How to Measure Workforce Productivity in Retail
With digitization taking over and online shopping becoming more common throughout the U.S., it's understandable that many retailers are prioritizing e-commerce in order to provide a smooth and streamlined online journey for their shoppers. But, brick-and-mortar stores still have a lot of life in them.
According to the Accenture Global Consumer Shopping Survey, 60 percent of Americans still prefer to shop in-store, and while this is certainly a very positive statistic for retailers with a physical presence, there are a number of aspects unique to high street retail that can create challenges that retailers operating exclusive in the digital environment typically don't experience. Workforce productivity is one of them.
Exploring Retail Challenges
In the world of physical retail, we must take into account how human resources can affect the overall customer experience. Of course, having the necessary skills onboard for online retail is also an essential aspect contributing towards overall success, but in the online space many of the traditional roles of the retail workforce - product identification, checkout, and customer service - are typically undertaken by shoppers themselves, or by automated solutions. Shoppers rely much more strongly on the retail workforce when shopping in physical stores, so having productive members of staff is very important.
And this is where the challenge lies. Right now, the talent pool is at a turning point. 'Baby Boomers' are retiring, and are rapidly being replaced with millennials. Deloitte estimates that more than half of the workforce will be made up of millennials in 2020, rising to 75 percent by 2025. Millennials naturally have different expectations of the generations before them, which means many retailers are caught between wanting to maintain existing processes and adapting to meet the needs of the new workforce.
A failure to meet millennial needs could result in unsatisfied employees, and increase the risk of apathy in the workplace. Apathetic employees cost businesses money, so being able to track and monitor individual performance and productivity is a vital aspect of optimal business operations and success.
Tracking Workforce Productivity
The problem is that it's not as easy to track workforce productivity in retail as it is in other industries and sectors. Productivity in healthcare, for example, can be measured through number of patients seen. In logistics, it's number of deliveries made. In retail ... it's not quite as straightforward. It is, however, essential. A Cisco Workforce Productivity for Retail report suggests that 50 percent of today's customers believe the level of service they receive in-store is dropping, which means that it's more important than ever to identify suitable key performance indicators (KPIs) to track and monitor workforce productivity in retail.
Here are some KPIs that can be tracked:
1 - Task Completion Rate
While those working in retail often have set areas of the business they are responsible for - restocking shelves, assisting shoppers, checking out purchases, organizing stock rooms, or any combination of such - it is less common to see these tasks be formally laid out. In doing so, however, it allows for specific tasks to be assigned to individual employees, and with the use of workforce management software, managers can see real time updates relating to task progress and completion. This provides better insight into real time workforce activity throughout operating hours and enables managers to see which employees are achieving targets, and where there is room for improvement.
2 - Time Tracking
While task completion rate can provide greater insight into the number of tasks that employees are taking on, time tracking goes one step further to analyze how long each member of the workforce spends on certain activities. This KPI needs to be measured across the entire organization. Why? Imagine an employee spends three hours stocking shelves when we've anticipated it will take two. We're then left with the question of whether the task has been underestimated, or whether the employee is not working in the most optimal and efficient manner. By collecting and comparing data across various roles within the organization, it becomes easier to identify anomalies and find weak links across the different teams.
3 - Sales per Employee/Sales per Hour
Sales per employee is a tricky one, and in some instances it may be more suitable to slightly adapt this particular KPI to adjacent indicators such as items per hour for checkout staff, or revenue per person for sales floor associates. It's also necessary to adjust figures depending on whether you're tracking full time or part time staff, so it can be a little more involved than other KPIs, but on the whole it's one of the most effective ways to ensure each employee is behaving in a productive way across their shift for their given role. Perhaps one of the best byproducts of this KPI is that it helps managers determine whether they have the resources they need to handle demand, or if it's time to increase headcount.
4 - Items per Sale/Units per Transaction
By tracking and monitoring items per sale across all retail employees, it becomes easier to see which members of staff are putting the effort into going 'above and beyond.' Is your workforce taking advantage of cross-selling and upselling opportunities, or are they putting in only what's required of them at a basic level? It's a very important question to be asking in terms of workforce productivity. Highly productive employees are those that work to analyze customer purchases and engage with shoppers on a deeper level by suggesting suitable and complementary items. For those also operating within an e-commerce environment, it connects closely with Web 3.0, context, and the semantic web.
5 - Customer Satisfaction
It's important to remember that it's not just the employees themselves that can be tracked in order to monitor workforce productivity. Customer satisfaction levels can give a unique insights into whether staff are meeting their goals and acting productively from a consumer perspective. While gathering customer feedback is arguably easier for e-commerce businesses, it is still possible to achieve in brick-and-mortar stores. Retailers could consider offering incentives for filling out online surveys after shopping, such as entry into a prize draw, or early access to new products. Questions to ask include 'how easy was it to find an assistant?,' 'were the shelves fully stocked?,' and 'how long did you wait in line to be served?'
The Role of Big Data in Retail
These KPIs are important tracking methods, but they are not enough to facilitate change. It is one thing to collect data from these measurement techniques, but it is quite another to analyze, understand, and act upon this data to determine exactly how it can be used to improve workplace productivity in retail.
There should always be an output for our data sources. We need to transfer the above KPIs into usable exports that can help to identify suitable solutions to our productivity concerns. And that's where in-store retail analytics comes into play, with the data all being used together to draw useful meaning from massive amounts of diverse retail data. For long established businesses, collection of this 'big data' can be used to compare current measurements with those for the same period the previous year to determine whether any action implemented has been successful in achieving what it set out to.
So here's an interesting question:why measure workforce productivity in retail? We briefly touched on the idea of apathy earlier, but it's not all about that. After all, there's a big difference between unproductive, apathetic employees and unproductive, yet eager members of the team who are not being provided with the opportunities they need to excel. And this is why we must consider scheduling.
There are many benefits to measuring workforce productivity in retail, but one of the greatest is undoubtedly the ability to optimize employee scheduling to ensure there are an optimal number of resources effectively manage demand during operating hours. A RetailNext case study actually found that in better aligning staff hours to store traffic, businesses could experience a rise in average transaction value, an increase in the number of units per transaction, and improved conversion rates.
This really does show just how powerful measuring workplace productivity and implementing necessary solutions can be in terms of overall sales and profits in the retail space, especially for physical stores.
About the writer: Rob Press is a content marketing manager at Deputy, a robust scheduling software that can be used to manage your workforce in a wide variety of different industries. Aside from helping businesses reach operational efficiency, he keeps up to date with the latest trends in SaaS, B2B, and technology in general. You can connect with Rob on LinkedIn.
About the author:
Robert Press, Deputy