Few industries are experiencing the level of disruption that we see in retail today. As the waves of digital transformation sweep in, retailers must quickly adapt or run the risk of becoming irrelevant to customers.
This level of change shouldn’t be considered a bad thing. The change ushered in by digital technologies is opening new opportunities for retail stalwarts and start-ups alike. To seize these opportunities, retailers must be willing to rethink the traditional roles of the store and store associates.
Change is Afoot
Technology innovation has dramatically changed the role of store associates. Mobile POS, equipped with payment processing capabilities, allows cashiers to do more than simply ring out purchases. Adding to this change is the advent of “frictionless” technologies such as those introduced in the Amazon Go store. While these frictionless solutions are still a few years from maturity, they have the potential to radically transform customers’ purchasing experience in brick-and-mortar stores.
New, automated solutions applied to administrative tasks such as cash counting, inventory management, and price changes are freeing up even more time in stores.
In addition to technology changes, disruptive forces are impacting traditional retail business models. Retail stores are becoming more focused on providing a differentiated customer experience. Omnichannel retail places more emphasis on customer and product knowledge than ever before, requiring store associates to be more connected.
Driven by competition with online marketplaces such as Amazon, retailers are coming to grips with the need for local stores to become inventory hubs that can fulfill walk-in and digital (web and mobile) demand. All of these changes are putting pressure on retailers to improve the capabilities of their associates to serve customers better.
Finally, we see societal challenges to traditional retail roles. Retail jobs can be seen as temporary or part-time endeavors that seldom lead to a career. Regulatory pressures on the minimum wage and the need to increase associate capabilities demand a level of change from retailers.
The New Imperative: Versatility
In the new, digital model, stores must deliver exceptional, personalized service to their customers. Stores must serve as inventory fulfillment hubs, providing high quality, responsive service as well as instant insight into customer behavior and product movement.
In short, to be successful in the new digital model of retail, retail associates will need to versatile.
Why versatility? Consider a non-retail example. The New England Patriots have not had a losing season since 2001. In that span of time, they have only missed the playoffs twice. It is a run of success unparalleled since the merger of the AFL and NFL in 1970. Much of this success has come from building quality players through the NFL draft. The Patriots have a great track record of finding talent in the draft that makes an impact on the field. The common thread among their most successful draft picks is versatility, which allows them to move players to different roles as game situations or injuries dictate. In other words, the Patriots can leverage their versatility to handle unplanned events much more seamlessly than most other NFL teams.
In her book, The Good Jobs Strategy, Zeynep Ton, discusses how a number of retailers are following the same path as the Patriots. They are recruiting and cultivating a staff of versatile associates that can play various roles based on the needs of the store. She explains that these retailers, instead of changing people to get tasks done, change the tasks, not the people. As a result, they can offer more predictable hours and higher pay to associates, while also achieving outstanding labor leverage to sales.
Does it Scale?
Will this model work for all retailers? It is a good question. However, let’s ask the question another way. Consider what we described as the role of the store in the new digital era. Do you believe the old retail labor model with low hourly rates, high turnover, and low customer service and could be successful in this multi-dimensional, highly automated, customer-centric environment?
As retailers begin to look at this confluence of factors and contemplate changes, what areas of labor management they should consider? There are many items to consider, but let’s begin our exploration with three basic components.
First, retailers need to envision the future of their retail store operations. What activities will be performed? What services will be provided? What knowledge and skills will be required to carry out these activities and services? Can a smaller, focused staff of permanent, versatile, associates carry out these tasks better than a larger, more transient one? What would a transition and training plan look like to move to this new type of labor force?
Second, retailers should consider the metrics they use to measure associate productivity. Do these metrics still apply in the new world of omnichannel retail? What metrics need to be added, changed, or removed? For instance, with the higher average cost per hour of labor, productivity must increase to provide the necessary level of return. The next generation of retail metrics must take this into account.
Lastly, do retailers understand their customers’ behaviors and shopping patterns? This question is not a global one, but a local one. Each store has unique characteristics regarding customer traffic patterns, shopping tendencies, and response rates to promotions. Deep familiarity with these characteristics allows retailers to fine-tune staffing models to optimize performance on a store-by-store level.
While these three areas are not exhaustive, they provide the foundation to begin considering new labor models and schedules. Applying advanced analytics, such as machine learning, can allow retailers to start experimenting with new models and fine-tune the results to find the optimal solution.
The New Era: Adapt or Perish
Change is inevitable. Retailers that embrace the change and seize the opportunity with a more focused and capable workforce will be the ones that survive and thrive in the new digital era.