Over the weekend, the renowned make-up artist and cosmetic company entrepreneur Napoleon Perdis caused quite a stir with the common sense suggestion that department stores could reverse their flagging fortunes by investing in their staff.
However, some of Perdis’ comments have implications that go well beyond the retail sector:
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“Those people who are saying [to David Jones chief] Paul [Zahra] ‘you have to spend less and cut’ will be the first who will point the finger at him if he doesn’t get returns,” Perdis says.
When faced with a tough economic climate or slow sales, the first instinct of many businesspeople is to immediately start slashing costs. This has been especially true at the old media and retail dinosaurs as they struggle to compete against their online competitors.
Now, being careful on your costs is something you should take a lot of pride in. As long-time readers might recall, Old Taskmaster’s childhood hero was Scrooge McDuck.
Even sofas are treated as unneeded expenses around Taskmaster Towers. Why sit on a couch when a folding chair is just as good?
But it’s just as important to recognise that there’s a world of difference between an investment and a cost. The difference comes down to returns: If you spend a dollar and get more than a dollar back when all is said and done, consider it an investment rather than a cost that should immediately be cut.
If sales are slow, by letting go of your customer service staff you could be cutting back on your investment in the future of your business rather than cutting a cost. This is especially true if a lower level of customer service means that fewer customers are willing to pay the premium to shop in your store, instead of online.
So Old Taskmaster says you should heed Perdis’ advice. If your sales are slow, consider investing in your staff rather than immediately, unthinkingly rushing off to print the pink slips.
After all, sometimes you need to spend money to make money.
Get it done – today!