Running a modern retail store can be a challenging task. According to Zeynep Ton,
a Professor of Operations Management at MIT’s Sloan School of Management, a typical supermarket carries nearly 39,000 products, runs 100 promotions a week, and serves 2,500 customers a day. Amidst all this activity, store employees must constantly shift inventory from storage into the right shelves to meet demand (which fluctuates constantly), operate POS machines for checkout, manage the backroom, oversee receiving/warehousing, and perform housekeeping duties as part of store operations. While infrastructure and leadership are elements that determine a retailer’s success, it is the store workforce that plays a key role in retail execution to improve store performance. Workforce analytics can help improve workforce management so that employees are utilizing their abilities to the maximum.
Products don’t move themselves – and while IT systems will help determine where the merchandise has to be placed on shelves, it is still often the poorly paid, poorly trained, and poorly motivated store workforce who has to do the job –
and retailers will pay a heavy price if this is done inefficiently. Take the case of Border’s, the once-superstore-now defunct bookstore: while the company had one of the most advanced IT systems for tracking inventory and merchandise in the industry, one in six items of merchandise at Borders was misplaced. The reason? Poor workforce management.
In addition to carrying out regular activities, the store workforce also has to manage customer interactions and execution of promotional activities – and these require the application of instinct or human judgement.
Retail organizations who haven’t understood the necessity of an informed, experienced workforce have slashed pay-roll costs and have paid the price. In 2007, the now-defunct U.S electronics retailer Circuit City fired more than three thousand of its most experienced salesmen, replacing them with newer, lesser-paid workers. The result? Sales dropped, and the company went bankrupt by 2009. In 2000, when Bob Nardelli took over Home Depot, the number of salespeople on the floor was reduced and a number of full-time jobs were converted into part-time ones. In the stores, customers first struggled to find an employee, but often found that they had no useful information to provide. The company’s customer-service ratings took a dive, and its sales growth stalled.
So how can retailers ensure that they are developing a strong, efficient and capable store workforce? How can retailers develop critical capabilities of their workforce?
A healthy employee is a happy employee
We can all agree on the fact that working in a retail environment is often stressful.
Apart from having to constantly be on their toes to ensure that store activities and products are moving at the required pace, store workers also have to ensure that they are able to cater to customer demands. Together, these activities can be both physically and emotionally overwhelming. This is why it’s important for retail managers to take an interest in helping employees stay healthy. A retailer who is known in the industry to have made employee health almost a religion is Wegman’s, a family-owned U.S. regional supermarket chain. For nearly 15 years, the chain has made it to Fortune’s list of 100 Best Companies to Work For. In 2010, 11,000 Wegman’s employees took part in an initiative to eat five cups of fruit and vegetables a day and walk up to 10,000 steps a day for eight weeks. Apart from this, Wegman sponsored the health screenings (which included a flu shot and H1N1 vaccine) of nearly 8,000 employees. It recently opened a new health 24/7 hotline for its employees. Another retailer who believes in making employee health a priority is Build-A-Bear Workshop, an American retailer headquartered in
St. Louis, Missouri that sells teddy bears and other stuffed animals. Here, even part-timers get health, dental, and vision benefits, while HQ staff has on-site yoga privileges and Zumba workout classes.
Make scheduling a two-way street
When store employees have a schedule in place, it helps both retailers and employees plan their time more constructively – and workforce analytics can help with this. However, retailers should make employee input a priority when it comes to creating a work schedule. Assuming a dictatorial position when it comes to devising a schedule will only make store employees feel frustrated. This is why it’s important to involve employees while creating their individual schedules. Idaho-based Pita Pit,
a quick-service restaurant franchise serving pita sandwiches with about 180 locations nationwide, believes in getting to know each employee’s personal scheduling needs and preferences. This move by the management helps to keep staff morale high and turnover low. Employees use a specially designated board in each store to post requests for extra hours or for their shifts to be covered. Says Peter Riggs, Vice President of the corporate business “This gives us a good idea of who to call first when someone calls in sick or we need to staff up”. Pita Pit’s
employee-inclusion policy also works well when weather or other unexpected events require a sudden need to reduce staff. Instead of telling people who took the pains to get to the store to turn around and go home, the management then asks if anybody else would like to go home early. Another example of a retailer using scheduling to their advantage is Mercadona, one of Spain’s largest supermarkets. Mercadona employees have predictable schedules, and workers usually learn about their schedules one month in advance. This ensures that they don’t have to work different shifts every day. This system is in direct contrast to the favoured one in the U.S, where retail managers regularly modify schedules on short notice in order to align labor supply with store traffic.
Pay now for training, and watch it pay-off
Mercadona is also known in the industry for one more thing: it’s investment in employee training. The supermarket chain invests four weeks of training time and 5,000 euros for each new store employee, whereas in the U.S the norm is to invest roughly seven hours of training. This investment contributes to Mercadona having an exceptionally low employee turnover rate of 3.8%.
So why is employee training so important? Because, when it’s done right, it enables employees to take more ownership over their actions in a way that aligns with your store brand – and this almost always helps make a positive impact on a customer. Quality of customer interactions increase when they feel like they are talking to store employees who are knowledgeable about what is being sold, and when they are provided with informed opinions. However, it’s important for this training to be handled in a way that promotes this sense of ownership. Often, retail managers see training as just telling employees what to do, and fail to communicate why something should be done in a certain way. This promotes no understanding on the employee’s part – and it’s important to remember that not every customer interaction can be scripted!
Put the ‘team’ in team work
Retail managers often see their store workforce in silos, with a set of employees assigned to a particular activity. However, there are advantages to enabling collaboration across departments and functions – like in the case of Apple. The world’s most valuable company recently suffered a set-back with its infamous iOS 6 Maps application. To help improve the application, the company is asking its retail employees to spot errors in the map data. According to MacRumors, some Apple stores are having employees collectively spend a total of 40 hours per week going through Maps in their area. In this case, the company is mobilizing its existing workforce and giving its retail employees a chance to pitch in their suggestions and findings, giving them the feeling of being able to contribute beyond just their regular job roles.
Retail analytics: measuring workforce productivity
A smart retail analytics solution that provides retailers with workforce analytics can help retailers gain insight into the correlation between workforce productivity and sales. Using a retail analytics solution, retailers can monitor workforce attendance, scheduling details, departmental productivity and other factors. The solution can also identify which workers are more efficient at a certain activity, and can also highlight any improvements in performance after training.
So do you have a retail analytics solution that provides you with workforce analytics? Does your retail analytics solution help you improve your store performance and develop your retail workforce capabilities?