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.
Focus on: Mobility
Mobility is sure to play an increasingly important role in Macy’s omnichannel future, both in commerce and marketing. But don’t look for the company to take a cookie-cutter approach.
"Between QR codes, what we’re doing on Facebook and Instagram that is feeding into our mobile app, what we do with shopkick — everybody is different and that is why personalization becomes so important, because there isn’t just one cookie-cutter approach to it," said Martine Reardon, chief marketing officer, Macy’s Inc. "The more that you can understand the customer, the better you will be at designing offers for her."
Speaking at the National Retail Federation Convention’s 102nd Convention & Expo in New York City, Reardon said Macy’s has embraced mobile as a multitasking tool to help the nation’s largest department store chain better serve its customers.
"Mobile is our communication tool," Reardon said. "Using the mobile device to communicate with our customers is probably the most important thing."
Notable on the m-commerce side, the department store retailer is making its first foray into mobile wallets. Macy’s is currently conducting tests with Google Wallet in five markets and is piloting Isis, the wireless carrier-driven mobile solution, in another two markets. Expect mobile wallets to be a major focus during the next two years, according to Reardon.
Emphasizing an omnichannel approach, Macy’s sees mobile as a way to bridge online and in-store silos, and drive incremental sales. At Macy’s New York City flagship, for example, sales associates on the expanded shoe floor (billed as "the world’s largest shoe floor," with more than 250,000 pairs of shoes), use iPod Touch devices as cash registers.
The devices also provide detailed product information and allow associates to determine the availability of a given size and style on the spot. If the item is not in stock, the associate can locate it elsewhere and have it shipped in two days.
"The mobile access is one of the biggest reasons we are having such success on that floor," Reardon said.
QR CODES: Another growing technology is the use of QR codes. One application for the Bobbi Brown cosmetics counter leveraged content of a Macy’s TV commercial. By scanning the code customers could view on their own devices, makeup artist Bobbi Brown demonstrating how to create a smoky eye. The brand’s sales "exponentially doubled," reported Reardon. While the video wasn’t explicitly selling anything, it provided product information "right in the palm of her hand," she added.
And like travelers using GPS to map out journeys, in kind, over Black Friday weekend Macy’s offered an app, devised with help from eBay and GSI Commerce, which guided shoppers to where sale items were in each of its stores.
"If a shopper is on a mission, if they have gotten up at midnight to come shopping, they want to make sure they know where they are going," Reardon explained.
In December, the retailer unveiled an updated version of its Macy’s app featuring a tiled layout, a bar-code scanning function, and swipe and touch. Within 10 days of launch, 44% of its existing users had downloaded the new version.
"We find that coupons, particularly on a mobile device, are what is driving engagement and driving the commerce," Reardon said.
There is a separate app for the New York City flagship to aid shoppers as its goes through a four-year renovation. Along with a current directory, shoppers can make reservations and be alerted when their lunch table is ready or when it is their turn at Santaland.
One of its biggest promotional assets — the Macy’s Thanksgiving Day Parade — is honored with an app too. People are able to learn more about the historic parade, find restrooms and coffee spots along the 2.5-mile route, and even turn themselves into virtual elf balloons and float along just by uploading a photo.
Top 10 Myths About Multichannel Retailing
The physical store remains the centerpiece of the purchase journey, according to a study by PwC. The report, "Demystifying the Online Shopper," addresses myths about multichannel retailing and offers some ideas to help retailers keep up with their customers. Here’s a recap:
- Social media will soon become an indispensable retail channel. Social media isn’t likely to become an important retail channel anytime soon. Currently, it’s a driver for more shopping across all channels, not just online.
- Stores will become mainly showrooms in the future. For most companies, the physical store remains central. But companies do need to determine how to best drive purchase activity across all of their channels. There still is a place for the store to be a showroom — as a supplement for online pure players, rather than a new model for brick-and-mortar retailers.
- The tablet will overtake the PC as the preferred online shopping device. Tablets and smartphones won’t catch up any time soon as these devices are used at the end of the purchase journey, particularly in-store, while shopping.
- As the world gets smaller, global consumers are becoming more similar. There is a wide range of local differences in consumer behavior, and retailers still need to cater to local trends.
- China is the future model for online retail. China’s multichannel and online model is unique to the culture. Also, shopping habits are dramatically different in China.
- Domestic retailers will always enjoy a ‘home field’ advantage over global retailers. Foreign retailers are making inroads into consumers’ lists of favorite multichannel retailers.
- Global online pure players will always enjoy a scale advantage over domestic online pure players. Many domestic online pure players are holding their own as they have better access to local market knowledge.
- Retailers are inherently better positioned than brands, as they are closest to the customer. Consumers are shopping directly from manufacturers, and many no longer distinguish between retailers and their favorite brands.
- Online retail is cannibalizing sales in other channels. Consumers are actually spending more with their favorite multichannel retailers, not just shifting some purchases to a different channel.
- Low price is the main driver of customer spend at favorite retailers. Customers value quality, innovative brands over price.