How to Win with Service and Labor in the Post COVID-19 Retail Reality

Article
by Andy Sumpter on 06-11-20

In part three of the four-part Blog Series, Andy Sumpter, our Retail Consultant from the ShopperTrak EMEA team discusses what the Service and Labor model could look like in the “new reality.”

Saying that service will be key in the “new reality” seems somewhat obtuse because service has always been key! However, it is fair to say that the new reality will present new challenges to what was expected before and shake up service as we knew it. In the short term, customers may be tolerant of any changes that impact convenience or service in the name of safety. However, as retailers adapt to meet new safety guidelines, attract cautious customers and meet new expectations, those that get there first (or do it better) will win favor with customers.

Open for Business

In many regions, the stores that remained open during lockdown had a consistent amount of in-store foot traffic throughout the week rather than higher traffic over the weekend. Prior to the COVID-19 pandemic, weekday (Monday-Thursday) traffic accounted for 48% of the week’s contribution. However, since March 9th there has been a significant shift where weekday traffic now represents 58% of the week’s contribution, resulting in an 11% increase.

How to Win with Service and Labor in Retail’s New Reality 1

What might be driving these changes? Recent conversations with some of our retail partners at ShopperTrak indicate that there are a few contributing factors. One of the factors is the impact of having all members of the household home during the week as the majority of nonessential workers are working from home. This additional time at home may be influencing the times people choose to shop. In addition, there are concerns about stores being more crowded over the weekend, making it harder to maintain effective social distancing if the proper guidelines aren’t in place. Finally, shopping as a form of entertainment has all but stopped. Will this type of traffic distribution remain consistent as stores begin to reopen? The short answer: no.  Right now, it is too soon to tell when retailers will shift back to heavier shopper traffic over the weekend.  For now, retailers should review their shopper traffic distribution changes on a weekly basis until it returns to normal. Understanding traffic insights will help stores better align customer facing labor with the opportunity.

How to Win with Labor

We are seeing some interesting data from the countries that have already started the reopening process and easing lockdown, including China and South Korea.  As demonstrated in our previous blog post, retailers are seeing more purposeful shoppers and increased conversion compared to pre-pandemic averages. This is great news considering the current decline in sales, but can only be considered great news if stores are properly equipped with the necessary labor to support higher traffic. Even if you are seeing fewer shoppers than expected, there is going to be more pressure on labor allocation.

Now more than ever, retailers need to ask themselves “can you really deliver great service with less people, doing more than before?”  I am no data scientist, but I do know one, and he says “no.”  In fact, I know quite a few and they all say the same while proving it scientifically! Now more than ever, retailers need to provide excellent customer service to draw customers back into the store and boost sales. In fact, there’s a strong correlation between a store’s STAR

How to Win with Service and Labor in Retail’s New Reality 2

rating (Shopper to Associate Ratio) and SPS yield (Sales Per Shopper). Looking at the side by side comparison, there’s a clear difference between the two scatterplots: the graph on the left has no patten, while the graph on the right has a strong correlation. So, what’s causing these differences? Simply put, the retailer on the left (Retailer #1) allocates labor based on transaction history, while the retailer on the right (Retailer #2) uses traffic as a basis for labor. Retailer #2 indicates a lower STAR (enabling a higher level of colleague engagement) returns and a higher Sales per Shopper, or greater overall revenue. Note, each dot represents one location (FY 2019 data).

If you want your retail business to come through this next period, you are going to need your people there when your customers are. If you are not creating labor schedules based on new footfall data, how are you going to ensure your people are there when the customer is?

Embracing the Multi-Channel Customer

As states begin a phased approach to opening non-essential retail, ShopperTrak data suggest consumers will be cautious about returning to stores. Consumer concerns about health and safety have accelerated adoption of alternative shopping channels. Buy online, pickup in-store (BOPIS) and curbside pick-up have taken center stage as customers seek to reduce their risk of exposure. According to Adobe Analytics, BOPIS orders have increased 208% compared with a year ago. “Retailers who have buy online pick up in store capabilities are using them to keep consumers coming to their storefronts, maintain engagement with their brands and give their customers an experience that even 1-day shipping cannot replicate,”  says Taylor Schreiner, Director of Adobe Digital Insights.

As more shoppers elect to combine digital channels with in-store experiences, retailers are racing to configure their operations to meet the increase in demand. The key to success is creating a seamless brand level experience between online and in-store operations. Mall operators are partnering with retail tenants to offer centralized or curbside pick-up. One of the best examples can be seen at one of ShopperTrak’s partners, Mall of America. Mall operators have created and are promoting contact-free curbside pick-up, designed with employee and customer safety in mind. Specific parking lot locations have been designated where shoppers can safely have their packages dropped off to their car. Other retailers are rapidly investing in new technology to facilitate and measure the customer experience of BOPIS or curbside pick-up.

Measuring Success

Given the current reality and the fact the store operations will be largely determined by local pandemic conditions, stores must embrace various operating models within a single organization.  This could mean one store within the brand operates by exclusively offering curbside pick-up, while a store not too far away is fully operational and offering customers every possible experience, or choice of channels. Measuring success, now more than ever, must be done at the individual store level rather than compared to the brand. This makes measuring store performance challenging, but not impossible. It also requires store leaders to answer questions about which is the correct operating model, and which is not. To that end, let’s look at five questions that will make the process more manageable.

  1. What are the current and future operating guidelines (i.e. occupancy limits)?
  2. Understanding these guidelines, what are the traffic trends by day / hour, and how are they evolving?
  3. How well-aligned is labor to traffic to meet the expected service levels and perform newly required tasks such as sanitizing the store?
  4. Am I seeing greater adoption of new channels (i.e. Curbside Pick-up)?
  5. How are these newest channels impacting the allocation of labor?

The answers to these questions will help retailers begin to think beyond a baseline service model and begin thinking about the best way to engage with the customer. The good news is we will be addressing the topic of customer engagement in our next blog post, written by Grant Gustafson from our Americas team. Click here for previous blogs in the series.

Read more posts by Andy Sumpter