{"id":6222,"date":"2020-07-16T12:00:07","date_gmt":"2020-07-16T12:00:07","guid":{"rendered":"https:\/\/www.tellermate.com\/us\/?p=6222"},"modified":"2021-06-07T08:53:59","modified_gmt":"2021-06-07T08:53:59","slug":"reducing-labor-costs-can-reduce-retailers-sales-and-customers-too","status":"publish","type":"post","link":"https:\/\/www.tellermate.com\/us\/news-and-resources\/reducing-labor-costs-can-reduce-retailers-sales-and-customers-too\/","title":{"rendered":"Reducing labor costs can reduce a retailer\u2019s sales and customers, too"},"content":{"rendered":"

It\u2019s no secret that brick-and-mortar stores are under the gun to decrease operational expenses; but reducing labor costs \u2013 one of retailers\u2019 most-commonly used cost-cutting measures \u2013 often leads to understaffing.<\/p>\n

A recent\u00a0Retail Dive report<\/a>\u00a0shows that slashing labor costs \u2013 which may seem like a great way to reduce a retailer\u2019s budget \u2013 can instead lead to poor customer service, a negative in-store experience, and in turn, lost sales and profits. And what retailer can afford to lose customers, sales and profits in today\u2019s ultra-competitive, omnichannel environment?<\/p>\n

The December 2017 article, based on a study from the Massachusetts Institute of Technology Sloan School of Management, reminds retailers of the importance of good old-fashioned customer service. When potential customers can\u2019t find store associates to help them, businesses quickly lose retail sales and resulting profits \u2013 not to mention the potential for repeat business.<\/p>\n

Its lead researcher, Rogelia Oliva, said, \u201cRetailers need to move past the inclination to minimize cost by understaffing stores because it has a big impact on profitability. They could generate more sales if they have staff at the correct level.\u201d<\/p>\n

Retailers historically have based staffing levels on sales quotas. However, Oliva suggest store traffic should be the key metric instead of sales because scheduled labor may be unable to meet customer traffic flows.<\/p>\n

Balancing staffing levels, labor costs, sales and store traffic<\/h3>\n

\"Reducing<\/p>\n

But it\u2019s a catch 22 for retailers trying to perfect the balancing act of reducing labor costs while increasing store traffic, sales and profits. In fact, a separate study from the\u00a0University of Pennsylvania\u2019s Wharton School of Business,<\/a>\u00a0states that \u201cIntuitively, the level of store labor should impact sales, so setting store labor to a percentage of sales forecast is circular and fails to take into account how store labor impacts sales. In the worst case, this approach leads to a spiraling effect: a low sales forecast leads to reducing labor which leads to lower sales and so on.\u201d<\/p>\n

So, what\u2019s a retail operations manager to do when it comes to having the right amount of staff \u2013 short of looking into a crystal ball?<\/p>\n

Understaffing and the customer experience<\/h3>\n

There are many factors to consider when it comes staffing the right number of employees to meet customers\u2019 needs. Consider:<\/p>\n

Are customers waiting too long to check out?<\/strong>\u00a0According to\u00a0this retaildoc.com post<\/a>, \u201cThe greatest friction for shoppers is waiting in line to pay for something, closely followed by them having to wait to find someone who can assist them.\u201d<\/p>\n

Are employees available to help boost sales and add to the customer experience, or are they just trying to get them out the door?<\/strong>\u00a0While some customers know exactly what they want and wish to be in and out of a store quickly, others not only want but need the assistance of a trained associate.<\/p>\n

What amount of sales are you losing because employees aren\u2019t available to upsell?<\/strong>\u00a0Whether it\u2019s a scarf that complements a sweater, shoes that make an outfit magnificent, or a wine that pairs perfectly with a meal a customer plans to cook at home, countless sales are lost when employees aren\u2019t there to suggest add-ons. Not to mention earning customer loyalty that personalized service can provide.<\/p>\n

What manual tasks could be automated?<\/strong>\u00a0If employees are bogged down with tedious tasks that could be automated through retail technology, you are losing sales. And wasting labor costs.<\/p>\n

Perhaps, the answer to offsetting labor costs isn\u2019t to cut staff but instead to implement retail technology that allows the employees you have to maximize their time on the floor with your customers.<\/p>\n

LiveDrawer™ helps reduce labor costs<\/h3>\n

A variety of retail technology exists to help retailers improve efficiencies and reduce labor costs. And while each has its own benefits,\u00a0automated cash management systems<\/a>\u00a0benefit retailers in numerous ways \u2013 including offsetting labor costs by helping boost employee productivity.<\/p>\n

The\u00a0LiveDrawer solution<\/a>\u00a0is a software\/hardware system that includes an intelligent cash drawer that automatically counts bills and coins the moment they are placed in the drawer; the accompanying software provides remote, real-time accessibility to customizable dashboards. This allows managers and the head office to view details of each and every transaction and run reports that, among other things, can help optimize employees\u2019 time on the clock.<\/p>\n

How? LiveDrawer\u2026<\/p>\n