A second saved.

A recent article in the Wall Street Journal grabbed my attention. With the tsunami of grim economic news pounding retailers, the possibility of a grey sales holiday season worldwide and draining consumer confidence, I have started to wonder which tactics retailers would unload to survive into 2009.

One slightly dasterdly approach is to focus not on operating efficiencies but trimming labor costs through the use of timed cashier processing times at the register. Check out this comment from the article:

At a Meijer Inc. store north of Detroit, Daniel A. Gunther has good reason to keep his checkout line moving. A clock starts ticking the instant he scans a customer’s first item, and it doesn’t shut off until his register spits out a receipt. To assess his efficiency, the store’s computer takes into account everything from the kinds of merchandise he’s bagging to how his customers are paying. Each week, he gets scored. If he falls below 95% of the baseline score too many times, the 185-store megastore chain, based in Walker, Mich., is likely to bounce him to a lower-paying job, or fire him

Well ok. Nothing like a big stick over the employee head to increase performance. What is amazing about this is not that that stores are saving money, cutting down on employee chatter and the like, but that the endless quest for profits completely ignores the reason they are in business in the first place - That is to serve customers and make the shopping experience enjoyable.

While some employees don't mind the cash register clocks, many comment on feeling rushed, harried, and cranky. One employee reports that they no longer can talk to long term customers, and some customers feel that now the employees are under stress, and have no time to answer questions.

Which I think is the retail algebraic equation of the day. Operational efficiency over customer experience. The savings through speed and productivity are less than the customer satisfaction achieved. Over time no matter how efficient and effective your front line cashiers are, if they are too rushed and cranky to chat with the customers - why do it? Why risk losing customers to save a second?

A second earned is a customer lost?

Does the $ sign reduce sales?

For years the conventional wisdom for the pricing of goods has been to drop a cent. Customers, or so the theory goes, will respond much more eagerly is the price of the item is 19.99 rather than simply 20.00. Once this theory was set into practice it has become the standard. No one really tinkers with this formula, save for Wal-mart dropping one or two cents or governments musing about dropping the penny from circulation. And, certainly no one questions that retail prices should always be preceded with the ubiquitous $ sign right?

Well now comes a study from a research team at Cornell University that tested how consumer spending patterns changed depending on the $ sign included or not.

Trying to determine is there is any difference in customer purchasing activity the team created three different menus at a nearby restaurant. One included the $ sign and price, one with no dollar sign and a third with the price written as words. Testing their menus on 201 lunch goers they discovered that customers spent more when the price was listed without a $ sign than with.

One theory for this behavior is the thought that including a $ or the scripted word "dollar" created a mind set of "pain in paying" for the customer and was a repetitious sub conscious cue that they were parting with real money causing them to spend less.

Although this test was focused in a restaurant it stands to reason that the same principle would apply in any location that priced products individually. That by removing the Dollar sign would create higher customer purchases since no visual cue that they are spending money is present.

It;s an interesting theory and one that deserves some more study to be sure, but in these tight economic times it seems to me a worthwhile exercise for retailers to try out in an effort to convert more browsers to buyers.

Who really needs the dollar sign anyway?