Enhancing Retailer Productivity and Labor Efficiencies

At Bluestock Advisors, a strategy consulting company specializing in growth, we assist companies in achieving strategic goals over time. While the goals and timelines of each company are unique, certain core factors consistently contribute to productivity and sales improvement. Among the most significant factors impacting a company’s bottom line is its human resources and labor costs. In today’s labor-constrained market, enhancing the productivity and effectiveness of associates is crucial for driving sales and profitability. In this white paper, we present several examples of how retailers and service providers can enhance productivity and labor efficiency, thereby transforming their largest expense into the ultimate growth factor.

Tips for Increasing Retail Productivity

Monitor Key Performance Indicators (KPIs)

Effective labor management requires monitoring key performance indicators that provide insights into your team's productivity. Tracking and regularly reviewing metrics like sales per employee, average transaction value, and customer satisfaction scores can help identify areas that need improvement. The resulting data-driven decisions can lead to more efficient operations.

To choose the right KPIs to measure, make sure to incorporate the company’s key goals, and decide what steps you’ll need to take to get there.  For example, if you’re trying to increase sales, you might want to track your sales per associate to get to the right labor productivity goals.  Keeping an eye on the market and industry trends will also help you determine when you may need to update the KPIs you track.  Staying flexible and ready to adjust as necessary is important as new technology like AI changes the landscape.

In the beginning,  you may not have the data to begin to monitor your chosen  KPIs.  You will need to build the data flows and a dashboard to track how you are doing against your goals.  You can always go back and refine the dashboard and KPIs after you have some data populated.  It is hard to improve what you don’t measure. The labor study method detailed below  can be a great way to set baselines for the current state and develop a KPI scorecard. 

Set Clear Goals and Expectations

Clearly defined goals and expectations provide your team with a roadmap for success. Ensure that every employee understands their role in achieving the company’s objectives. Regularly communicate performance expectations and track progress. When your team has a sense of purpose and direction, they are more likely to work efficiently and stay focused on the end goal.

It is also important to explain the reason behind the goals and expectations. For example, instead of simply setting a goal for the scheduling team to respond to every customer inquiry within 5 minutes, explain to them that research has shown that if we can contact the customer within 5 minutes, we have a 10x greater chance of scheduling an appointment. This means that the scheduling team would have to play less phone tag, they will set up more appointments, and the result will be more sales. Explaining the why can be the difference in your team truly aligning to meet the company goals instead of simply trying to hit a metric on a dashboard. 

Identify Productivity Opportunities  

For retailers with large workforces, performing a comprehensive labor study involves analyzing and optimizing your workforce's allocation and scheduling. By conducting a labor study, retailers can gain a deeper understanding of how to maximize the efficiency of their workforce. You can run a labor engineering study for an entire department or a smaller study to look at a specific process. 

For example you may want to identify opportunities for moving freight from the delivery truck to the shelf of the store. In this study, you would evaluate the current process and break down how long each step takes. Unloading the truck, sorting freight, moving freight to the aisles, stocking freight and so on. 

At the end of the study, you should have a breakdown of all of the detailed steps that go into the freight unloading and pack out processes. At this point, your teams can evaluate how to optimize the process. This is where you move into the steps detailed below like training, deploying user friendly technology or investing in automation.

Invest in Training and Development

One of the most effective ways to improve labor efficiency is by investing in the continuous training and development of your staff. Equipping your team with the knowledge and skills they need will help them to excel in their roles. This will not only enhance their job performance but will also boost their confidence and job satisfaction. Well-trained employees are more likely to handle tasks efficiently, reducing errors and the need for constant supervision.

Traditional training methods, typically characterized by in-person sessions, printed materials, and one-on-one mentorship, are increasingly proving to be time-consuming and costly. They often require a large investment of employee time- both trainer and trainee, reducing the time associates available to spend on the sales floor. The resulting delay in staff deployment can affect a store's operational efficiency and sales potential.

Implementing various technology solutions for training can reduce labor costs and improve operational efficiency. Innovations such as automation, artificial intelligence, and machine learning are revolutionizing workforce management. By implementing automated processes and AI-powered tools, companies can streamline tasks, optimize resource allocation, and minimize manual labor. 

For example, tools like Loom to send an interactive show/tell video and cut down on meetings or using Scribe can speed up training development.

Deploy User Friendly Technology 

In today's digital age, technology is your ally in optimizing labor efficiency. Implementing modern merchandising solutions, point-of-sale (POS) systems, inventory management software, customer relationship management (CRM) tools and associate onboarding and training tools can streamline retail processes and free up your staff to focus on more value-added activities, like improving in-stock levels, assisting customers and driving sales.

Developing or leveraging technology and systems featuring intuitive interfaces can guide new associates through step-by-step processes seamlessly, eliminating the need for extensive upfront training. Much like the user-friendly design of iPhones and most apps, which require no specialized training, the focus should be on creating applications for both associates and customers that prioritize a user-centric experience. 

Whether you're in the process of building a new application for your team or considering the adoption of SaaS solutions for your department, placing emphasis on user-friendliness and intuitive design can significantly reduce the need for training and onboarding. 

Utilizing tools like MerchLogix Navigator can speed up new employee onboarding time by providing step by step instructions for merchandising tasks within the app with little or need for employee training.  

Implement Workflow Automation

Workflow automation involves using technology to streamline,  simplify and automate repetitive tasks and processes in your business. By automating routine activities like data entry, inventory tracking, and order processing, you free up your team to focus on more strategic and value-added tasks. Workflow automation not only reduces human error but also accelerates the pace of work, leading to increased efficiency and productivity. Embrace tools and software that can automate tasks such as inventory replenishment and employee scheduling to save time and resources while driving growth.

For example, do you have processes where associates are filling out paper forms, scanning them, emailing them to different employees or managers for review or approval purposes? These are the types of processes that can easily be automated by off the shelf, no code technology like Jotform (or many other systems). With simple solutions like conditional formatting, workflows and software integrations, these no code tools can empower your teams to build their own solutions without relying on IT funding or support.

Streamline Store Layout and Visual Merchandising

Your store layout plays a significant role in labor efficiency. An intuitive store layout minimizes the time customers spend searching for products, leading to quicker transactions and improved customer satisfaction. Similarly, strategic visual merchandising helps guide customers through the store, increasing the likelihood of impulse purchases and higher sales per square foot. Well-organized displays and signage reduce the need for constant assistance, allowing your staff to focus on other critical tasks and helping customers with more complex tasks. Additionally, implementing wayfinding and/or beacon technology within your mobile app can improve the customer shopping experience and help associates focus on assisting customers with products and sales rather than directions.

Check out our interview with space planning expert Flora Delaney, on how effective space planning can be a silent sales person.

Implement Task and Initiative Prioritization

Not all tasks carry the same weight when it comes to driving sales and customer satisfaction. Implementing a system that prioritizes tasks based on their impact ensures that your team is always working on activities that contribute most to your business's growth. For example, restocking popular items or assisting customers on the sales floor should take precedence over less critical tasks. 

Empower Your Team to Use Artificial Intelligence

AI integration can help any department if utilized correctly. Having an AI expert come in and train  teams on how they can leverage different AI tools to speed up processes, validate errors or respond to customer inquiries can be incredibly valuable. There has never been a better time to speed up content creation, training development, sales playbooks and more using AI. However , similar to  all technology solutions, finding the right tool can be painful.  It is important to first identify  the opportunities that can benefit from AI integration and then work towards finding the right tool. As we discover new and innovative technologies, it can be easy to fall into the trap of using technology because it’s new and cutting edge but it may not really be needed if there isn’t a problem it’s solving. 

Regularly Review and Adapt

The retail landscape is dynamic, and what works today may not be as effective tomorrow. Continuously reviewing your processes and strategies to identify areas for improvement will allow you to stay agile and adapt to changing market conditions and customer preferences. Regularly seeking feedback from your team and customers will help you gain valuable insights into what can be done better.

Improving productivity is not a one-time task or initiative, it is a mindset and a process that an organization should integrate into its culture. It’s an ongoing process that is never done and is never perfect. 

Turning Productivity Efficiencies into Fuel and Growth

Staff Sales Driving Activities 

The insights gained from a labor study allow retailers to make data-driven decisions when it comes to scheduling shifts, assigning tasks, and managing staff levels during different times of the day or week.  These decisions can be based on peak shopping hours, customer traffic patterns, and employee workload. 

By aligning labor resources with customer demand, retailers can minimize overstaffing during slow periods and ensure they have adequate staff during busy times, ultimately optimizing labor costs and enhancing the overall shopping experience for customers. This approach not only improves productivity but also contributes to increased sales and profitability.

Companies like Lowe’s are doing exactly that.  According to an excerpt from their Q3’2023 earnings transcript;"In store operations, we've made foundational improvements to associate productivity that enable us to effectively align labor to demand while continuing to serve our customers. During the quarter, we've leveraged these new cap abilitiesto reduce operating expenses while enhancing the customer experience for both Pro and DIY customers at the same time."

Conclusion

Efficiency and labor productivity are integral to the success of any retail business. By investing in training, embracing technology and optimizing workforce management, you can create a culture of efficiency that drives growth. Implementing these tips will not only enhance your labor efficiency but also can result in improved customer satisfaction and increased sales. Remember, your team is your most valuable asset, and when they work efficiently, your business thrives.

Incorporate these strategies into your retail operations, and you'll find that small changes in labor efficiency can lead to significant growth and success in the competitive retail industry. If you’d like to learn more, connect with us to see how Bluestock Advisors can increase productivity at your organization.