Why does Employee Centricity Matter?

A new perspective on Customer centricity

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Introduction to Employee Centricity

"If you want people in the stores to take care of customers, you have to take care of the people in the stores." – Sam Walton, Founder of Walmart

Employee centricity means creating an environment where frontline store employees—managers, associates, cashiers, and helpers—are valued, supported, and empowered to grow. It’s about making these workers "rich" in well-being, income, and opportunities, which in turn drives customer centricity. The customer experience begins at the front line, and retailers can’t claim to prioritize customers without first prioritizing employees. As Jeff Bezos calls Amazon the most customer-centric company, its employee practices raise doubts about this claim.

In my 30 years in retail, visiting stores daily to listen to employees shaped my philosophy: focus on frontline staff to build a customer-centric business. Employee centricity is the foundation for customer loyalty and success. Retailers who neglect this—like many struggling brick-and-mortar chains—risk irrelevance in an omnichannel world where physical stores still matter.

Why Employee Centricity Matters

"The true value is created in the interface between employee and customer. By putting employees first, you deliver unique value." – Vineet Nayyar, CEO, HCL Ltd

Despite online growth, physical stores thrive because employees create value through service, advice, and loyalty-building interactions. A demotivated workforce drives customers away, while engaged employees keep them coming back. Herb Kelleher of Southwest Airlines said, "Treat employees right, and customers return, making shareholders happy."

Walk into any store: the difference is clear. Employee-centric retailers craft captivating experiences through superior service and well-managed stores. Gartner notes that 89% of companies now compete on customer experience, up from 36% a decade ago. Engaged employees are key to this, yet 90% of retailers focus only on customers, missing the employee link. In retail, employees are brand ambassadors—the first touchpoint for shoppers.

Why Few Retailers Prioritize Employees

Your employees come first. And if you treat your employees right, guess what? Your customers come back, and that makes your shareholders happy. Start with employees, and the rest follows from that.- Herb Kelleher, Founder- Southwest Airlines

Retailers often view frontline staff as expenses, not assets. During slowdowns, layoffs hit stores first, as seen with Walmart, Best Buy, and others since mid-2022. In the U.S., department store headcounts dropped 10% and wages 4% over a decade, while training budgets shrank—33% of associates get no formal training, per Axonify.

Cutting staff saves costs but loses sales. For every dollar saved, retailers may lose several in revenue if customers leave due to poor service. This creates a downward spiral: fewer staff, worse service, declining sales, more cuts. With inflation and recession looming, layoffs at Amazon (10,000 jobs), H&M (1,500 jobs), and Bed Bath & Beyond signal a focus on short-term profits over long-term value. Retailers treating employees as expendable undermine their edge over e-commerce: human interaction.

Top Employee-Centric Retailers

Few retailers truly prioritize employees, but leaders like these stand out:

1. Wegmans: High pay, benefits, and $50M+ yearly training create a "people-first" culture.

2. Trader Joe’s: Happy staff in Hawaiian shirts, overstaffed stores, and leadership training boost service.

3. HEB: Empowered store managers and team incentives drive innovation and engagement.

4. Publix: Employee ownership and no layoffs in 79 years foster loyalty and service.

5. Costco: Generous pay and low turnover (7% vs. 60-70% industry average) prove people matter.

These retailers, ranked from store visits and research, embed employee centricity in their DNA. Deloitte finds 94% of executives see culture as vital, yet only 19% believe they have it right. These companies prove that prioritizing employees elevates customer experience.

Creating Employee Centricity – The LEADER Framework

"We built the Starbucks brand first with our people, not with consumers."- Founder and CEO, Starbucks- Howard Schultz

To build employee centricity, use this framework:

• Listen and Engage: Visit stores weekly, as Sam Walton did, to hear staff and align them with goals.

• Empower: Give employees ownership, like HEB and Lululemon, to boost accountability.

• Attitude: Hire for personality, as Trader Joe’s does—skills can be taught, but not friendliness.

• Development: Invest in training and growth, like Wegmans’ $50M program.

• Encourage Teamwork: Use group incentives, as Costco does, to foster collaboration.

• Reward: Offer top pay and recognition, like Publix’s ownership model.

Leader: A Framework for Employee Centricity

Start with top-performing stores (30% driving 70-80% revenue) for quick impact, then scale. Retailers who prioritize employees see 60% higher profits (Deloitte). In a digital era, people—not products—differentiate physical retail. As Jim Sinegal of Costco said, "Pay well, teach well, and get productivity." Employee centricity isn’t just culture—it’s the path to customer centricity and survival.

Retailers must rethink its employee strategy to remain relevant and stay ahead in the digital era. The time for employee-centric strategic thinking may have finally arrived.

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