Invest in training

Dear Sir,

I read with interest the article printed in your pages on January 16, 2007 urging shopkeepers to improve their attitude. The article intrigued me since we had conducted two surveys on shopping on behalf of the Department of Consumer Affairs in 2001 and 2003 (available at www.gov.bm and select Consumer Affairs) and Mr. Barnett’s comments about service mirrored the findings of those studies. In those studies, we had established a Satisfaction Index to measure how satisfied local customers were with a variety of features related to shopping.

Of the ten attributes measured, not one met the expectations of shoppers although one, Store Displays, come close. The lowest score was for Quality Compared to Price while Staff Product Knowledge and Quality of Service feared only marginally better. Apparently in the four years since the study was last conducted, little has changed on the Retail front.

It is worth noting that with Staff Product Knowledge and Quality of Service, these can be improved with training. Anecdotal information suggests that retailers are not willing to train staff because of the cost and the fear that if trained, other retailers will ‘steal’ their staff.

While these may appear to be legitimate concerns, a failure to train staff results in poor service and the likelihood of increased sales overseas either by travelling or by the Internet.

But what actually is the overseas spending market? In 2005, the Statistics Department reported that retailing spending in Bermuda totalled $642 million. Declared overseas spending by residents totalled $61 million, a figure which of course is subject to under reporting but is closer to the mark as a result of greater surveillance by Customs. Figures on spending on the Internet are difficult to track but our study found that this spending was approximately $7 million.

This figure seems low but our study also revealed that there was reluctance by residents to spend on the Internet because of possible credit card fraud. Now the only missing link is spending done by catalogue shoppers. In our study, about half as much of those who shopped on the Internet did catalogue shopping. So let’s estimate that $3 million was spent on catalogue shopping. Thus we can estimate that total retail spending by residents in 2005 was $713 million. So with spending on island at $642 million, 90 percent of all retail spending stayed in Bermuda.

The question for retailers is what proportion of the $71 million (ten percent of total spending) can they keep at home? In reality, only some of it. Studies in the retail sector have shown that customers will pay up to ten percent more at a retailer who provides better service. However, the amount saved between purchasing in Bermuda and abroad is usually a lot more than ten percent, even with shipping and duty costs included, which is one of the main reasons that those who shop overseas will continue to do so. This issue here is cost.

Although retailers face an uphill battle against Internet shopping and shopping while abroad, staff training must continue. Investment in training will likely be pale in comparison to the returns. For instance, for every one percent gain in getting persons to spend at home results in a $7 million increase in local spending. Training costs are likely to be a lot less than $7 million. And the ‘Buy Bermuda’ campaign is unlikely to do it. Our study found that nearly two-thirds of residents (64.9 percent) found the campaign to be of little or no influence. Retailers would be better off spending that money on training.

CORDELL W. RILEY

Managing Director

Profiles of Bermuda

17 Parliament Street

(Above Hamilton Pharmacy)

P. O. Box HM 2914

Hamilton HM MX