Retailers: Store labor is an investment—not an expense

Big staff cuts can be self-defeating. Learn how to manage retail labor costs without sacrificing the customer contact shoppers prize.

Low unemployment and rising wages are driving up retailers’ labor costs, and executives are looking at staff cuts to get those costs under control. But without careful planning, those cuts can have unintended consequences—alienating the very shoppers stores depend on.

Our research shows that 87 percent of consumers who shop in stores say the availability of sales associates is a key factor in deciding where to shop. And 79 percent of consumers who made an in-store purchase say interacting with a sales associate played a vital role in the purchase decision. Sweeping staff cuts means there’s less opportunity for this all-important customer contact—which can translate into potentially lower sales.

We think there’s a better way. Retailers that see store staff as a source of growth, not just a cost to minimize, can hold onto in-store consumers and grow in-store sales. In this report, we show how retail executives can optimize the store labor model and maximize customer engagement—using short-term strategies to tackle rising labors costs and longer-term structural changes to deliver sustainable advantage and the personal experience shoppers prize.