The Big Squeeze: Redesigning Store Labour

With wages and related costs rising faster than inflation, retailers must continually wring more from every unit of labour. In the past, many have successfully slashed labour costs, either through brute-force cuts or more subtle changes – for example by decreasing the time allocated for certain tasks. But at some point this starts to affect customers’ experience in store, and many retailers have already pushed it as far as they can. So how should they now respond to the continuing, relentless pressure to bring down labour costs?

We have seen executives meet this challenge in different ways, but the common theme has been a shift in mindset from cutting to redesigning labour. Rather than the store or the budget, the customer has been the focus of their decisions – instead of asking simply “how can I cut labour costs?”, they have asked “what do my customers truly value, and how can I allocate labour to provide it?” At the same time, they have moved from looking at stores in isolation, to considering the whole of the value chain – asking “which decisions being made elsewhere impose unnecessary costs on the stores?”

Of course, the stores can’t make these changes on their own – redesigning store labour takes close collaboration with trading, logistics, real estate, and in some cases suppliers. It also requires building new central insight capabilities, to provide better support to the stores. Even so, this doesn’t necessarily imply a complicated, multi-year programme, and some relatively simple strategies have quickly delivered real value for a very modest effort. This short article presents a set of case studies showing some of the ways retailers can redesign store labour. They illustrate three different approaches, each requiring a different level of commitment and resource:

  • Understanding what’s really happening in the stores by exploiting data and insights
  • Taking an end-to-end cost perspective when making trading decisions
  • Redesigning labour from the ground up, with a fully cross-functional approach

The Big Squeeze: Redesigning Store Labour

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