Photo: RetailWire
Are staff shortages affecting retail sales?
Through a special arrangement, presented here for discussion is a summary of a current article from The Retail Doctor’s Blog.
Stores that were designed to run on six employees are now limping along on two. How do store operations personnel know when they’ve cut past the fat and into the very muscle and bone of their retail operations?
Here, a few signals:
- How long do customers have to wait to pay? At most grocery stores, policies call for opening another register when three or more shoppers are in line. For smaller stores, three could feel like an eternity. The first step is training the crew on how to hustle when it is busy and then look at adding additional staff.
- Do employees have enough time to add on to every sale or are they just trying to get customers out the door? Do a POS report and look at the average number of items per sale. If employees have been trained to add on to every sale, the number should rise — especially over the holidays. If it doesn’t, listen to what an employee says while they bring someone to the cashier. If they’re constantly running around trying to do the work of three people, customer service, the ability to build a sale and the potential to make the store a great place to work all suffer.
- If sales are down, how do employee hours over this last three months compare to the average of the same period last year? This is a bit more advanced but helps determine if the store has been running low on employees for a long time. Then you have to see which came first: lower sales due to fewer employees or fewer employees due to lower sales. If it’s too few employees, you’re just a slower and more expensive version of your online competitors.
- How often are you having to call associates to work extra shifts because you’re slammed? If you’re desperately holding on to employees in this tight labor market, you have no room for error if you get slammed or when one calls in sick; you’re constantly trying to plug the leak.
Discussion Questions
DISCUSSION QUESTIONS: What signs do customers see when stores are understaffed? What suggestions would you add to those in the article for improving staffing efficiency?
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BrainTrust
"If you’re having problems finding all the people you need, then the issue is not the people, it’s your wage."
Nikki Baird
VP of Strategy, Aptos
"I’m in favor of fewer associates that are well compensated and career-minded so customer interactions are beneficial to both the shopper and store."
Ken Lonyai
Consultant, Strategist, Tech Innovator, UX Evangelist
"The math simply doesn’t work out to keep the same staff on while top-line revenues are flat."
Probably the clearest sign that a store is understaffed is all those “Help Wanted” signs in the windows and doors as you walk in. Or maybe even the latest signs I’ve been seeing that say “Weekly job fair on [XX day] — we’ll hire you on the spot!”.
If you’re having problems finding all the people you need, then the issue is not the people, it’s your wage. Or benefits — because, honestly, retailers leave a lot of value on the table by not thinking about some of the “soft” benefits that employees really value, like shift flexibility or putting schedules out far in advance so they can plan their lives.
Bottom line, I think retailers already know they’re well past muscle and into bone. What I don’t get is the continued refusal to recognize that the issue is that the labor market has heated up, and if they want to compete, they have to pay. From what we’ve seen in the market, even investors expect that retailers will have to reinvest in labor. With the store in such a precarious position in terms of meeting consumer expectations, retailers better get on it quick, before they become a self-fulfilling prophecy.
I couldn’t agree more Nikki, but just like many of the retailers have been doing to their entire staff, they continue to underfund and not pay for experience which is part of the reason they are losing sales. They say it’s a brick and mortar issue, but I believe it is much more of a personnel issue on every front. We need to invest in people and the store experience to make the consumer come back to purchase.
There is no point driving traffic into stores if retailers don’t have enough staff to adequately service it — under-staffing is rampant in the industry. The first thing retailers need to do is allocate staff and labor hours relative to traffic in the store. Even today, many retailers make staffing decisions without traffic count data — many use sales transaction counts as a proxy, which are often not even close to the actual traffic count. Front-line staff are the single most important factor in driving conversion rates and when retailers under-staff there is a clear and negative impact on conversion and sales.
Customers who go online can pay immediately. Those same customers are going to be unforgiving if they perceive longish lines in stores, particularly if half the registers are unmanned. This is a watershed time for commerce, and the best-prepared companies will be poised to move ahead
As Cathy says, “Customers who go online can pay immediately.” To the discussion regarding parking, customers who go online don’t have to deal with parking. How many issues like these cause friction about going to the mall or the store. I think there is a message here!
I agree with Cathy and many of the other comments made. It is difficult to understand why, at this time of year, we are seeing so many unmanned registers and longer than acceptable lines. It also is beginning to appear that those grocers/retailers having a three person in line policy before opening another register have expanded the number closer to five.
Even Nordstrom was having staff issues over the weekend. In the Charlotte store, the entire first floor accessories area had only three associates. All had lines of buyers getting frustrated with associates who were busy helping shoppers and didn’t quite know what to do to get people rung up more quickly. Perhaps they could add one just to ring sales. It was clearly busy enough! The overall experience was not up to Nordstrom standards!
For most of retail, it’s hard to pin retail sales loss issues on one factor.
Before focusing on the why’s and how’s of employees, I would look at the customer journey and where shoppers happen to interact with associates vs. where there’s a benefit to interacting with associates. For example, checkout is an arcane practice leftover and largely unchanged from a century ago. Unless associates at checkout add real value (that’s rare) it’s an area ripe for technology, even for small merchants. In such a scenario, automation means limited staff can be assigned more value-added roles.
In fact, I’m in favor of fewer associates that are well compensated and career-minded so that customer interactions are beneficial to both the shopper and store. Again, planning the customer journey to be meaningful, frictionless, and time conscience likely will benefit from technology as a complementary mechanism to aid employee efficiency.
Based on the data we’re seeing in our benchmark studies, the information in the article is somewhat dated. We have find retailers ARE in fact improving their payroll-to-sales ratios, and have been for the past three years.
What Bob Phibbs might be alluding to is not seeing those employees on the selling floor. This could be the result of two things: 1.) too much administrative work that eats employee time or 2.) bad management in the store and the employees are “hiding” — yes, they really do this — in various “safe” areas around the store.
Both can be helped with technology … optimizing non-selling functions and providing mobile alerts and data to store and department managers so they can stay out on the selling floor to keep an eye on things.
I also think there’s a lot of hidden complexity behind this statement: “If sales are down, how do employee hours over this last three months compare to the average of the same period last year?” Because staffing levels are so dependent on sales, we’re more likely to see the opposite occur. Budgets decrease because sales are down.
Overall, I think we’re seeing retailers recognize that they cut too lean and are slowly putting payroll back. The aughts were not retailers’ finest hours … the push towards self-service in-store, and continued pushing of profits by driving down payroll numbers (the GE management era came to retail!) created a situation that they’re still digging out from. But digging out they are.
Long checkout lines, disorganized displays, and as Nikki said, ads for career fairs all indicate understaffing. Last time I was in a mall a few weeks ago, the associates who were ringing people out were pitching seasonal jobs to customers and offering to help them fill out applications on the spot. Talk about a weird experience. Instead of trying to upsell on products, employees were trying to sell jobs.
The bottom line is many retail stores are not offering competitive benefits packages. From low wages, part-time and unpredictable hours and no health insurance there is little incentive for people to choose those jobs over other options.
It’s no secret that retailers lose sales all the time because of either understaffed stores or stores with poorly-trained staff. The solution is simple; hire more people, increase their hourly wage and train them with effective training. The problem is today that most of these retailers have their financial people run the company and not creative thinking ones. Financial people have great value, but they don’t understand the need sometimes to take a risk, spend a little money and see what happens.
Today if it’s not a guaranteed ROI they don’t invest. Look at stores like Apple … do they lose sales? No, they’ve created the perfect in-store experience. You can browse and play with the products, but when you need something, there’s hardly ever a wait for an associate, and they’re always able to help and get you what you need quickly. Other retailers say, “sure Apple could do that but look at their price points.” And that’s the end of the conversation. Independent retailers often do a better job of service and sell more per store because they understand the associate makes it or breaks it.
Retailers can do more business if they want to but, for that to happen, the bean counter might need to take a few days off and let someone else figure out store payroll, scheduling and training.
One of the signs missing from the article is higher than historic employee turnover. No one wants to work in an environment that expects more than they can reasonably give and/or where customers are always unhappy with the service levels they are receiving. Nor do customers want to deal with new employees who are unfamiliar with the nuances of their position and its responsibilities.
Paying more should help ease the problem of securing and retaining employees, but really training them so that they do their job will result in happier employees and customers.
In these fiercely competitive times, retailers have had to grow profits in the wake of deep discounting and rising hourly wage rates. The math simply doesn’t work out to keep the same staff on while top-line revenues are flat, or you’re having to move more tonnage at lower retail prices just to keep up with last year. And moving more tonnage takes more labor. Bottom line, ongoing coaching and leading by example will encourage the staff who are still in your stores to help customers proactively. Raising wages to keep more staff is not always feasible when gross profit budgets have to be met.
Staff stretch is a key measure to keep an eye on. How many customers to staff? Keeping this in balance is key to the desired level of customer experience. Look at this over time. As decisions are being made to cut resources, how does this correlate to traffic (are you teaching customers to not even bother)?
Track the size of the basket, also called “Average Transaction Value.” If it’s declining, it could be a warning that staff are too busy to up-sell/cross-sell, simply processing what’s in front of them.
If you have an appointment booking system, a more basic paper deli ticket system or queue system, check how many abandonments are being seen and what direction you are heading in.
Another metric to look at is patronage measure if you have Web Access Points, look at the data and see if you have the same level of regular, occasional and new customers pre and post any change.
What do customers see? Simple things like shelves not restocked, nobody available to help. If you have a customer satisfaction system or mystery shop you may well see the signs come here or even in online reviews of the stores.
Talking with customers daily, we hear the same story: “I was anxious to buy when I went in to the store, but no one looked at or even greeted me.” One of the most difficult tasks that face retail stores today is finding the right people.
Our advice? Retailers: Hire people with great attitudes, forget about anything else. You can teach behaviors, but not attitude. Ask a potential hire why they want to work in the store. Listen carefully! The pressure to fill the store with staff cannot rely on hiring just anyone who has a pulse. We talk so often in this forum of the critical importance of customer “COR” (Conversion Optimization Rate) for brick and mortar stores. The most powerful way to secure the required customer interaction, and optimization, is with a staff all possessing great attitudes anxious and trained to understand the importance of their knowledgeable role with customers. We know it’s not easy, and it is work, but think about it this way: better hires are more productive, thus preserving margin dollars.
Bottom line is a retailer’s front line is the store associate. They are the most important element of the in-store experience and not having enough of them to meet customer demand is a sure sign of pending failure. Retailers who are struggling to hire people should look at heir wages and benefits — chances are their pushing candidates away with subpar offers. That said, it’s clear to me most retailers are definitely trying hard to hire more people for the holiday shopping season. They better have planned ahead for training programs to make those new hires knowledgeable or again, they’re setting them up to fail!
I spent six hours yesterday walking through stores at the Mall of America. I don’t think I spent $20; that’s a record low for me.
It was a slow night so I didn’t encounter long lines. In fact, plenty of stores only had one associate on the sales floor. And in many cases, those associates didn’t even bother to acknowledge me, but that’s a different topic. I walked around my favorite apparel store for five minutes and I was the only person on the floor. There were two associates working but they were doing something in the stockroom.
Retailers cannot expect to have strong sales this holiday season if there is no one on the floor to help shoppers. Who’s there to recommend gift items, help put together outfits or add-ons to the sale?
I know that retailers are frustrated when it comes to hiring and keeping people, but consumers are frustrated, too. If you can’t afford to fully staff the store at least make sure the associates on duty are properly trained to help shoppers.