If you’re selling to the high-end customer, you want to make sure that you have integrated the “high-end focus” all the way through your business plan to the hiring, training, compensation and management of your floor sales staff.

The Manhattan real estate market is the most competitive in the world, where high-end retailers are matched with the most prestigious retail space. Frequently, trends become evident in Manhattan before they show up elsewhere. In the luxury retail market, the ground is shifting under everybody’s feet for a lot of reasons, some cyclical and some that look to be permanent changes. As everybody knows, the US retail market is still finding its footing after the Great Recession. Furthermore, due to Internet-based competition, bricks-and-mortar store locations are finding it necessary to change their marketing strategies. Product lines that are based primarily on “aspirational luxury” brand marketing – and not on inherent product attributes – are struggling as today’s millennial consumers increasingly view “conspicuous consumption” as undesirable. Fast-fashion – moderately-priced staple items and capsule collections from famous designers marketing “bridge lines” at retail outlets like H&M and Zara – is winning at the lower end. And at the higher end, bespoke and hand-crafted items bought at on-line retailers like Etsy and ModCloth are catching on with more affluent and better-educated consumers.

Success is Not Just About Money Anymore

So what about prestige locations in cities like Manhattan? There certainly is no shortage of retail tenants. But we also see an awful lot of “churn” in the tenancy. While this kind of turnover may be in the interest of certain lessors in certain situations (it can keep the streetscape fresh, which drives retail foot traffic to the area), your business plan may well be based on an expectation that your retail location(s) will “stand the test of time.” Enduring retail businesses make financial planning a lot easier, of course, because you have a longer or even an indefinite term to recoup the considerable sunk costs of establishing a luxury outlet. In today’s challenging retail market – especially in the most demanding of locales, like Manhattan – it takes more than just the investment of money to achieve success. In an interesting way, the 21st-century revolution in retail caused by the Internet is forcing bricks-and-mortar retailers back to their 19th and early 20th century roots – back to the tradition of impeccable customer service rendered by knowledgeable, highly-trained, and well-compensated salespeople.

At the high end in retail, most entrepreneurs will willingly spend a fortune on the branding, the store architecture and fixtures, and the media campaign. But when it comes to hiring the in-store staff? Unfortunately, for too many retailers, the sales staff is the missing link, an underpaid after-thought and not the leading element of a smart 21st-century customer engagement strategy that they should be. We think that the “killer app” of the bricks-and-mortar retail outlet is tactile product experience coupled with the personal education of “hand-selling.”

3 Essential Elements of A World-Class Retail Sales Program

1. WHO are you hiring? The most fundamental element is to hire the right people to begin with. If your business strategy is to serve affluent consumers in a prestige location with top-end goods, then your sales staff must share a sincere enthusiasm for the products, or you are unlikely to be successful. This means hiring people who already know a lot about your product line and who have a keen interest to learn more. It means hiring people who dress and carry themselves in a way that can make them authoritative to your customers. At the high-end of retail, your salespeople are also educators. Naturally, these people must be compensated better and must be well trained and managed.
2. Managing the sales conversation: Mass media driven branding is not enough to support price differentiation in the 21st century. If your line is not distinguished by inherent product attributes (quality components, careful construction, durability), and then your sales margins will be under extreme pressure. Of course, carrying the right products is not enough. Your sales people must be able to explain the product attributes to your customers in a persuasive and engaging way – very much like one hobby enthusiast speaks with another. This requires serious management engagement.
3. Managing the “sales tempo:” It is important to ensure that your sales staff’s expectations about the “sales tempo” are aligned with reality. At the low to mid-range, frequent sales of modest value happen all the time, and most transactions are nearly anonymous. Products at the high-end sell very slowly and a great premium is realized from personal relationships built over a long time. Affluent customers may be willing to spend a great deal of money at your store, but they will want to fully understand your product’s value proposition and they will want to have a trusting relationship with the sales staff. If your sales people’s expectations are not aligned with the customer’s, this will be a major impediment to your success. Furthermore, if you have constant turnover in the sales staff, you may be abandoning a lot of “relationship equity” with your customer base.

In 21st-century prestige retail, there will be a renewed focus on “inherent product and service attributes.” To ride that trend to success, be sure to integrate your thinking about the sales staff into your business strategy from the very beginning.