While the chorus around omnichannel and digital commerce’s growing impact and the need to transform stores becomes louder every day, retailers need to account for how these changes affect the work associates perform and the store’s labor budget. The reality is that a majority of retailers are unsure of how to upgrade labor standards and labor hours for maximizing store productivity and ensuring smooth operations.
Labor standards are defined as the average amount of time it takes for store associates and managers to complete customer service, sales and operational tasks in the store.
Retailers use a varied set of sales, customer service and operational labor standards for day-to-day store execution. In order to achieve consistent store execution, retailers need to ensure that all these standards are always in line with constantly evolving customer expectations, labor regulations and related store labor policies/procedures.
Effective labor standards and related standard operating procedures (SOPs) in the stores include accurate labor planning for all tasks, performance evaluation, insights for operational improvements and cost minimization and above all documentation of the best methods.
EKN recently conducted a survey of 63 US retailers and spoke to several softlines and hardlines retail executives to understand their viewpoint on this key retail store execution area. The general consensus is that labor standards are not well documented or updated effectively within the retail organization. In fact, nearly two-thirds of retailers (64%) update labor standards and labor hour models infrequently- range from quarterly, annual or on an ad-hoc basis.
Another major business pain that retailers are experiencing is the lack of proper organizational management and consensus on issues related to labor standard updates and improvements. In most retail companies, it comes down to finance and store operations teams who take a bulk of the decisions related to labor standards but seldom do these teams see eye-to-eye on issues of such critical importance to stores as they are trying to address different objectives.
Our analysis shows that labor standards and labor models are largely dependent on day-to-day sales trends and traffic patterns rather than inherently figuring out how to adjust labor standards that address the varied complexities in a store. For instance, standards should be based on the ‘actual time’ required to complete a task versus the time taken by associates/managers in an ideal scenario.
The varied complexities in the store are compounded by unpredictability of events that take place in the store on a daily basis. This is partly due to the fact that store tasks take much more time to complete due to unpredictable customer service or operational activities that occur in the stores.
Most retailers use store activity-based models to plan tasks and labor standards wherein the time taken to complete tasks is fixed for certain standard tasks such as time taken to open and close the stores. There is however, variability built into the plans for other types of operational tasks such as pricing changes, setting up a new ad, and others. Such tasks can change every day due to unpredictable store conditions, sales trend or customer traffic movements.
Moreover, store tasks are becoming more complex as standard store customer service processes such as sales, exchange and returns are more omnichannel today than ever before. For instance, 1 in 2 retailers will fulfill online orders by performing customer deliveries directly from the store by 2018. This will mean that retailers will need to streamline standards for inventory operations as well as put enhanced emphasis on balanced store task allocation.
EKN will continue to focus on labor management issues in the store. Stay tuned for our forthcoming blogs on this topic and other retail industry trends.
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