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The Final Frontier: Bottom-Up Store Planning in Specialty Retail
This is the fifth and final blog post in our specialty retail series. Each post highlighted a different piece of the store execution and optimization gap within the specialty segment of the retail industry. We introduced this concept in part one and covered conversion rate challenges in part two, workload quantification opportunities in part three, and task-based workforce management (WFM) in part four. If you have yet to read prior blogs from the series, we encourage it. In this fifth installment, we discuss how all the prior information comes together for retailers in the final frontier: bottom-up store planning.
The Top Meets the Bottom
To start, all organizations have some mix of bottom-up labor quantification and top-down financial imperatives at work in planning business goals. The top-down budget will always take priority for financially conscious retailers; nonetheless, store planning does not need to react to budgets, but can inform them instead. In specialty retail, vendors try to impose grocery planning approaches where they do not fit. This has left specialty retailers without the tools they need for system-based WFM solutions to support productivity and service improvements through better forecasting, staffing and scheduling.
Inadequate Planning and Reactive Approaches Cause Problems
Some businesses try to address this shortcoming through on-call scheduling approaches to correct the inadequacies of suboptimal forecasting and planning processes. Those approaches are tough on associates. In fact, they recently forced a new wave of state or local scheduling legislations around fair (or predictive) scheduling practices. Several state or local statutes now require that retailers give associates two-to-three weeks advance notice regarding schedules, and employees must be compensated for schedule changes afterward. These laws are resultant from the unfortunate toll on-call scheduling takes on employee productivity, morale and wellness1.
Overcoming the Optimization Gap
Relying on simplified financial metrics and operational policies to set labor goals, budgets, forecasts and schedules is maintaining the status quo, not thriving through business growth. There is a better way for specialty retail. Bottom-up store planning starts with work content-based labor modeling, which informs a retailer’s goals by developing dynamic standards that drive staffing and scheduling. The bottom-up approach is the peak on the WFM continuum, and it is still evolving. Very few specialty retailers have successfully migrated to this type of labor management, most likely due to defective approaches around store planning (i.e., the topics of this series’ prior blog posts).
Deploying a Solution Set to Meet the Needs
Retailers cannot get optimal, dynamic schedules out of bad forecasts or generic standards. Forecasts that capture a portion of demand are misleading, even dangerous to sales-building and format delivery objectives. Additionally, an operator can have a great forecast, but with labor standards that do not adequately represent her workload, the retailer’s optimization gap is still present. The good news is these unique challenges for specialty retail can be overcome with the right understanding and approaches, and certain WFM vendors are determined to help change the specialty retail landscape.
Bottom-up awareness of work content enables a host of fact-based decisions for better optimization and focus on key value-added activities. Developing a schedule and task-based work plan guides associate teams to systematically implement the retailer’s brand mission and drive higher conversion rates. It also allows retailers to grow basket sizes2. Capturing all iterations of each plan and schedule enables continuous improvement. Larger store retailers have demonstrated the potential for incremental improvements to add up in a big way. Similar opportunities await specialty retail for those harboring the right tools and leadership determination.
There is a lot to learn from specialty retailers, as well as great options available to address the unique complexities of their business models. With a task-detailed, work content-based approach to managing labor as a strategic resource, many more opportunities arise. Resource options include the disciplines of effective store management via workplace organization, best methods, process improvements, facility design, engineered standards, data integration, accurate forecasting, effective scheduling, mobile interaction and operational know-how. But it all starts with understanding the unique differences and challenges associated with specialty retail and the right tools and approaches to address that uniqueness. Change begins with awareness.
As of late, grocery stores and larger formats have received more attention from WFM vendors, but that is a true disservice for specialty retail. Many vendors dismiss specialty retailers’ true needs because stores employ fewer associates and implement cross-training; this has masked opportunity for too long.
Retailing is a challenge in today’s competitive marketplace, particularly in specialty retail. Increased competition with online selling and consumer showrooming has only made the challenge greater for these businesses.
Great retailing, executed well with the tools available, is a value to consumers and communities, and it is a noble profession for workers regardless of store size or merchandise specialization. We think specialty retail is on the cusp of moving toward the final frontier in workforce and store execution management planning. Logile is committed to helping drive and sustain that move.
- Logile, Inc. Predictive scheduling and its impact on retail [White paper]. Southlake, TX
- Netessine, S., Fisher, M. L., & Krishnan, J. (2010). Labor planning, execution, and retail store performance: An exploratory investigation [White paper]. SSRN Electronic Journal. doi: 10.2139/ssrn.2319863