Beyond Cost-Cutting

Retailers are putting an increased emphasis and value on how and when they use their workforce. And in doing so, they are on the right path, according to research from The Wharton School. The study found the associate payroll was the most important factor in determining revenue. A mere additional dollar (properly applied) on labor could reap rewards of $4 to $28 in return.

"The rating of store associate knowledge had the second biggest impact on sales," said professor Marshall Fisher, during a panel presentation at the National Retail Convention & Expo in New York City. (The third factor was product availability or the in-stock situation.)

Additional Wharton research found that most retailers could "significantly boost their revenue simply by changing one planning metric." That is, by linking staffing levels to store traffic, rather than revenue. Many retailers are already using traffic counters to ascertain customer patterns, according to Fisher.

"And I think more and more retailers are looking at improving conversion," he said. Norm Daigle, manager of labor and productivity for Hannaford Bros. Co., a 180-store grocer based in Scarborough, Maine, said the chain recently added an automated scheduling program in three service departments — meat, produce and seafood — that incorporates foot traffic data in 15-minute increments. (The retailer has used time and attendance and forecasting and scheduling solutions from Kronos for several years.)

The result has been a redistribution of labor and "even adding some labor," Daigle said during the presentation.

"We realized it was critical to be well-staffed from 4 p.m. to 7 p.m. weekdays," he added. "It made us better positioned in the evening hours when many people are picking up dinner on the way home. The opportunity to improve service levels is something that is top of mind for me."

For Hannaford, workforce management has been an evolving strategy.

"Out of the gate, it was about controlling costs," Daigle explained. "But over time, it has evolved to a position where it is really about the customer experience in our stores."

Hannaford recently enhanced its workforce management strategy with the addition of Kronos' labor analytics application and next-generation user interface. The analytics solution will enable Hannaford to identify, predict and manage opportunities for cost savings and productivity gains — all while ensuring a consistent and positive shopping experience.

Ocean State Job Lot is thinking along the same lines. The 109-store close-out retailer installed Kronos' workforce HR tool and is using it to run time and attendance. Ocean State is also implementing a program to create store schedules, freeing up store managers.

"This saves time, but more importantly, it allows us to better utilize our [labor] resources by aligning them closer to customer traffic in the front door, the merchandise flow in the back door and the tasks assigned to the stores from corporate," said David Gouveia, project manager, Ocean State Job Lot, Kingston, R.I. "We are not trying to cut costs but to do more with our existing budget."

One thing is certain: Management buy-in is critical to the success of workforce management tools.

"If management doesn't buy in, the employees won't buy in. If you don't have adoption by store-level management, you won't be successful," Gouveia said.

Laura Klepacki is a contributing editor to Chain Store Age.