Managing store and department weekly labor allocations effectively in retail must be a priority to minimize waste during challenging economic times. Labor often represents the largest variable expense on the bottom line, yet many retailers fail to manage it effectively.
- Volume Driven Forecasting and Scheduling:
- Utilize historical POS data, customer traffic patterns, and seasonal trends from the store/department level up to forecast labor needs accurately. Each location has unique volume trends and should be forecasted from the bottom up.
- Scheduling software should consider these variables to optimize weekly labor schedules in alignment with traffic trends.
- By aligning staffing levels closely with predicted demand, you can prevent overstaffing during slow periods and understaffing during peak times, thus reducing waste. In my experience, the standard is typically between 5%-10% in each direction. You will never be perfect, but the key is to be as close to the pin as possible.
- Flexible Staffing Models and Cross-Training:
- Implement flexible staffing models that allow for agile adjustments based on real-time POS data and store traffic. Part time workers are more flexible for scheduling software, have a lower average wage rate, and can be scheduled in 3 to 4 hour blocks depending on your state. There is a trade off in experience and productivity, so this impact should be fully understood prior to making systemic changes to your existing staffing model.
- Cross-train employees to manage multiple roles within the store, enabling you to allocate labor resources more efficiently across different departments or operational tasks.
- This flexibility helps in adapting quickly to unexpected changes in demand or staffing availability, minimizing waste caused by inefficient resource allocation.
- Continuous Monitoring and Adjustment:
- Regularly monitor key performance indicators (KPIs) such as schedule vs actual, forecast versus actual, labor cost percentage, sales per labor hour, approaching overtime, and customer satisfaction metrics… etc
- An earned labor model will allow you to identify misses in the volume forecast by mid-week (or daily) so you can adjust quickly. Compare actualized days to the volume forecast, identify gaps and rerun your labor model to adjust labor allocations mid-week. The caveat here is to ensure you are not deleveraging productivity on peak days by decreasing a stores labor allocation. Consider black out days (Fri, Sat, Sun).
- By continuously optimizing labor allocations, you can reduce unnecessary costs and ensure that staffing levels are aligned with operational needs.
Incorporating these strategies into your weekly labor allocation process can significantly reduce waste and leakage, thereby optimizing resources and improving the overall store performance. There is nothing more impactful than managing labor efficiently and effectively on both your bottom line and the customer experience.