Retail is a people-centric sector, which means it’s prone to higher variable labor costs, however, simply cutting back on labor spend is too narrow of an approach to boost revenue and profits.
For retailers, the key to success amid growing consumer and competitive pressures is customer service. Consumers are consistently demanding better shopping experiences, which means customer service should be a priority.
There are more strategic ways which you can be more efficient with labor planning and spend. Below are three ways you can improve your scheduling to save on costs and overcome tight profit margins.
Overtime and other premium pay are some of the most significant sources of labor costs for retailers. It can be difficult to manage the number of employees needed for the customer demands both online and in-store, resulting in unplanned overtime and in many cases poor coverage and reduced service quality. Leveraging and predicting store traffic will help you understand when your stores will be filled with online customers and in-store shoppers, so you can more accurately match labor supply. An added benefit is that managers can recoup as much as 66% of their time spent administering manual or legacy systems to plan and schedule.
According to McKinsey, leading retailers are taking a data-driven approach to labor scheduling and budgeting, resulting in 4% to 12% in cost savings while also improving their customer service. Buying patterns are constantly changing and generic schedules don’t consider store-specific factors. Using predictive scheduling will help you foresee influxes of traffic you’d otherwise be unprepared for.
Learn more about how you can manage your workforce effectively with smarter scheduling.
Associates who consistently work overtime tend to burn out, become dis-engaged, and eventually leave - which can be very costly for retailers that don’t manage their associates’ time and skills accordingly. A Cornerstone report found that work overload decreases productivity by a shocking 68% in employees who feel they don’t have enough hours in the day to complete their tasks.
To the same degree, under-used associates feel detached and unneeded, leading to lower engagement rates. Both scenarios lead to dissatisfied employees and inevitably higher labor costs as they’re less productive.
To ensure that your associates remain engaged – and that you’re spending in an optimal way, it’s important to schedule the right tasks to the right people at the right times. Gallup states that employees who exercise their strengths daily are six times more likely to be engaged.
Different skills are required for different jobs, which is why it’s important to leverage performance and skills-based task management to gain visibility on which skills are needed prior to scheduling them. You’ll be able to assign the most qualified person to the task, which will not only increase efficiency, but will also empower and motivate your employees.
Engaging associates “in” the scheduling process through improved communication and self-service is another area in which retailers can improve predictability and fairness for their associates within scheduling. Providing self-service tools such as mobile or on-the-go technology allow for retail associates to manage their schedules wherever and whenever they want.
With a self-service approach, your associates will be able to manage their own HR activities, which will not only save time and cut administrative costs, but it’ll play an important role in overall associate engagement. In fact, productivity improves 20 to 25% in organizations with connected employees. Allowing your associates to have greater control over their schedules will involve them in the process so they’re more connected.
Smart retailers are always searching for new areas of investment and ways to be more efficient in their retail business. Predicting store traffic, being more strategic with skills and people through better task management, and empowering your associates to manage their time will not only reduce costs for your business but increase associate engagement and productivity.