Clocking on to productivity management tools
With the recession continuing to squeeze the UK economy, the standards by which retail performance is measured have shifted.
By Doug Hargrove
Falling sales have become the lingua franca of results announcements, with companies commonly judged on how well they have been able to insulate themselves against the turbulence of a market in decline.This contrasts with the rosier state of the retail sector just a couple of years ago, when consumer demand was rising almost universally. Unfortunately for many retailers, the suddenness of this sea change in the economy has left them doubly exposed to the new conditions. Over the past decade, labour costs – which form the second largest area of expenditure for retailers – have risen steadily, with CBI figures placing the average rise in the UK minimum wage at 7% a year since 1999[1]. This was fine in the boom years, but now that the economy has reversed, retailers have found themselves caught in the middle, with profit margins corroded by a combination of high wages and falling sales.
Retailers understand they need to take action. With sluggish consumer demand continuing to hinder sales, the most obvious course of action is for businesses to take better control of their staffing costs, and the balance of work that needs to be done in stores against the manpower allocated to fulfil this. This is an area that many in the retail sector have come to regard as a perennially “broken” process, with Torex analysis finding that the gap between planned hours and actual labour hours can be as great as 10% over a five-year period. However, the resources available to help retailers with their staffing procedures have come a long way since the days of juggling separate spreadsheets and timetables. With today’s productivity management tools, retailers are now able to more easily reconcile the two variables, reducing unnecessary costs, while boosting customer service levels at the same time.
The influence of workforce management technology can stretch throughout a retailer’s operations, from the level of individual stores to the strategic decisions made at head office. At a higher level, such tools can help senior executives arrive at a more accurate forecast of the future staffing requirements of the business based on the direction they wish to take the company, and subsequently how labour budgets will be able to meet this. For example, if a convenience retailer is planning to implement an over-the-counter hot food service, the number of specially-trained staff it employs will have to rise, impacting on staffing budgets. By closely linking staffing resources with performance targets and the overall vision for the business, retailers are more likely to achieve their goals without encountering any setbacks.
Moving on to the level of individual stores, advanced productivity management tools can help managers allocate staff around the shop floor more effectively by accommodating common retail necessities, such as the need to occasionally move employees into different roles, thus ensuring high levels of customer service and reducing inefficiencies. For example, a shop that sells mobile phones in a town shopping centre is likely to experience two peaks in footfall – at mid-day, from office workers browsing in their lunch breaks, and in the evening, from families and commuters making their way home. It therefore makes sense to allocate more assistants to the shop floor during these periods, to better cope with the rise in visitors and ensure a consistent customer service experience. At other times, it may be more sensible to reduce the number of employees assigned to the front of the store, and devote more resources to back room processes. By doing so, the store is able to deliver a high level of front-line customer service to shoppers, while functioning smoothly, with other essential processes receiving adequate resources.
Reaching this balance is crucial. Several recent surveys have shown that, contrary to visions of bargain-seekers concerned exclusively with costs, the recession has actually driven customer expectations of customer service up. But while store managers typically know how to effectively allocate employees to achieve high levels of customer service, most scheduling solutions are not able to cater for the flexibility modern retail operations require. In order to maximise sales opportunities, managers need productivity tools that can determine staff schedules based on both employee numbers and their contractual flexibility. In addition the various specialities and levels of expertise each employee holds, as well as the nature of the products they need to sell needs to be considered. For example, it is better to ensure that store assistants trained in delivering customer service are allocated to the shop floor during the most challenging periods, as opposed to others who may be less skilled in this respect. This can have a significant effect on a retailer’s profits, with one Torex customer recording a 1.8% improvement in conversion rates, along with a 5.6% rise in the value of the average transaction.
Different types of goods also require a greater or lesser investment of a store assistant’s time to convert into sales – a customer considering buying a new fridge will need more service and advice than one looking for a new kettle, for example. Productivity management tools remove the need for manual planning (and the associated inaccuracies) and can help managers arrive at a much more precise view of the staff resources required in-store, based on a breakdown of the products it sells.
As well as assisting with the planning of employee scheduling, productivity management tools can now also help accurately measure the hours actually worked by each member of staff. With the advent of electronic POS and backroom systems, it is easier than ever for store managers to achieve this. Instead of demanding that staff clock in and out each day, productivity management tools can seamlessly integrate with a store’s POS systems to register the attendance of staff, and the hours they have worked. This information can then be fed into the retailer’s billing system, ensuring that employee wages are paid accurately and on time.
While productivity management technology can play a key role in raising efficiency in stores and helping deliver better customer service, it is also important that such improvements are incorporated into a retailer’s broader objectives as a business. Productivity management tools should not just be seen by management and store staff as a solution to a specific challenge, but as playing a fundamental role in moving the business forward and improving its offering to its customers. By seeing and communicating the benefits this technology can provide to the business in broader strategic terms, retailers can secure greater buy-in and support from employees, which can then feed back into the success of the initiatives.
By implementing productivity management tools that can respond to the changing demands of today’s competitive retail environment, businesses can take more decisive action to mitigate against the effects of the current recession, and beyond. With the power to take greater control of their staffing resources and integrate these more closely with their overall objectives for the business, retailers are able to move forward with greater purpose. By improving the role staff can play within the business, stores can offer a more appealing proposition to customers. This can help convert more visits into sales, in addition to raising the profile of the business as a whole amongst shoppers, allowing the retailer to improve the revenue and costs lines of the business simultaneously.
