Specialty retail task is to become task-based

Specialty Retail: The Core Task is Becoming Task-Based

Dan Bursik, Vice President, Product Management
Kyle Ferlic, Retail Analyst

This is part four of our five-part series on the intricacies of specialty retail. Part one outlined why specialty retail workforce and store execution management is different from grocery and big box store optimization. In part two, we discussed the major gap in conversion rates between specialty retail and grocery, and why it matters. Part three explored how engineering tactics like standards management, utilization studies and customer journey analyses can aid specialty retailers in better quantifying workload. Today, we dive into the criticality of task-based scheduling for specialty retail.

Specialty Retail Sees Less Specialization

We begin by discussing specialization. The level of workload concentration can vary in specialty retail; employees are often task-generalists versus their grocery retail counterparts, who have more specialized work assignments. This is observable across the grocery store. For instance, deli associates rarely transition to produce or meat departments, as they have not been trained to do so. Front end cashiers might do light stock work for products near the front end, but they seldom have assignments in bakery, frozen food or dairy. Contrastingly, specialty retail employees assist throughout the store, perform replenishment and recovery tasks between customers, and move seamlessly from task to task as needed.

This cross-utilization of staffing skills is an asset to specialty retail and a vital necessity for their format and brand. Some specialty retailers even schedule employees across locations, let alone departments, to maximize the labor force. However, this flexibility within staff work has led to maintaining a job-based scheduling approach, where few tasks are clearly defined, and work priorities are left to store associates to execute using limited information without central support. In our opinion, there are few excuses for not quantifying associate work content (i.e., tasks) to understand, direct and optimize workload modeling, which leads to better labor planning and less waste.

Walking in a Specialty Retailer’s Shoes

To elaborate, we utilize the insights of Dr. Zeynep Ton, an MIT professor whose work over the last decade has been focused on educating businesses around the virtuous retail cycle1. This cycle denotes that high labor budgets lead to good quality and quantities of labor, which result in good operational execution and higher sales and profits. This, in turn, allows for higher labor budgets. That said, more people does not mean better service. Targeted investments in labor can drive incremental growth; untargeted excess merely drives waste. Poor, or zero, investments in labor is what Ton delineates as the vicious retail cycle. This is predicated on the “false trade-off” that more labor means higher prices and lower profits. We incorporate Ton’s research here because of its rich array of information supporting our point.

Back in 2008, Ton analyzed four years-worth of data from 250 specialty retail stores and interviewed more than 50 of that chain’s employees from the CEO down2. She came to several powerful conclusions: 1) task-based staffing levels had a profound effect of store success but were not used to measure performance; 2) increasing staffing levels improved task performance by staff; and 3) increases in staff performance elevated store profit margins. Combined, Ton’s comments show that matching qualified workers to the right tasks and holding them accountable for those tasks increased profits. Her final comments are worth noting2:

How is a store manager to know how many hours of labor are needed to run the place well? Employee tardiness and absenteeism, variations in workers’ speed and skill, and the vagaries of customer demand add up to a dizzying level of uncertainty for managers trying to staff their stores. But one approach managers can use is to track the performance of the tasks that are most likely to suffer from insufficient labor…Another approach is to match the size of the staff to the estimated total workload. Forward-looking retail chains are beginning to use computerized scheduling systems to do just that. Such systems offer a promising alternative to corporate policies that place too great an emphasis on payroll as a fraction of sales.

Let us fast-forward to Ton’s work in 20121. Ton was not only convinced specialty retailers were biting the hand that feeds them by cutting labor to meet sales budgets, but they also sacrificed long-term success for short-term gain. It is possible, based on her research, for retailers to invest in labor, training and workload planning strategically without sacrificing profit. How? Ton1 commented, “retailers who view labor not as a cost to be minimized but as a driver of sales and profits” create a virtuous cycle. She also stated that some retailers in the virtuous cycle actually err on the side of overstaffing.

Although her research is incredibly useful, we believe there are critical pieces that Ton misses. First, it is possible to appropriately staff versus overstaff with the right technology. Also, existing operators cannot create larger labor budgets out of thin air. So, what does one do to transition from a vicious to virtuous cycle?  It starts with a system capable of quantifying, scheduling, communicating and managing task-level workloads.

Circling Back to Task-Based Workloads

Ton said that retailers who invest in employees are hyperfocused on “eliminating waste and improving efficiency”1. We believe this statement implies that it is nearly impossible to find improvement opportunities when they are masked by an oversimplified approach to labor modeling, work planning and scheduling. With the right system and guidance, the efficiency-based drive for less waste does not need to compete with innovative investments to grow sales and service. Instead, they can complement one another. The key is to clarify your objectives and measure the outcomes to make smart adjustments.

In ending, we leave readers with some questions to ponder. When you consider turnover rates in specialty environments, are associate judgments regarding intraday tasks to complete—without proper training or staffing systems—going to produce sustainable results? Expert research shows it will not1. Does sales-based labor management result in maintaining one’s brand and optimizing labor as a critical resource? Our experience says otherwise. Specialty retail deserves better.

Come back next week for our final installment of this blog series on your journey toward workforce and store execution management optimization in specialty retail.

References

  1. Ton, Z. (2012). Why “good jobs” are good for retailers. Harvard Business Review. Retrieved from https://hbr.org/2012/01/why-good-jobs-are-good-for-retailers
  2. Ton, Z. (2008). The hidden risk in cutting retail payroll. Harvard Business Review. Retrieved from https://hbr.org/2008/03/the-hidden-risk-in-cutting-retail-payroll