Project Description
Labor shortages and tight budgets represent constant and increasing challenges for retail store operations. For many store managers and retail field leaders, these two constraints make it almost impossible to successfully accomplish the recurring operational workload and new omnichannel requirements, while simultaneously providing excellent customer service in retail stores.
Corporate attempts to improve operating margins have slashed variable labor budgets while simultaneously placing added pressure on stores to execute more frequent operational and promotional activities. Meanwhile, appealing store environments and superb service are no longer differentiating factors but rather essential requirements for survival in today’s highly competitive retail environment. Further, the current labor shortages have severely hampered the ability to attract and retain productive store associates. As a result, store managers are often faced with difficult choices when deciding how to best allocate their limited resources and budget.
This dilemma can be addressed by answering four key questions and then identifying and prioritizing opportunities that are uncovered.
Key Questions to Assess Your Retail Store Operations
When our team conducts store operations assessments for Parker Avery’s retail clients, we take an in-depth approach to identify and prioritize areas of improvement. In addition to conducting multiple on-site store visits and observations across a range of store types and geographies, we interview key stakeholders such as field leadership, store managers, and store associates. To thoroughly evaluate the workload regularly performed in stores, it is important to ask retailers the following questions regarding each store activity:
- Do we need to be doing this task?
- What role(s) should be responsible for each store activity?
- When and how often should store activities be done?
- Is there a standard or better business process for completing this task?
By undertaking this effort, retailers will find they can improve efficiency in their stores, enabling more consistent execution of their workload while simultaneously repurposing a portion of their labor budget to improve customer service and focus on value-add activities. Let’s take a closer look at each of these key questions.
Do we need to be doing this task?
The first step of any store operations assessment is to identify all of the tasks that are being consistently performed in the stores. This list should be exhaustive and include daily items such as replenishing shopping bags at the checkout stations as well as less frequent activities such as documenting, packing, and shipping merchandise to be returned to vendors. Variations based on sales volume, store format, geographic location, and other factors should be taken into account. Additionally, the activities of all store personnel (sales associates, asset protection, back of the house, etc.) should be considered.
Documenting all recurring operational tasks will often be an eye-opening experience and bring to light many activities that corporate or store management was not aware were being consistently performed. Prior one-time special requests may have unknowingly become standard practice, or activities that were supposed to have ceased may still be continuing. Shedding light on these situations will provide the opportunity to eliminate unnecessary effort and result in a quick win of labor hours that can immediately be redeployed to other activities.
What role(s) should be responsible for each store activity?
Once a retailer has identified the non-value add activities that can be eliminated from their stores, the next step of a store operational assessment is to look at who is responsible for executing the remaining workload. Whether by virtue of the personal preferences of specific associates or the more ubiquitous “that’s how we’ve always done it,” it is likely that the employees most suited for the job are not the ones who actually perform many operational tasks. Highly paid sales associates may be unpacking new receipts while stockroom workers sit idly nearby.
To avoid any misallocation of resources that places an unnecessary strain on store labor budgets, roles and responsibilities must be clearly defined for all operational tasks. RACI charts that provide clarity to roles who are responsible, accountable, consulted and informed should be developed and communicated to all personnel. RACI charts ensure that everyone in the store is aware of the relationship between all tasks, not just their own.
After clearly defining and communicating the responsibilities for store operational tasks, retailers must continually monitor their execution to ensure that associates do not revert to their old ways. Position shifts may even need to be considered for any employees uncomfortable with the new operational reality.
Sample RACI Chart
| Activity | Back Office Mgr | Back Office Assoc | Floor Mgr | Floor Assoc | Visual Mgr | AP Mgr |
|---|---|---|---|---|---|---|
| New Receipts Processing | A | R | ||||
| New Receipts Merchandising | A | R | C | C | C | |
| Price Changes | A | R | C | C | C | |
| Returns to Vendor (RTV) | A | R | I | |||
| Hanger/Sensor Tag Pickup | A | R | ||||
| Supply Replenishment | A | R | ||||
| Mark Out of Stock | A | R | I | |||
| Re-ticketing | A | R | ||||
| Merchandise Fill In | A | R | ||||
| Floor Recovery | A | R | ||||
| Fitting Room Maintenance | A | R | ||||
| Gift Wrap | A | R | ||||
| Cash Wrap Clean Up | A | R | ||||
| BOPIS Pick, Prep, Stage | C | C | A | R | ||
| Ship From Store Execution | A | R | C | |||
| Inventory Cycle Counts | A | R | C |
R = Responsible (primarily performs activity)
A = Accountable (ensures activity is completed)
C = Consulted (offers direction as needed)
I = Informed (notified activity has been performed)
When and how often should store activities be done?
In addition to identifying the most appropriate personnel to perform the operational workload in their stores, retailers should also take a closer look at when each task is being performed. Operational tasks done at inopportune times can have an adverse effect on merchandise availability as well as employees’ ability to assist customers, two of the most crucial variables to a compelling store environment. For example, a store operational assessment may uncover employees performing operational tasks during peak selling hours while standing idly during slow traffic periods.
To maximize merchandise availability and employee interactions with customers, retailers should evaluate historical traffic patterns and establish a detailed schedule of when each task should be performed. Equally as important, this schedule should also include the specific times for when a given task should not be performed.
Retailers may want to consider reserving certain peak traffic hours for time on the floor and make these hours off limits for any other tasks. If floor hours are adopted, corporate resources must be informed that special requests cannot be honored during this time period. Other tactics to investigate as part of determining the optimal timing for executing operational workload include shifting some activities to off hours and staggering employee schedules. This timely execution of buy online, pick up in store (BOPIS) and ship from store (SFS) orders are an emerging priority in meeting customer expectations. The combination of all of these timing decisions will ensure that a focus on customer service is maintained.
Real World Retailing | Case Study
After performing a comprehensive store operations assessment, prioritizing, and addressing the opportunities uncovered, a U.S. luxury department store chain was able to improve:
- Merchandise speed to floor by 75%
- Back-of-house team productivity by 30-50%
- Management’s presence on the floor by 10-20%
Based on survey results, the company also improved customer service and employee morale.
Is there a standard or better business process for completing this task?
The final stage of any store operations assessment is to review the methods currently being utilized to execute specific tasks. If standards have not been put in place, retailers will likely find that processes and productivity vary significantly across locations. Even if specific best practices have been developed and implemented, employee turnover, transfers, and promotions may have diluted their efficacy over time.
At a minimum, retailers should invest in developing a set of standard practices for their most common operational tasks. These can range from something as simple as shortcuts recommended by long-tenured associates to as complex as highly engineered labor standards. Either way, these practices should be fully documented, complete with written instructions, diagrams, and photos.
After training the field on the new standard practices, advanced retailers implement a certification program and require store associates to be regularly re-certified. They also re-evaluate their standards on a consistent basis according to a pre-determined schedule with varying intervals based on each process’s relative impact on the store labor budget.
Final Word
With retailers seeking any chance to cut costs, store labor is not only scarce, but managers are frequently being asked to do more with less. However, customer service does not have to be sacrificed. Companies who sharpen their pencils and closely evaluate their retail store operations processes can identify opportunities to achieve the required cost savings while simultaneously improving the customer experience. Using a proven store operations assessment methodology, asking the key questions we outlined, and answering with honest objectivity, your company can realize tremendous efficiencies and provide a better customer experience.
Authors
The Parker Avery Group is a leading retail and consumer goods consulting firm that transforms organizations and optimizes operational execution through development of competitive strategies, business process design, deep analytics expertise, change management leadership, and implementation of solutions that enable key capabilities.
