Today’s post is courtesy of our board member, Mark Wales.

Recently, we’ve seen increasing pressure on retail profitability. Declining traffic and retention, combined with increasing labor costs, higher customer expectations, and the need for more frequent investments in technology and store renovations, are all making survival in the retail jungle a real challenge. The result is that more than 8.5k stores are projected to close in 2017 which is higher than 2008, the previous worst year on record.

And yet, challenging times like these can provide an opportunity for employers. Rather than deciding to squeeze the cost of labor as a way to try to protect the P&L, employers can rather look for ways to work smarter with the employees they have.

By focusing on optimizing forecasting and scheduling, retailers can enhance their ability to have the right employees, in the right stores at the right time. Furthermore, if retailers allow employees to have input into their schedules, they are more likely to have engaged employees who will give that extra discretionary effort to deliver the right customer experience.

Retailers must keep in mind that optimization is not a one-size-fits-all solution. In fact, the factors that most impact forecasting and scheduling are often very local, such as:

• All employees are not created equal. Experience, tenure and capability matter and significantly impact productivity.
• Stores themselves vary in format, customer-flow and sales mix.
• Weather, transportation patterns, special events and numerous other factors (even the stock market), can influence local demand in variable ways.
• Store closures, pop ups, Amazon and other online options are quickly affecting demand in unpredictable ways.

However, one factor transcends local needs and is consistently true across all stores and markets: Good managers build great teams. They find the right individuals, blend their skills, and lead their teams to achieve their goals. So give your managers the tools they need to build good teams. The ability to schedule employees to work together on a frequent basis builds up a level of trust, knowledge and teamwork that unlocks productivity. You must ensure that your forecasting, planning and gatekeeping at a corporate level support the ability to execute at a local store level. By doing this you will set your managers up for success.

So put your faith in your leaders in the stores. Make sure that you’re triggering the right behaviors in field leadership by emphasizing simplicity and consistency. This creates time for managers and employees to focus on servicing the customer in ways that bring them back. In the end, it is not cutting labor, but rather investing in and supporting labor that will increase sales, and protect the profitability of stores.

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