Sales have long been the driving force in determining payroll. However, if retailers want to stay competitive, that must evolve. Rising wages and increased digitalization create increased margin pressure, which means payroll optimization becomes less of a differentiator and more of a must-have.
What this means is: If you’re not looking beyond store sales when allocating payroll, you’re not going to remain competitive.
The Limitations of Driving Payroll Based on Sales
Store sales should be one – but only one – factor when allocating payroll. Payroll based only on sales is limiting, because sales is a lagging indicator. A stronger real time signal is store traffic.
[Tweet “Store sales should be one – but only one – factor in allocating #retail payroll.”]
At Alert Tech, our apparel customers find that fitting room traffic can inform the number of fitting room associates needed on a given day. Fitting room technology provides not only an accurate measure of traffic, but also reduces unnecessary labor costs.
Are You Viewing Labor as a Cost or as an Asset?
Speaking of costs, labor is costly. However, labor can be a huge, competitive asset as it forms the backbone of customer service. Customers expect increasingly better experiences in stores. Optimizing labor allows you to provide your customers with more hands-on time with your associates, and thus a better customer experience.
You Must Integrate Technology and Labor
Ok, so labor is costly and you’re ready to optimize your payroll – but where do you start? The good news is that you probably do not actually need a larger labor force. What you’ll want to do instead is integrate technology into your stores.
Using technology, you have an opportunity to automate routine, behind-the-scenes tasks, so – for instance – store associates don’t need to spend unnecessary time in the back office. This allows associates to instead focus their time where it where it will have more impact – embracing more meaningful customer-facing responsibilities and providing customers with exceptional service.
Customers are more and more accustomed to interacting with technology. In fact, they are so familiar with user-friendly technologies in their everyday lives that many have come to expect similar experiences in brick and mortar stores. Customers want information and assistance immediately and will quickly move on if it is not readily available.
Retailers must continually invest in technologies that bolster the in-store experience, including systems that provide real-time monitoring and customer collaboration. An example of a useful real-time monitoring system is Alert Tech’s Sense System. Monitoring fitting rooms with unobtrusive Sense technology puts store associates at ease as they assist customers.
[Tweet “Why You Can’t Rely on Sales as Your Payroll Driver“]
The key to making in-store technology work is finding the right balance between shoppers’ interactions with technology and with staff. Having technology in your stores is essential to help operations run smoother and to free up your sales associates, but too much technology can be a problem. There are reasons that customers are coming in to the store and not simply shopping online – and one of those reasons is that they want human interaction.
To find the right balance for your brand, remember that store associates must successfully execute the key tenants of your customer service. To allow for the best possible customer experience, be sure to have human interaction at key times – such as handling disgruntled customers, or assisting customers who indicate interest in making a buying decision (such as searching for a specific item or entering a fitting room).
Retailers must use additional information points to optimize labor costs versus simply tying payroll allocation to sales. Technology that provides this information can also help the business centralize around the customer, facilitate associate engagement, and boost customer experience.
Leading retailers are already leveraging smart technologies to improve existing capital-to-labor ratios. Take time now to audit existing initiatives that assist this process, and assess what technologies you can add. Start asking what your critical pain points and stumbling blocks are and decide how you can use technology to overcome those.
Want to see a demo of how Alert Tech can help with this process? Request one here.
If you liked this post, you may also enjoy:
Implementing the Internet of Things in Retail: Challenges and Opportunities
Retail Analytics: How to Collect Data for Your Retail Operation, and What to Do With It