Improving the in-store customer experience is a top priority for many retailers, and this includes providing shoppers with knowledgeable associates at peak shopping times. Yet, rising operating costs and a lack of insight into skill sets often make this an uphill battle. By deploying more automated solutions, retailers are in a better position to dispatch their most effective associates in the field, and match talent to task.
Retailers report that payroll remains one of their top expenses, trailing only real estate costs. As companies work to get payroll under control, too often they sacrifice service and sales. The first mistake retailers make regarding staffing is that they hire and schedule labor based on their own needs, not the needs or shopping trends of their consumers.
"The biggest challenge for apparel retailers is to maximize the workforce and their abilities when the customer is ready to spend," says Alex Ruiz, director of retail for Perry Ellis, Miami.
While it is good news that shoppers are entering stores ready to spend discretionary income, this is both a benefit and a challenge for apparel retailers. Even in a fragile economy, consumers still live within a "reward culture," explains Ruiz. "They may not have the discretionary income to buy big-ticket items like a home or car, or go on vacation, but they are spending on apparel."
This factor has also raised shoppers' expectations when they step inside a store. Besides expecting more value, from both price and customer service perspectives, they are much more informed thanks to the Web and social media. They also expect more knowledgeable associates to help them complete their purchase at the store.
Historically, retailers hired and scheduled associates based on their availability instead of based on whether or not these employees had good sales skills that could build relationships with consumers. While apparel retailers often cultivate young workforces that can be trained, "a younger workforce is also somewhat erratic, and the rate of people who call in late or sick is higher than those in an established workforce," says Stacey Shulman, CIO, American Apparel, which is headquartered in Los Angeles. "This can increase labor hours due to associates needed to cover these shifts, hitting overtime hours and eating into allotted labor hours."
Add in the rudimentary planning, which is often comprised of allocating hours based on "gut reactions" and recording these shifts manually on spreadsheets, and it becomes difficult to establish effective schedules that respond to consumer demand, create shopper relationships and grow revenue. Instead, retailers struggle to control budgeted hours, and end up sacrificing service and sales.
Bon-Ton Stores, York, Pa., knows these challenges first-hand. "As our operations budgets change with the economic environment, we have fewer hours that we must stretch further," says Louise Kennard, Bon-Ton's director of store staffing, store operations.
Yet, the retailer's priority is to "place the customer-facing associate in the right place at the right time," she says. "From a scheduling perspective, we need to use all available data to strategically place that employee where the customer is most likely to be at any given time."
This is not always an easy task for a company that has formed a chain primarily through acquisition, and operates 272 stores in 23 states in the Northeast, Midwest and upper Great Plains under the Bon-Ton, Bergner's, Boston Store, Carson Pirie Scott, Elder-Beerman, Herberger's and Younkers nameplates; and in the Detroit area, under the Parisian banner, all encompassing approximately 25 million square feet in varying space configurations. With the help of SAP's Workforce Management 3.1 application, Bon-Ton is able to gather metrics from its POS system and integrate other data sources to focus on available labor resources and determine how to best utilize them in the most highly trafficked areas within the stores during specific times.
For Bon-Ton, this includes pulling current and historical POS sales and transaction data and integrating it with store-specific sales plans. The application converts data inputs and standards into workloads and determines how many 15-minute intervals of labor are needed per scheduling area. Once the schedule is created, it is available for stores, regional management and corporate via SAP portal technology.
"Managers then can access the application and make any tweaks needed to react to last minute changes, working within their budget and retaining the integrity of the system-generated optimized schedule," she says.
The application accounts for all store-scheduled and actual payroll, sales and non-productive payroll, including benefits. "The application provides visibility from total company to total store, down to scheduling area," she adds. "This highly accurate integrated system provides maximum visibility to the largest store-controllable expense and provides a systematic centralized solution to manage an estimated 30 million labor hours scheduled on an annual basis."
For Canton, Mass.-based Casual Male Retailing Group (CMRG), workforce management is a valuable tool in supporting its in-store customer experience. "Several years ago, we realized that CMRG has a particular opportunity to service its guest, a male consumer of apparel in difficult-to-find sizes, in not only fitting him with comfortable clothes that look good, but also in assisting him as he selects his wardrobe, and assuring the apparel selections fit his fashion tastes and lifestyle needs," says Dennis Hernreich, the retailer's COO and CFO.
At the same time, the company needs to adhere to a financially responsible payroll model. As a result, CMRG developed a store workforce model that assigns payroll hours to each store based on the store's hourly customer traffic and average customer visit time. The company also generates analysis on this staffing, and all information — including store personnel resources, electronic scheduling, hourly customer visits and transactions — is available internally, helping CMRG to further develop its workforce planning.
"Stores adjust scheduling to adhere to the demands of our customers when they tend to visit our stores, which can differ from store to store," he explains. "Therefore, a scheduled shift of 10:00 a.m. to 5:00 p.m. is no longer an acceptable practice."
The methodology, which has been in place for more than three years, is flexible enough to respond to ever-changing business trends. It has also helped the company "enhance the customer experience we provide each guest, while staying within a financial budget," Hernreich says.
Store traffic volumes put Perry Ellis' workforce management strategy into motion. With no automated way to track shopper volume, corporate had to estimate if "traffic was off today," Ruiz explains. "It was a nebulous way to staff for traffic volume."
By partnering with ShopperTrak, Chicago, Perry Ellis has an automated way to monitor traffic, and can compare it to past volume. "In the past, managers would say conversion was low due to low traffic," he says. "However, when shopper traffic is low, there is an opportunity for better conversion since associates can spend time with each shopper."
Perry Ellis piloted the automated traffic counting system in four stores four years ago. An orbit installed above store entrances counts customers as they enter and leave the store. The device, which is connected to the store's telephone lines, transmits data to ShopperTrak to calculate the correlation between weekly sales and labor hours.
"Before, we only tracked the previous week's sales and labor. Now the solution's reports reveal our ‘power hours,' or the times when our strongest business occurs; retail metrics and key performance indicators; shopper-to-associate ratios; as well as store- and division-specific metrics," Ruiz says. "We also compare data to the previous year to monitor improvements and how sales are responding to trends."
By linking the solution to its workforce management system, the retailer can track labor related to its power hours. "The solution reveals when our strongest business happens each day, letting managers know when and where they need to have staff available," Ruiz explains.
They are also able to get a good handle on conversions. "Stores that are staffing properly saw conversions increase, and their shopper versus associate ratios were better, and customers were getting better service," he says. "This is something you couldn't see without insight into actual traffic and conversion rates."
Previously, Perry Ellis's conversion rate hovered between 12 percent and 14 percent, but with the system installed, the company hit an average of 20 percent. Within six months of testing the system, the company expanded the technology across all 65 stores of its Perry Ellis and Penguin divisions.
Getting the job done
For American Apparel, workforce management used to be a very manual process involving spreadsheets. The company managed time cards for employees in 280 stores across 20 countries, as well as those in its manufacturing and distribution facilities. Among other challenges, the varying labor rules and regulations of different regions made the manual processes even more difficult, Shulman said.
American Apparel began automating its workforce management enterprise-wide in 2010 with a workforce management solution (Workbrain) from Infor, New York City. By 2011, it was managing shifts for all store employees, as well as manufacturing and distribution center employees.
The company's next priority was to ensure daily operations were on point, a job that will be supported by a new task management system from Reflexis Systems, Dedham, Mass. "Currently, we email tasks to employees, but we needed a better way to assign tasks across stores, factories and the DC," she says. "We want more collaboration and interaction than email can provide. We also need better accountability and task-focused management."
This is especially important considering that the retailer uses item-level RFID to manage operations, including conducting daily item counts and inventory management, throughout its stores and supply chain. By linking its RFID system with a task management system, says Shulman, American Apparel will be able "to generate alerts, versus tasks, that will drive action, solutions and traceability."
For example, if there are inaccuracies related to inventory, the task management system can generate an automated task for an associate to conduct a physical count to validate an item. American Apparel also plans to integrate traffic counting software with task management at store-level, "so we can better schedule associates and allocate tasks more appropriately," she says. "We want our sales force interacting with shoppers during busy times and completing daily tasks during slower times."
The system, which will be accessible via a dashboard, will be available by the end of the summer.
Deena M. Amato-McCoy is an Apparel contributing writer specializing in retail and business technology.