Macy’s cannot offer the use of its Scan and Pay app for purchases from departments where employees make commissions in union-represented stores in Massachusetts and Rhode Island, a labor relations arbitrator recently ruled. The ruling demonstrates how retailers are still facing challenges figuring out how to compensate and incentivize associates as stores are doing more to support online selling.
The arbitrator found Macy’s self-checkout feature in its mobile app bypassed the traditional point of sale register-based tracking of sales and commissions, thereby affecting and reducing commissions for store associates.
“Today’s victory for Macy’s workers sends a powerful message to CEOs across the industry that companies cannot use mobile apps to force a backdoor pay cut on workers,” said Marc Perron, president of the United Food and Commercial Workers International in a press release.
App-driven self-checkout is also being offered by other larger retailers. Curbside pickup and ship-from-store are other omnichannel practices potentially creating tensions with associates concerned they’re losing pay to online sales despite brick and mortar store’s increasing influence on online sales.
Santiago Gallino, a professor at the Wharton School who specializes in digital transformation, told CNBC that associates on commission may be less incentivized to assist shoppers heading to stores for help if they expect that many will only later go online make the purchase.
“The link between the cause and the effect is not so clean,” he said. “The moment when that link is broken, my sales rep may lose the incentive to be helpful and pay attention to a customers’ needs.”
In an out-of-stock situation, for example, to gain full credit for a sale, an associate may encourage a customer to come back to the store later rather than encouraging them to purchase the item online.
Speaking to WWD, Anil Patel, CEO of HotWax Commerce, said most retailers don’t have the technology to determine how to reward associates for online sales influenced by their actions or department.
“Setting sales quotas at the store level and measuring store success purely based on in-person purchases isn’t realistic, especially if your stores are being leveraged to fulfill online orders,” he said.
