Does 1 Second Really Matter?

Occasionally I have been asked to justify why anyone in retail would need engineered labor standards. The arguments go something like,

• “Does one second vs one and a half seconds really make a difference?”
• “Most scheduling systems round labor anyway”
• “At the end of the day, operators have to schedule to the budget, not to labor standards”.

The basis of these questions is probably related to a bad experience trying to implement a pile of over-engineered labor standards that were handed off with little context or considerations for the end use. I know this because it happened to me back in my workforce management software implementation days. I have seen over engineering and incomplete labor engineering — typically from consulting firms whose primary services are focused elsewhere.

Labor standards should not be thought of as over-engineered time studies that split the hairs of time and are not compatible with environments that operate more fluidly. They are precise and accurate calculations, true, but in retail practice they should be viewed as a means to a more operationally productive end.

Engineered labor standards are the basis for achieving operational excellence. They are about understanding the workload required to effectively and efficiently operate your stores to make your workforce more productive. The information and insight they provide can lead to substantial gains in labor savings and lead to increased profitability. In most cases our clients are able to reinvest savings from inefficient tasking work to customer service and selling. Labor standards can also help make workforce management scheduling systems more accurate and work toward sharpening the budget – not blowing it.

So back to the original question – “Does one second really matter?” The answer is that you are asking the wrong question. The question should be, “Do labor standards really improve my operations?” The answer to that question, that we have seen over and over again across our clients, is emphatically “YES!”.

More to come on operational excellence and top-line growth…..

Sensing the Retail Store’s Pulse

Fresh from NRF2017, PJ Jakovljevic of TEC wrote a great article summarizing the momentum Reflexis Systems currently has in the market.  PJ specifically describes how the Reflexis partnership with Connors Group is a “step in the right direction” and will enhance their ability to compete.

Reflexis Overview

Founded in 2001, Reflexis is headquartered in Dedham, Massachusetts, and has offices in Atlanta, London, Düsseldorf, and Pune (India), with additional sales presence across cities in Europe and Latin America. Some of the company’s ~320 employees are stationed in their home offices in many other places.

The Reflexis retail store execution (operations) software platform started from store operations software solutions such as task management for corporate planners and store managers and retail store auditing for regional managers (the latter called StoreWalk). In 2009, the vendor expanded into the realm of labor operations software solutions such as time and attendance (T&A), workforce management (labor budgeting, forecasting, and scheduling), employee self-service, mobile apps, and analytics (see figure 1). These retail store execution capabilities aim to enable retailers to align store labor and activities with corporate goals and to institutionalize best-practice responses to near real-time exceptions and alerts.

More than 240 of global retailers in multiple vertical retail categories have reported significant improvements in store-level compliance with corporate strategies and increased revenue and profitability after implementing Reflexis solutions. These include grocery, quick service restaurant (QSR), convenience, specialty, big box, and apparel stores. In fact, Reflexis has an impressively high customer retention rate of 97% and high customer satisfaction ratings.

Figure 1. Reflexis retail execution platform
Figure 1. Reflexis retail execution platform

IoT-enabled StorePulse

Reflexis recently moved into the real-time retail store operations realm with StorePulse. This solution has since been adopted by major discount, grocery, consumer electronics, and drug/pharmacy chains. This is an IoT play where retailers can link their existing systems and devices to Reflexis to create automated best practice actions for store associates and store managers. This is based on metrics and exceptions from store supply chains, point-of-sale (POS) devices, store traffic counters, loss prevention, and various other retail systems (see figure 2).

For example, a major big box retailer is using the Reflexis StorePulse solution to greatly improve the efficiency of execution of the retailer’s in-store price matching promise to consumers (who typically come to showroom and then buy from the likes of Amazon). In this setup, store managers can approve the price reduction request by responding to a StorePulse alert with a simple “yes or no” click or finger push. Previously, store managers would have had to spend an inordinate amount of time shuffling papers or through computer screens to find info on the product whose price discount needed approval, which prevented them from doing more valuable stuff (imagine doing about 30 such approvals a day).

Check out the remainder of the article here.


Store Closing Trends and Operational Opportunities

The convergence of several retail patterns continues to point toward an increased need for operational labor improvements, from retail stores to distribution centers.

Retail store closings have been making headlines over the last few weeks.  Macy’s, Kohl’s, Walmart, and Sears have all announced store closings.   Conversely, the trend for distribution centers appears to be growth; in terms of new facilities, facility size increases, and inventory turns.  This largely reflects the impact of ecommerce growth.

We also continue to read, and hear from our clients, about Millennial’s desire for experiences in stores and increased service levels.  So, while the sales volume may be shifting to online transactions, there is still a demand for enhanced in-store service.

The need to increase the focus on customer service by minimizing time spent on non-service store activities/tasks (stocking, merchandizing, receiving, etc.), becomes tremendously important.  Our consultants, however, continue to see high levels of non-service tasking, and inconsistent execution coming at the expense of service across most retailers.

Time spent with customers is crucial to driving conversion and higher units per transaction, and needs to be focused on heavily to maintain the correct payroll percent.   This is negatively impacted if store employees are increasingly burdened with inefficient processes, or not well trained on defined best methods.

A reduction in physical store count means that the remaining stores will need to up their game operationally to meet the customer demands.  The remaining stores will not receive much payroll breathing room from the closing store cost reductions, and will need to prove their worth and viability on a daily basis by extracting the highest value from the labor they have remaining across the fleet.

We have found that processes in both the distribution centers and the stores can be improved to help ensure that product is delivered efficiently, and in a way that is quickly and easily merchandised at the store level.  Minimizing this type of tasking time to reduce overall payroll spend, and to refocus efforts on customer service, is essential.

The trends point to decreased physical store footprints, increased customer service levels, and increased distribution center activity.  Operational processes need to be crisp, and labor needs to be balanced optimally to pull this off effectively.


Can Supermarkets Be Profitable in the Click and Collect Game?

Traditional brick-and-mortar supermarkets are under siege from competitors across the entire retail spectrum.  Not only have retailing behemoths Amazon and Wal-Mart upped their stakes in the grocery game, but seemingly every retailer now offers “grocery” items.  Walk the aisles of any drug, convenience, office supply or home improvement store and you’ll find a slew items consumers historically reserved for their weekly trip to the supermarket.  Combine this rapidly increasing competition with the continued deflation seen in core grocery categories (-2.2% CPI YoY) and you have a recipe for rapid business erosion.  To combat these sales declines, more and more traditional grocers are turning to “click and collect” as an offering to drive up customer trip frequency and basket size.

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To Marketing and Merchandising grocery executives, click and collect is an exciting new offering customers are bound to love!  After all, what busy mom or working family wouldn’t sign-up to have their groceries shopped for them?  To Operations and Finance executives, click and collect is a phrase that sends shivers down their backs nearly as much as “EMV chips” and “increasing minimum wage”.  The reason for the financial skepticism and operational concern is fairly simple; click and collect layers in incremental operational cost to a business model with already razor-thin margins.  The simple example below illustrates further:

Net Profit Rate2.00%
Original Profit $$2.00
Labor to Pick($12.00)
Service Fee Charge$5.00
New Profit $($5.00)

Using the industry standard net margin of 2%, a grocer would typically net $2 in profit on a traditional $100 basket. However, once click and collect is introduced, the same grocer must now spend labor to pick the customer’s order and ultimately pay an associate to do what the customer used to do for free.  Using a modest one hour of labor at $12/hour to pick the order and assuming there is a $5 fee for the service, the grocer has now lost $5 in profit!  Not exactly an offering any grocer should be too excited about.  Granted, this is an oversimplification of a complex financial model and most grocers are banking on a sales lift to justify the service, but it begs the question: can traditional grocers be successful (profitable) with click and collect?  The answer is yes, but doing so requires, among other tactics, an operational strategy that maximizes picking efficiency and delivers a fantastic customer experience.  Designing that operational strategy requires a grocer to deliver on and solve for a variety of topics, including:

  • In-Store Picking Approach – A recent Connors Group study showed for a 40 item order, grocers are spending between 0.8 and 2.2 hours all-in per order picked in-store, with the majority of grocers above 1.4 hours per order. The key characteristic that separates the top performers on this picking efficiency spectrum is their strategy for picking as order volume increases.  Efficient click and collect picking in a grocery environment is a step-wise function.  At low volumes, single order picking is the most economical and practical. As volume increases, it becomes economically viable to step into batch picking and then ultimately zone picking.   Establishing a “wareroom”, a miniature warehouse setup within the retail store, also warrants analysis to further optimize picking efficiency.
  • Picking Outside the Store? – To dark-store or not to dark-store? That’s one of the most hotly contest questions in the online grocery space today and rightfully so.  The allure of lower labor rates and warehouse-like inventory control are extremely appealing.  And in many cases, picking orders at a central location, instead of within the retail store, is the best decision.  However, factors ranging from transportation costs, to pick efficiency and capitalization costs need to be considered.
  • Lead Time & Pricing Considerations – When designing a click and collect offering, careful consideration needs to be given to lead time and its interplay with service fee pricing. Short lead times are valued by customers and yield higher service fee charges, but can wreak havoc on store operations.  Conversely, long lead times allow for operational optimization and alternative fulfillment models.  In the end, thorough price elasticity and efficiency modeling should be done to identify the optimal balance between lead time & pricing.
  • Work Methods, Labor Standards & Equipment – Like any frequently reoccurring retail process, establishing an accurate labor standard and using proper work methods while picking, sorting, bagging and delivering click and collect orders are essential. A suboptimal method at any step within this process can result in lost productivity and order errors.  In addition, work methods need to conform to the other characteristics of the click and collect service.  Should associates pick into totes?  Should they pick into bags to reduce sorting? What style tote cart should be used based on order profiles?
  • Technology Assessment – Operating a click and collect service is inherently technical and nearly impossible without the right technology. Even with technology in place, improperly designed or planned operational software can cause picking inefficiencies and order mistakes.  How does the software validate the correct item was picked?  What logic is being used to route associates throughout the store?  How can the software be streamlined to speed the picking process?

We at Connors Group have deep experience helping retailers answer all of these questions.  Click here to contact us to learn more about how Connors Group can help optimize your click and collect operations.

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!

The Labor Impact of Chip Readers

At Connors Group, we have measured the productivity of retail front end operations for years.  Few universal process changes have had the direct impact that payment card chip readers – or the EMV standard have had.  It impacts every piece of the customer transaction, causing significant delays and throughput considerations at the cash wrap.

(Photo: Mark Marturello, The Des Moines Register illustration)

(Photo: Mark Marturello, The Des Moines Register illustration)

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Black-FridayPicture this: It’s Black Friday and your store is filled to the brim with holiday shoppers. Customers greeted by your sales team at the front end are carefully ushered through their sales journey with minimal issue. Your well-trained floor staff seems to be handling the rush seamlessly. Then, as customers approach cash wrap, they notice the line spans towards the back of the store and become frustrated with their experience. They look at their items and decide the wait isn’t worth it, costing you a sale and putting more stress on your employees.

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Offsetting the costs of an increased minimum wage: Three areas retailers need to consider

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Retail Expectations: Three Takeaways from Reflexions

The Reflexis annual users’ conference was held at the Cosmopolitan Hotel in Las Vegas from September 15 to 18, 2015. This was the largest Reflexions program to date, with more than 150 attendees from over 50 retailers attending the three-day event. Connors Group was a first-time sponsor of the event, which was time well spent learning and hearing from Reflexis clients regarding case studies and best practices. Additionally, Reflexis reviewed and launched the latest and greatest enhancement to their product offerings. It was great to be there alongside other partners such as IBM, NOMi, CMITIME and Bluebird.

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Welcome to our blog

Let’s face it, managing a business is no walk in the park. Between fluctuating markets, buyer uncertainty and an increasing focus on efficiency and return on investment, it’s easy to throw up your hands in frustration wondering where you should start. Here at the Connors Group, we’re all about helping our clients achieve real, measureable and sustainable operational successes through proven, results-driven programs created and delivered by our expert team of consultants. We help companies improve the way they do business—whether focused on customer experience, distribution planning or engineered labor standards.
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