The sense and nonsense of productivity in retail –part 1
Labour costs are the most significant controllable cost in retail and therefore a key topic at every level of the organisation. A major factor influencing labour costs is productivity standards. For over 45 years, we’ve been helping our clients define achievable labour benchmarks in retail (because to us, productivity is the result, not the goal), and we still often get the same question: Where is the best place to determine productivity standards — centrally or locally? After all, the store manager is responsible for their own store and its corresponding labour costs.
Our honest answer? Take the time to rethink this thoroughly. We're not here to sell you a “we-know-best” story — but we would like to walk you through some of the potential challenges of a decentralised approach:
- How do you ensure that local decisions still meet the quality standard your brand aims to deliver? After all, the right staffing is essential for the intended customer experience.
- How do you avoid local choices that, in pursuit of hitting labour targets, end up conflicting with your brand values or customer-oriented approach?
- How do you provide store managers with the right tools and data so they can truly take ownership?
- How do you account for external factors, like inflation, when determining a fair and realistic productivity standard?
- How does your central organisation handle annual labour budgeting across all locations? Do you give store managers complete freedom, or do you provide clear frameworks?
- How do you ensure that the impact on labour costs of process optimisations, innovations and new concepts is properly substantiated before you invest?
All in all, leaving productivity standards and labour cost control entirely to local management is unlikely to make things easier. In fact, it comes with real risks. Less emphasis on productivity and more on labour costs? Whether you work with us on the right productivity per store, or tackle it yourself – make sure you arrive at achievable productivity targets based on the local workload.
Prefer to focus more on hourly wage than on productivity?
Even then, the same applies: make sure it’s properly organised centrally for your stores. With Workforce Planner, you have a powerful tool at your disposal to determine a feasible normative hourly wage for each store, based on an ideal staffing structure. From there, you can realistically determine the labour cost budget and actively manage it locally. By giving store managers access to Workforce Planner, they gain insight into both their current team setup and the ideal team composition. That gives them a tangible, actionable tool to manage and control labour costs — and with that, genuine responsibility for the store’s labour budget. And that’s exactly where the responsibility should lie.
Want to discuss this further? We’re happy to join you for a conversation. You can count on us to get straight to the point — because in retail, we know better than anyone: it’s all in the details.
Prefer to focus more on hourly wage than on productivity?
Even then, the same applies: make sure it’s properly organised centrally for your stores. With Workforce Planner, you have a powerful tool at your disposal to determine a feasible normative hourly wage for each store, based on an ideal staffing structure. From there, you can realistically determine the labour cost budget and actively manage it locally. By giving store managers access to Workforce Planner, they gain insight into both their current team setup and the ideal team composition. That gives them a tangible, actionable tool to manage and control labour costs — and with that, genuine responsibility for the store’s labour budget. And that’s exactly where the responsibility should lie.
Want to discuss this further? We’re happy to join you for a conversation. You can count on us to get straight to the point — because in retail, we know better than anyone: it’s all in the details.
