Retailers need to look at store labor as an investment—not an expense
Rising wages and low unemployment are pushing retailers’ labor costs higher, and retail executives are looking at store staff cuts to keep those costs under control. Some cuts may be unavoidable. But retailers making across-the-board cuts run the risk of leaving too few staff on the floor—with unintended and highly counterproductive consequences.
Why? Because in-store shoppers like talking to real people—and interactions with store staff drive sales. We recently surveyed 1,000 U.S. consumers to gain insights into the impact of in-person customer engagement. We discovered that interacting with helpful store staff is a critical part of the in-store shopping experience. Two-thirds of shoppers would prefer to interact with a store associate rather than a kiosk or other technology. And 80 percent actually like being approached by store staff. This interaction plays a pivotal role in making the sale, too:
Retailers know that good staff drive sales, and they appreciate the potential benefit of having more staff available to serve shoppers. Yet nearly 90 percent have responded to rising labor costs by cutting hours—and using more part-time staff, eliminating managers and reducing non-customer facing activities to minimize the impact on the floor.
We believe there’s a better way to tackle rising retail labor costs while delivering the interaction consumers value—by optimizing the store labor model. Based on our own experience in the market and our discussions with U.S. retail leaders, we identified a number of short-term tactics that can be implemented quickly:
These short-term actions can lead to quick savings that can, in turn, pave the way for more significant, longer-term strategic and operational changes—from optimizing inventory levels and product deliveries to developing staffing matrices for different store tiers. To learn more about how retailers can manage labor costs without risking the customer contact that brings shoppers to store, read our report, Store labor is an investment, not an expense.