Labor Optimization for Today’s Brick-and-Mortar Retailer

7/19/2018

A retailer's two biggest expenses – labor and inventory – are also their two greatest strengths. Products and selection can help differentiate retailers from their direct competitors, but how they approach labor can help differentiate retail leaders from the rest of the industry. In today’s competitive environment store associates should not be seen as a cost to be contained, but rather a key driver of customer and brand experience.

As retailers look at their shopper-to-associate ratio (STAR), the balance varies based on retailer type, intended level of service/selling, as well as location. For example, a store in a mall, where many retailers are competing for a share of the shopper’s wallet, will typically experience a higher STAR when compared to a destination store where consumers seek a more urgent purchase or expect a higher level of service. Successful high-touch retailers, for example, might maintain a lower STAR throughout their stores as customers demand more personalized product consultations. Value retailers might want to consider optimizing their STAR at peak trading periods, but otherwise it tends to be quite a self-serve environment.

The traditional approach to in-store staffing is based on risk aversion. Historically, retailers’ finance organizations view labor as a cost to be contained, and so sales or transactional data are used to directly influence labor allocation. But a more optimal STAR can be achieved by leveraging traffic data – and the results, have been proven to positively impact the bottom line.

By leveraging traffic data to optimize labor, retailers are able to make decisions on the actual number of customers flowing through the stores every day. Since each store is different, each retail sector is different – and retailers need to take a granular approach to staffing store by store, location by location.

For retailers chasing targets and KPIs that are set by financial departments and based off

generalized sales data, this can require them to rethink how they are approaching labor. Sales data only measures the count of shoppers who converted into buyers, whereas traffic indicates the level of opportunity. By understanding the opportunity within a store, retail managers can more accurately staff their stores to increase sales and grow profit. Further, leveraging traffic data allows leaders to discern the unique trends of individual stores.

Applying cost containment to historical sales means you are both repeating the past and limiting a store team’s ability to provide service. You will complicate the issue further by using in-week adjustments – and many retailers do this. It’s a conservative, rear-view look at a new and fast-changing retail store environment defined by customer experience and engagement.

It’s important to create staff schedules and goals based on real traffic information, not intuition or historical sales data. By leveraging traffic insights, retailers can identify their “power hours” or the hours throughout the week when traffic is at its highest. These hours offer significant opportunities for increasing sales per shopper, so it’s imperative that retailers have the staffing during peaks than during any other period. That means not only the right STAR ratio to support the increase in footfall, but also a right sales associates on the store floor to maximize the potential sales opportunities.

Engaging and efficient staff, deployed by individual stores in specific ways, are assets that can differentiate you from competitors – both physically and online. Rather than scaling back on staff or misaligning labor using sales data, top- and bottom-line benefits arrive from a traffic-led approach. Customer expectations continue to change, and it’s important not to stand still. Being where your customers are and basing staffing on up-to-date traffic data is the best way for you to make that connection.

-Brian Field, ShopperTrak

Brian Field is the Senior Director of Retail Consulting Practice for ShopperTrak, where he oversees the application of ShopperTrak's proprietary solutions to retailer-specific issues across different functional areas in order to drive top and bottom line store performance. Prior to joining ShopperTrak, Brian served in roles of increasing responsibility at Chico’s FAS Inc., including as the director of corporate store operations and finance. Brian has spent nearly four decades in the industry, and his experience includes: store sales and management, training, merchandising, strategic planning and analysis for brands as diverse as David’s Bridal, Circuit City and Macy's.

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