Retail salesperson is the most common job in America. The sector is still growing, but most of the jobs come with lousy compensation. The average salary? Just $25,310 per year, according to the Bureau of Labor Statistics.
There's no great mystery as to why companies keep salaries low -- it's an easy way to keep profit margins up. But Zeynep Ton, a professor at MIT's Sloan School of Management, argued in an article in the Harvard Business Review that the tactic usually backfires. By cutting back on manpower, companies experience a drop in performance, which, in turn, leads to a dip in customer satisfaction, and then the ultimate corporate problem -- a drop-off in sales. Home Depot is a case in point:
When former GE executive Robert Nardelli became CEO, at the end of 2000, he cut staffing levels and increased the percentage of part-timers to reduce costs and boost profits. Those moves achieved both goals immediately, but they eventually caused Home Depot's excellent customer service -- the company's claim to fame and, arguably, primary source of competitive advantage -- to suffer, customer satisfaction to plunge, and same-store sales growth to drop and even go negative in some years.
Treating workers well pays off in the long run, Ton argues. She says that four employers, Costco, Trader Joe's, QuikTrip and the Spanish supermarket chain Mercadona, are prime examples. Here's why:
The Trader Joe's Company has more than 365 stores in more than 30 states, and offers upscale grocery fare such as health foods, produce and nutritional supplements. It has some 10,000 employees.
Starting salary: $40,000 to $60,000. Managers also have the potential to earn six-figure salaries. Benefits: Trader Joe's contributes an additional 15.4 percent of your gross income each year to your retirement account.
Costco Wholesale Corp. has more than 590 membership warehouse stores in 40 U.S. states and Australia, Canada, Japan, Mexico, Puerto Rico, South Korea, Taiwan and the U.K. It has roughly 174,000 employees.
Starting salary: Stockers and cashiers make on average between $11.84 to $12.61 an hour. The average starting salary for a full-time employee is $45,000 a year, compared to just $17,000 for Sam's Club. What the CEO says: "At Costco, we know that paying employees good wages makes business sense."
QuikTrip Corp. operates more than 600 gasoline/convenience stores in 10 states, mostly in the central U.S. It has roughly 9,600 employees.
Starting salary: An entry-level clerk earns an average of $8.66 an hour, but most store managers are promoted from within and are paid relatively well. The overall salary average for all staff is $32,966. Happy employees: Fortune magazine has named QuikTrip one of the 100 best companies to work for in every year since 2003. It has robust training programs for workers -- even low-level employees receive two weeks of training. Employees also like working here -- staff turnover is 22 percent, the lowest in the industry.
Mercadona S.A. has 1,419 stores throughout Spain. It has roughly 70,000 employees and is expanding, having hired 6,500 employees last year alone. It is known for offering consumers the lowest prices in Spain.
Starting salary: Spain has an extraordinarily high unemployment rate of 26 percent; salaries tend to be rock bottom. According to the website Hoy, the base salary for a Mercadona supermarket clerk is 12,600 euros a year or roughly $16,400 -- that's still about a $1,000 a year higher than the average salary for clerks in Spain. But what makes Mercadona exceptional in Spain is that it pays bonuses and gives raises. Employee perks: Employees get extensive training -- one month's worth versus just seven hours for the typical grocery worker in the U.S. And most importantly to quality of life, employees have predictable schedules. Workers learn their schedules one month in advance and don't have to work different shifts from one day to the next. They're also given full-time schedules, something that low-wage workers in the U.S. often lack.
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Average hourly wage for sales associates: $10.41
CEO William Dillard II's total compensation last year: $4.01 million
Working sales at Dillard's can be a dramatic affair, complain several employees on Glassdoor.com. The clerks can be territorial, as they compete for sales numbers. There's little training, many say, and high turnover. Employees labor under the constant threat of termination, and with dizzyingly impossible-to-meet sales goals. The result: dismal morale.
Average hourly wage for sales associates: $7.51
CEO David Perdue Jr's total compensation last year: $1.94 million
The benefits and pay are low and there's a ton of work, especially because many of the stores run with a skeleton staff, employees gripe on Glassdoor.com. "They are not very understanding about family emergencies, your health, and love loading you with way more than you can handle," says one manager, even though Dollar General saw its profits last quarter soar 36 percent from the same time last year. The discount chain gets an average employee rating of 2.4 out of 5.
Average hourly wage for sales associates: $8.31
CEO Do Won Chang and his wife and CMO Jin Sook don't have publicly available salaries, because Forever 21 is a private company, but Forbes estimates their net worth at $3.6 billion.
Do Won Chang is no stranger to grueling work, having held three jobs at once -- as a janitor, gas station attendant and coffee shop barista -- when he first immigrated to America in 1981. But now as the co-founder, along with his wife, of retailer Forever 21, Chang doesn't have to mop a floor again. He's worth almost $4 billion.
But employees at his cheap chic chain aren't saved from the menial grind. While Forever 21 wasn't on the 100 biggest retail list, its lowly employee rating of 2.3 earns it an honorary spot. On Glassdoor.com, sales associates bemoan the long hours, which sometimes keep them in the store to the early hours of the morning. In January, a handful of Forever 21 employees filed a class action lawsuit against the chain, alleging that the company routinely failed to pay for time worked, and forced employees to labor through breaks and stay after they clocked out -- so that supervisors could check their bags for stolen goods.
Average hourly wage for sales associates: $7.92
CEO James Gooch's total compensation last year: $5.6 million
You have to work hard at RadioShack, say employees on Glassdoor.com, who complain about intense pressure from above to make sales goals, while managers lament about the time spent away from home with their 50- to 60-hour-a-week schedules. They give the company an average of 2.4 out of 5.
"Minimum wage unless you annoy people into buying a wireless phone," said a sales associate. And because of the high sales targets, "managers will always be on your back about absolutely everything," said one sales rep in Arlington, Texas. "Almost to the point where your whole life revolves around RadioShack and would seem as if you have lost your personal life."
Average hourly wage for sales associates: $7.58
CEO Michael Balmuth's total compensation last year: $12.5 million
The company doesn't have enough managers, so sales associates complain they don't get properly trained. And while employees have very nice things to say about each other, many of them agree that Ross Stores somehow manages to attract the rudest, most demoralizing customers. Then there's also the part about low pay, few raises, being understaffed and overworked. Employees on Glassdoor.com give the department chain a 2.4 out of 5.
Average hourly wage for grocery clerks: $15.45
Average hourly wage for baggers: $8.68
CEO Bob Piccinini's salary isn't available, because Super Mart is a private company. But as the majority shareholder of a chain with an annual revenue of around $5 billion, you can bet it's more than a bagger.
Employees are dissatisfied with Save Mart, according to Glassdoor.com, giving the 60-year-old supermarket chain an average rating of 2.4 out of 5. Many complain about a lack of promotion opportunities, and general disrespect from upper management.