Can Labor Modeling Really Help My Retail Business?

When it comes to operations in a retail store, managers understand the struggle of balancing sales, service, and productivity with changing customer patterns and behaviors. While it often feels like trying to hold onto something in the midst of a hurricane, there is a method for keeping steady: Establishing a properly balanced labor model. In fact, there are four major ways that labor modeling can help with workforce management and workforce planning of your business.

Finding Hidden Benefits

Cutting labor when sales dip is a classic retail reaction. One of the mistakes of trying to save money by cutting labor is underestimating how many behind-the-scenes activities workers may be doing. Research conducted by The Harvard Business Review noted that stores that strategically increased their staffing in the right places often experienced benefits such as a more organized back room or a cleaner store appearance, and that these stores often also experienced higher profits. A properly established labor model allows you to better calculate the impact of labor on profit and discover some of the surprising ways that staff may be contributing to the success of your business.

Saving Money

Of course, the bottom-line, primary benefit of a proper labor model is that it can save you money when it comes to labor management. In fact, research by McKinsey and Company revealed that retailers are able to cut labor costs by upwards of 12 percent through better “labor scheduling and budgeting,” and all without sacrificing “customer service and employee satisfaction.” Labor modeling helps re-balance and reallocate labor, allowing businesses to better meet customer demand with a “supply” of exactly the right staff at exactly the right time and place.

Making Efficient Staffing Decisions

Labor modeling provides key advantages when it comes to workforce planning. By helping retailers gather more data, they can then apply it in ways to benefit both staff and customers alike. For instance, the results can help maximize sales opportunities during non-peak times (such as the end of workers’ shifts), which is better than the employees simply starting their closing duties early. Armed with this data, retailers can not only maximize the sales opportunities, but also reward the employees based on customer conversion. These incentives will drive employee productivity and customer service which, in turn, will drive increased sales.

Improving Customer Service

While labor modeling is perhaps mostly known for its contributions to workforce management efficiency and increasing productivity, it can also have a serious impact on customer service. By re-purposing employees from non-service inefficient processes to customer facing service activities retailers boost service levels, and sales . This is crucial. According to research conducted by Bain and Company, a whopping 25% of the “top frustrations” of customers came from poor experiences with sales representatives.

A properly designed labor model can stand alone, or be incorporated into workforce management software: be sure to contact us and request a free consultation!

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