly, employees are usually sourced too quickly or from the wrong places, and aren’t trained effectively, often neither incentivized to care for their jobs nor aligned with the mission of their company. Additionally, growth opportunities for retail associates are limited, resulting in lowered worker motivation. In turn, retail work has deteriorated, as has the consumer shopping experience.

2) JCPenney and Sephora are developing sales associates’ careers, leading to an increase in store traffic and profitability.

Since shoppers are no longer impressed or excited by bald consumption, the sales associate role is evolving to accommodate consumer and industry shifts. Today, the role remains as crucial—if not more integral—to a company’s success. Older stores are bracing themselves for the “experience economy,” new retail upstarts are popularizing the pop-up and retailers like Apple and Starbucks are setting new standards with well-compensated and -educated store associates. Some companies have improved their employee structure incrementally along the way, experimenting with and giving retail stores alternative employment models. Others have taken steps to disrupt the store experience by changing the role that store associates play.

Trailblazer: Sephora

At Sephora, store associates are given more training, support and opportunity to switch roles as they grow. They also join a company that establishes a clear career progression. Those who begin as cashiers can later meet with management to discuss how they might like to specialize in the “worlds” of color, skincare or fragrance. Once employees, or “cast members,” move on to these roles, they work on the “stage”—the black-tiled section of the store where customers shop and test products. Employees then have the opportunity to become Certified Color Artists who give makeovers to interested customers, a role that  comes with higher compensation. As the number-one specialty beauty retailer in the United States, Sephora’s efforts are paying dividends at a time when many others are confronting falling foot traffic and sales.  

Trailblazer: JCPenney

JCPenney is also trying to disrupt the department store experience by enhancing its hair salon, the Salon by Instyle, with a new “Project Cinderella” initiative aimed at improving stylists’ working conditions. Benefits include giving the stylists the ability to set their own schedules, prices, health insurance, profit sharing, paid time off and educational opportunities; all while earning from 50% to 70% commissions. JCPenney claims that the salon offers “some of the industry’s highest commission and benefit packages, while creating an environment where our employees can grow and thrive.” This has helped JCPenney salons recruit the best stylists with robust client lists into its stores, according to its 2016 Annual Report.

Actionable Opportunities and Questions

  • How should companies communicate the career paths they offer frontline employees both externally and internally? How would these changes bring in new, different and more motivated candidates?
  • How can retail become an attractive career option for talented individuals interested in the sector? How can this renewed interest help the retail industry thrive? What initiatives can you focus on to make this a reality?

For Brands and Retailers

  • How can you support your frontline employees and their endeavors?  What opportunities can you offer for advancement? Are they interested in opportunities apart from higher pay that are easier to offer right away? Through what avenues can you learn more about their needs?
  • How can you improve training programs for retail associates and how can these investments ameliorate store environments? Where can you draw inspiration and guidance for this training? How can you reorient the work of your retail associate team more along the lines of hospitality as opposed to mundane labor?
  • Do you offer performance-based incentive plans to drive sales of specific products? Does the structure change as sales associates rise to personal stylists? How does this affect customer loyalty?

For Investors

  • How much investment are your prospects and portfolio companies willing to give to their frontline workers?
  • Will these employees be independent contractors or are there benefits from making them full time employees? How prepared is the team for these hiring responsibilities? What does this say about the company’s knowledge of how to succeed in the modern economy?
  • With a range of tools available for companies to sell merchandise, how is personal styling and shopping necessary for a brand’s business? How can these resources be utilized elsewhere?

For Real Estate Professionals  

  • How can you use your local connections to help the stores you’re working with find the right employees in the different geographies you serve?
  • Which events and seminars can you provide in your spaces that will attract more motivated employees to find jobs in your locations? What simple services and perks can you provide them to improve their lives better and increase the chance that they will stick around?
  • How can you encourage the retail stores in your locations to improve store associates’ working conditions and standing? How will this help your locations increase foot traffic and store engagement?

3) Glossier is seeing big gains from modernizing the old-school distributed sales consultant model, while those failing to innovate the model remain stagnant.

While sales associates, personal shoppers and stylists work within the confines of a store or a styling company, other companies rely on distributed sales teams. Companies with distributed sales consultant models work by selling items to independent sellers at a wholesale price, who then sell items to shoppers at a retail price. The sales consultant, in this case, acts like the end retailer.

Companies such as Avon and Mary Kay initially attracted stay-at-home women who had extra time and already received financial support from their husbands. These women typically bought items and brochures from the company and then sold the products in their communities, finding customers on-the-ground and creating larger networks of women who continued to spread the word about the products. People who recruited additional sellers were given a percentage of those sales as well, creating an incentive structure that helped grow the businesses.

While distributed sales consultant models mostly existed offline, they are now moving online as well and growing exponentially. Tapping into online communities can allow sellers to scale more quickly and social channels like Instagram are accessible to companies to build their followings online and off.

Trailblazer: Glossier

Glossier is taking a different approach to the distributed sales consultant model. Instead of having its influencers purchase the products outright, the company creates online merchandise pages for its approved ambassadors, which allow shoppers to buy products that ambassadors recommend right on Glossier’s website. Glossier reps receive compensation when they generate sales without having to purchase any inventory, giving the brand tighter inventory control and alleviating the burden for ambassadors. The company markets its ambassador program with its participants in mind—a way to supplement their studies and career goals. This strategy is working well for Glossier, with 79% of the company’s 2016 sales came from peer-to-peer evangelists, according to founder Emily Weiss.

Trailblazer: Girl Scouts

Girl Scouts is a quintessential example of the distributed sales model. Young members are trained to sell the company’s private label cookies by going door-to-door or creating cookie stands in their neighborhoods. Like Glossier, Girl Scouts holds all of the inventory and ships the products to customers at a later date. This nonprofit has created a cookie phenomenon; the company has a 7% share of the total U.S. cookie market and has sold approximately 200 million boxes since 1999, making more than $700 million in revenue.

Girl Scouts’ model is not only about driving revenue, but also aligns with the mission of the company—teaching young girls how they can become role models and leaders. This is a great example of how distributed models can tap into existing communities and behaviors and turn them into a sales force—a model that many companies have used for inspiration. Even so, it’s striking that the only way to buy Girl Scout cookies is though the organization itself. The product remains unavailable both online and offline, a testament to the promise of this sales model.

Older distributed models are becoming stagnant

While the distributed sales consultant model can be put to good use as Girl Scouts and Glossier have shown, it is not universally applicable. Some companies use the model in predatory ways, often linked to how they manage inventory, while other businesses are seeing their customers tire of this sales method. As consumer consciousness increases, these companies must tread lightly—their reputation can quickly sour if they take advantage of their distributed sales associates.

Straggler: LulaRoe

LulaRoe is a clothing company powered by an online sales consultant model: women across the United States act as Independent Retailers, purchasing inventory from LulaRoe at wholesale prices. These women then sell the brand’s products to people in their offline and online communities for a markup, thereby making a (theoretical) profit. The effort women put into these endeavors can vary—some update their social channels on a daily basis, painting beautiful lifestyle imagery, while others are left with thousands of dollars of merchandise they don’t know what to do with because of minimum order quantities.

Early on, there was pent-up demand for the trendy and colorful clothes LulaRoe sold. The first sales consultants made thousands of dollars each month. However, in the company’s model, sellers higher up in the food chain are incentivized to find additional sellers to purchase inventory; they earn more when someone they refer buys inventory from the company than when they make a sale themselves.

LulaRoe makes money by selling its products to women at wholesale, rather than selling the product itself. This creates an environment where the company can make money even in the absence of consumer demand, as they continue to convince women to become Independent Sellers for a minimum price of approximately $5,000. This is dangerous—many women go into debt to buy LulaRoe merchandise, only to be left with excess clothing they cannot sell. LulaRoe’s duplicitous messaging convinces women that selling can provide them with full-time incomes—an impossible feat given that the demand for the product is not enough to cover the expanding supply. As more sellers join in, the demand for the product diminishes, which further reduces the value of the inventory its sellers purchase.

Straggler: Avon

Avon was founded in 1886 and grew into one of the most successful examples of the distributed sales consultant model, particularly in the 1960s. The model worked because it engaged stay-at-home women with time on their hands who lived in areas with little commercial retail.

After decades of success, Avon’s revenue decreased 35% from $8.8 billion in 2012 to $5.7 billion in 2016, according to annual reports. One reason is that the community of women the company initially engaged changed their behavior. Its door-to-door sales model limited, the company has failed to keep up with the shifts in e-commerce and social media, and has not succeeded in reinventing itself in the era of omnichannel retail.

Additionally, the brand is seeing competition from stores like Sephora and Ulta, which boast large selections and well-designed, functional websites. Avon, on the other hand, looks outdated and dusty and is losing out to its main competitors, L’Oreal and Revlon, which have both done a better job at keeping up with consumer tastes and engaging younger shoppers. Although this model has existed in the United States since the late 1800s, the channel is still breaking through emerging markets in places like Brazil and South Africa. For example, more than 80% of Avon sales come from outside the U.S. with Latin America accounting for 40% of sales and 60% of profit. The numbers make sense as these markets catch up to the Western Hemisphere, but the company still needs to move ahead or it will only remain competitive in underdeveloped markets.  

Actionable Opportunities and Questions

  • How can you add an distributed sales consultant subsidiary model to your brand as part of your customer acquisition strategy?
  • How will tapping into these micro-influencers and sales associates help you find shoppers that are harder to find in your own marketing?

For Brands and Retailers

  • Think through the digital lives and motivations of your target consumer. What is she looking for? How can you use influencers, stylists and distributed sales teams to drive sales?
  • What are ways to create personas from your influencers that would appeal to different audiences of modern buyers? How can you promote influencers for preferences and needs that cover such things as athleisure, work wardrobe, a creative-field work wardrobe, clothes for lounging fathers and clothes for older women who want to stay on-trend? How can you use consumer insights and research to keep up-to-date on these preferences?
  • What should the commission structure be for these sellers? How can you compare this price to your typical customer acquisition cost to find a sustainable rate?
  • How can you ensure they are contributing to additional sales rather than cannibalizing your brands’ already-existing sales?

For Investors

  • What segment of shoppers is the company you are looking at trying to capture? Is the company providing the shoppers something novel they can’t find anywhere else? How is the company using styling, store associates, and influencers to psychologically reach them?
  • How do product assortment, store associates, distributed sellers and the way data is used to style consumers enhance the messaging and customer service this particular segment of shoppers is receiving?

For Real Estate Professionals

  • What demographics of shoppers do your properties attract? How can you use this data creatively to help stores figure out how to staff and build their stores?
  • How could distributed sales models coexist with your properties? How could these sales consultants help you drive foot traffic?
  • How could you use data from distributed sales companies to learn about new tenants that might succeed in your markets?

4) As algorithm-driven sales and recommendations lead to diminishing returns, online styling services that blend deep data science and the all-important human touch are filling the void.

Although the shopping experience was centered around humans for centuries, the internet has uprooted traditional practices. Early web companies like Amazon revolutionized the shopping experience, allowing shoppers to buy products without interacting with any human at all. As more people began to buy goods online, websites have continued gathering data to improve the experience.

Automated product recommendations are a key output of this data collection, which ideally allow a website to create a personalized shopping experience for each individual customer. In 2013, 35% of sales on Amazon.com and 75% of sales on Netflix were directly related to automated recommendations, according to a McKinsey study.

However, recommendation engines, while successful in the short-term, have proved too impersonal—and at-times entirely random—to completely eliminate the need for human input. But more broadly, the success of ecommerce and the internet has brought about an oversaturation of products, sparking a resurgence in the need for personalized curation. In a world where people are faced with the paradox of choice, making inferences based on past realities is not always predictive of the future. This has created a new opening for people to reclaim their role in sales to supplement a data-driven market.  

The internet has also given personal shoppers and stylists ways to scale their services. Some did this by creating online profiles, websites and Google and Facebook ads. What’s more,  a new crop of companies has created entire styling and personal shopping businesses that exist online.

Straggler: Trunk Club

Trunk Club was one of the first companies that successfully moved personal styling online. Founded in 2009, Brian Spaly, who also founded Bonobos, built the company on making relatively high-end styling services sustainable and scalable on the internet. Trunk Club was largely driven by human input and interaction—shoppers were assigned to Trunk Club stylists who worked on commission and attended to the shoppers’ styling needs by sending them trunks of clothing on demand. This maintained styling practices as they had traditionally existed offline. Many stylists also formed personal relationships with their clients, meeting in person and providing ongoing support.

This service, although initially successful, did not scale as well as Spaly intended. After Nordstrom purchased the company for $350 million in 2014 when revenues reached $100 million, recent projected revenues were lower than expected and the company took a $197 million write-down. Its online nature also illuminated the problem of fit, which is much easier to accomplish in person. The friction of trying something on at home and then sending it back if it did not fit was too inconvenient and expensive, given the high cost of each trunk. Nordstrom is responding by innovating models that are able to remove this friction between offline and online shopping. For example, they have conceptualized a service where shoppers find items they want online and then go to Nordstrom to try them on in a customized fitting room.

Trailblazer: Stitch Fix

While Trunk Club was a preliminary version of online styling, Stitch Fix furthered the concept by mixing data science with the human touch. To date, the company has amassed more than 2 million loyal clients, blending data from customer surveys with data from its merchandise in order to present its customers with viable clothing options. Stylists are then encouraged to look at clients’ Instagram profiles, Pinterest boards and other identification markers to best determine which items would be a match for their styling needs and desires. These processes ensure that customers are given clothing options that are the right fit, as well as the right style.

While Stitch Fix improved the underlying online styling experience, it also democratized the practice. Items on Stitch Fix range from $50-$250, come from both low- and high-end brands and offer maternity and petite options. This mass-market approach has made the company successful in markets and demographics not normally associated with styling. The company recorded more than $1 billion in revenue in 2017—Trunk Club, conversely, made less than one third of that in the same year.

Trailblazer: Screenshop

Screenshop, a new app heralded by Kim Kardashian, has also found a way to mix the human and the digital while taking advantage of the power of celebrity styling. Shoppers take screenshots of outfits on Instagram that they want to emulate. The app then directs them to a store with shoppable items from the outfit that represent various brands at multiple price points.

Shoppers can search images of an already-created ensemble for free on Instagram and then buy the looks for less. Instead of giving her preferences to a stylist, the shopper uses celebrities and other influencers for inspiration on styles and outfits. The app has affiliate relationships with around 460 brands and access to 10 million products, providing shoppers a wide variety of choices. However, because the app  takes a cut of sales that wouldn’t have existed without the work of the influencers, it could cut the influencer out of the economic equation altogether.  

Actionable Opportunities and Questions

  • How can you determine the optimal mix of data science and human input for your particular business model? What would happen if you dialed the human element up or down? How would this attract different customers?
  • Which particular data efficiencies can make your company run smoother, providing more resources for frontline workers? How could you offset these costs with additional sales and service gains?
  • Where is relying too much on data diminishing the user experience around a particular business? How can you invest more in people to offset the current limitations of technology?

For Brands and Retailers

  • Are you relying too much on recommendation algorithms to find more styles and products for your shoppers to try?
  • How can you personalize the discovery process so that shoppers are positioned to buy additional products? What type of testing can you perform to accomplish these sales goals?
  • If your business is relying too much on human input and creating expensive experiences only for the high-end, how can you use data science to decrease the time each stylist spends with each customer? How can these efficiencies give stylists more time to perform other duties or service multiple customers at the same time without the quality of their work diminishing?
  • How do you maintain the relationships with high transaction-value customers who have remained loyal through personal shopping programs?
  • Do training programs need to be created or enhanced to provide the right amount of brand and product knowledge for the stylists to give personalized advice? How can data science help stylists understand customers better?

For Investors

  • Where does the business you’re looking at stand when it comes to the mix of data science and human input? What are the scaling implications of this mix, as well as the skillset of the team?
  • What type of data is the company using to provide styling, personal shopping and recommendations to customers? Is data best-in-class or is the company lacking in expertise on this matter?
  • Is the company using human input for something that data could provide more effectively? Is it leveraging the right type of human input to take the model further or is it underutilizing it?

For Real Estate Developers

  • Where can you take the lead in the data and human mix? How can you provide digital and data solutions inside stores to help sales associates do their jobs more effectively? What are best-in-class examples you can find and leverage?
  • How can you help tenants invest in additional infrastructure in stores like touch screens in fitting rooms to call in clothes, store retrofits and more? How can these added conveniences attract more tenants and e-commerce shoppers that are working in the modern era?

Going Forward

Companies need to put renewed focus on training and developing frontline employees, who are poised to play a key role in retail’s revolution. They need to invest in digital infrastructure and use data efficiently, without letting data become a crutch or the business model itself. As old models are torn apart and new ones form to cater to shifting demands and new technologies, it is up to companies to decide which models to keep and which to discard. Maintaining a balance and thinking through what’s best for particular business models is key as brands and retailers strive to find the optimal balance of tech, human, physical and digital infrastructure needed to thrive and compete. We are, after all, people striving for human—not algorithmic—connections.