With recent changes in the trends
in retailing and heavy competitions with the widening of the product line,
retailers are thinking very simplistically about the cost and potential of
their workforces.
“No matter how you slice it up in
the retail business, payroll is one of the most important part of overhead,
and overhead is one of the most crucial things you have to fight to maintain
your profit margins. That is true since the birth of retailing.” The above
quote is taken from the book “Made in America” by the founder of the biggest
retailer of the world Mr. Sam Walton. His prophecy has been significantly
proved by the leading retailers, as we stepped into the 21st century
where changing attitude towards the people working in stores are considered as
a cost to be minimized.
In large retail enterprise,
retailers find it easy to ignore the details of the sales floor interactions
and they opt for large scale solutions to challenge the problems of staffing.
Pointing to merchandise location, Price points etc are a few of the ways that
facilitates sales process. Although, every aspect of retailing plays an
important role but there are areas of improvement on which banks the
competitiveness of the retail firm. Labor Management is one of them. In day to day life, we face the challenges of
overstaffing or understaffing. This creates an unnecessary shift to the
psychology of the managers of various stores operating under the same umbrella.
The management uses today’s technology which includes data acquisition and
perform various analytics to do better than the previous financial years of
operations. However, the bottom line is set with the fundamental approach of
either of the following ways while setting up the store staffing budget.
1. The
cost of labor must not exceed a certain percentage of the sales.
2. The
staffing budget must have a given area covered per staff in the store.
3. Every
Department within a store must have one in charge.
4. The
staffing budget must not increase previous financial year at any point of time.
5. The
staffing arrangement must follow a certain ratio to the customer traffic.
The above fundamental approaches
need a modification in the light of the 21st century retailing. To
sum it up in a few lines, it needs a very clever approach towards predicting
what volume of merchandise will sell in a particular period of time. The real
time adjustments can be made observing the actual flow of the customers at one
location. There is always a possibility to do much better than this. A few
studies have shown the wisdom of this: Stores which managed adequate staffing
in the light of store traffic rather than sales forecasting and sale budgeting,
have achieved substantial sale increase without extra costs. Even there is an
opportunity of getting better results when retailers recognize that their workforce
is not just homogenous pools of labor. When these dynamic adjustments will be
made, then not only retailers will decide how many but also who in particular
to move to sales floor.
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