Industry News

Retail Spotlight: How to Increase Sales by Controlling Labor Cost

Posted by Mike Tier on Feb 12, 2015 12:14:00 PM

Today's blog post is from The WFC Group's retail subject matter expert, Mike Tier


If you work in the retail industry you probably already know the benefits of investing in workforce management technology to help control labor costs and improve workforce productivity. But according to the latest KPMG 2014 Retail Industry Outlook Survey

42% of senior management will spend most of their time and energy over the next 12 months on operating efficiencies and applicable technology updates, which shows many are still trying to figure out how to use that technology to the fullest. It’s not easy to make this a priority, but it is the single best way to help increase your company’s sales.

Working with multiple top-tier retail clients here at The WFC Group, we’ve seen common problems which can be solved by taking the time to analyze employee hours, sales and footfalls, among other things.

You must mitigate overtime

Overtime occurs when too much work is spread out among too few workers. It’s extremely important to staff your stores to the appropriate headcount levels. If you are able to do this, it will first and foremost help your company stay compliant with local and federal laws, and it can save your organization money because you will not need to provide unnecessary benefits. From the employee standpoint, it helps reduce employee fatigue and prevents setting a precedence for employees that often come to expect overtime pay, so when it’s cut, employee turnover can increase. Easier said than done, right? So how do you make this happen using workforce management software, such as Kronos?

Kronos Pay Codes and Reporting Tools

Through this application, you are able to create reports that will notify managers which employees are closest to reaching their overtime hours, and how much overtime is actually being completed. You can auto-send reports to managers as often or as little as you want, but automating this process is extremely beneficial and helps you understand any problems before they become real issues.

You must analyze your staffing against a volume driver

Depending on the type of retail business you are in, the way you analyze your staffing against a volume driver can differ, but it’s key to understand when you are busy and when you aren’t in order to optimize your employees’ time on the floor.

Scaling Labor by Sales Matrix

Providing a scaling matrix that allows for incremental labor as volume increases, provides managers and stores more flexibility to efficiently manage employee hours. It helps managers allocate hours to other areas of work during slow times, such as shipping receiving or inventory replenishment. This way, traditional non-productive tasks may be completed more efficiently during low periods versus intruding on high volume sales periods.

Not by Sales Volume? Then how?

You need to identify the true volume driver in relation to employee headcount demand, and it might not be sales volume. Retailers that have variable price point and profit margin products (for example: high end electronic stores), could use footfalls or unit sales forecasts to drive needed employee headcount. Staffing to the level of higher traffic or unit volume might identify more realistic busy periods as opposed to just high sales dollar periods, resulting in an increase of sales and optimized labor spend.

So how do you reach overall success?

Combining a headcount matrix with a staffing matrix could result in an overall increase of sales and improvement of labor spend, which can ultimately create happier employees, reducing turnover.

Do you work in retail? If so, do you have any tips to add to this post? Let us know in the comments!

Topics: Retail

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