Retail Headquarters & Stores Collaboration: Looking Forward to Building Next Gen Retail Workforce. Research Partner

Transcription

1 Retail Headquarters & Stores Collaboration: Looking Forward to Building Next Gen Retail Workforce Research Partner

2 Introduction EKN s 2015 Employee Engagement & Empowerment Study 1 highlighted that for 90% of retailers the top two business drivers behind an empowered and engaged store workforce is to increase sales and improve customer engagement. In the stores, however, retailers are being challenged to strike a balance between the need for operational efficiencies, creating an omnichannel hub of customer experience and building an engaged and empowered workforce. As a result, most retailers are pushing the limits of an already overburdened workforce by adding more tasks and expectations to remain competitive. In the quest to turn stores into an omnichannel hub, the retail headquarters often overlooks the role of agile and proactive communication and collaboration with store employees that ensures operational execution and helps meet dynamic customer expectations. As retailing becomes increasingly complex with the emergence of technology and devices, more open, effective and real-time two-way collaboration between store employees and headquarters can do wonders. This report will explore the various challenges confronting retailers in managing the workforce and the strategies that can enable more seamless collaboration between stores and headquarter teams towards next gen engaged and empowered workforce. High Turnover and Enormity of Tasks are posing a Tough Challenge The primary aim of all retailers is to increase in-store sales by converting the customer footfalls into actual transactions. In doing so, companies need a trained and skilled workforce or associates who can multi-task between imparting product knowledge, selling, customer service and day-to-day operational tasks such as pricing, merchandising, planograms, returns, and inventory management. 1 For full report, click on the link Page 2

3 Retailers are also faced with numerous challenges such as high employee turnover and low levels of employee engagement. Moreover, stores also lack a robust, well-equipped and uplifting work environment that promotes consistent levels of workforce productivity. Most critical of all issues is the lack of collaboration between headquarters and stores which often leads to lack of alignment on key store issues, corporate objectives and improper expectation-setting with the workforce leading to low levels of productivity and disenfranchisement. Let us briefly analyze the challenges that confront retailers. The most prominent workforce challenge in the stores is high employee turnover. In 2014, the last full year for which data is available, average retail turnover rate was approximately 55%-70% 2. In fact, close to 45% of retailers consider hiring and retaining employees as the biggest challenge followed by training and development 3. This leads to two most probable questions: who are the employees that experience high turnover and what are the reasons associated with such actions. The unanimous answer to the first question across most retailers is hourly workers, with 1 in 3 retailers expecting to see more turnover within hourly worker in the future 4. The reason, however, for such high turnover is a combination of factors such as low hourly rate of workers 5, unpredictable work schedules, lack of proper training processes and better deemed career opportunities in other vocations. In fact, 42% of retail workers want the ability to control their own work schedules which they are unable to do today 6. To add to this, low employee engagement has fueled the rate of attrition with 40% of retail workforce believing that the industry is meant for an ageing workforce 7 and not necessarily for them. 55%-70% is the average retail turnover rate 40% of retail workforce believes that the industry is meant for an ageing workforce 42% of retail workforce wants to control their own work schedules 2 Bureau of Labor Statistics, May Retail Touchpoints Exclusive 2015 Survey The New Age of Store Operations, 4 Hay Group Study, 5 Wages is as low as $10.16, Bureau of Labor Statistics, 6 Kronos Incorporated report on The State of the Retail Workforce, 7 Kronos Incorporated report on The State of the Retail Workforce, Page 3

4 The second important component is the enormity of tasks that a store confronts on a daily basis. In a typical retail store scenario, the headquarters conveys a list of tasks that the store needs to accomplish for the day. Sometimes these tasks are sent to the stores intermittently throughout the days. These tasks span across all the major parts of the store with close to equal execution importance attached to them. stores are confronted with an enormous amount of task flowing from the headquarters on a daily basis? Though the majority of the tasks are operations focused, unless there is an urgent sale, promotion, price change or a product recall, the prioritization of tasks is left to the store managers judgement. But managers and store associates are not well-equipped with tools to control a sudden spurt in task allocation while they are on the floor helping a flurry of customers or performing operational tasks. This results in postponement and delay in work completion. Eventually, this culminates into loss in productivity thereby exerting unnecessary pressure on store workforce. The third component is the lack of store readiness to support the desired levels of store process automation. This complexity results in skewed revenue and customer engagement as the work-time allocation between customer service and operational activities is lopsided. In fact, a typical store workforce spends 70% of their time on operational activities such as inventory management, back room functions, and merchandising 8. A mere 30% of time is spent on pure customer service and sales. In most stores, product information, scheduling, training, benefits, and job performance data is not readily accessible for employees unless they spend time on an employee kiosk in the back room that means valuable time away from the selling floor and customer service. 70% of store workforce time is spent on operational activities while the remaining 30% is spent on customer services and sales The fourth and an equally critical factor that often gets overlooked is that employing and retaining a skilled workforce requires robust communication and collaboration between the headquarters and store associates. This issue needs to be analyzed from the store as well as the headquarters perspective. 8 EKN 2015 Next Gen Retail Employee Engagement & Empowerment, Natural Insights Page 4

5 Store perspective: In a standard store environment, innumerable day-to-day tasks and work orders are communicated from headquarter teams through different channels such as phones, s, employee portals etc., across various functional areas. However, the biggest disadvantage in such communications is absence of prioritization of work, prescriptive directions and agile communication standards for ruggedized and unpredictable store environments. Typically, as stated in the preceding section, the headquarter teams keep on adding to the task list, thereby overwhelming the store managers who fail to predict both the amount and allocation of work. A vital component like work allocation and prioritization is left to the interpretation of store managers who are unable to prioritize the relative importance of one task over the other and at the same time servicing customers. To add to this woe, not only is the task allocation to the workforce manual in nature but also the emergence of new form of tasks increases complexities for the store workforce. Examples include new tasks such as online order fulfilment from the store and on-time delivery/pickup of purchased products that stores need to execute these days so as to avoid falling out to competition. As a result of all of the above factors, in most cases, stores end up performing back-office functions with less than ideal time being devoted to customer service or employee training. In fact, for 73% of retailers 9, workforce training and sales/customers are the top two areas where store teams are spending less than the desired amount of time. Hence clear and concise communication, collaboration and work alignment between headquarter teams, senior store management and an associate is required for a flawless retail store execution. H Headquarters Perspective: Ineffective communication and inadequate feedback from the stores often leads to poor assessment of the workload assigned to stores or poorly estimated workforce standards 10. Retail headquarters believes that stores are supposed to execute all the operations (store signage, planogram, promotions, pricing etc.) and sales-related tasks that are sent to them as their entire focus lies on increased profitability through proper execution. Surprisingly, even store promotions or events are not always planned taking into account the workload or workforce issues of an existing store. The most important missing aspect in a headquarter communication is a planned and concise communication sorted by their level of importance to the store, prescriptive guidance for completion and related workforce standards. This has a direct effect on customer service which eventually suffers as the workforce is disengaged and is focused on mere compliance with headquarters policies and tasks thereby losing focus on other vital customer-centric functions. 9 EKN Labor Standards and Labor Model Excellence in Retail survey, Workforce standards is defined as the average time taken to perform a typical task Page 5

6 Process Capabilities 11 To manage the increasing enormity and complexity of work, retailers have realized the importance of enhancing process capabilities to increase efficiency by managing multiple tasks within a stipulated time. In fact, engaging workforce in a planned manner is vital for balancing day-to-day activities and taking on newer challenges. Interestingly, retailers are already in the process of capability building in various forms ranging from work-type to technology enabled engagement. As good as 50% of retailers are building workforce capabilities either in the form of scheduling work routine based on seasonality of employee task and customer traffic or bringing in new technology such as in-store mobile/tablet enabled workforce management tools or empowering associates by allowing them to bring their own mobile devices in-store for enabling extended points of service. In addition to this, another fifth of retailers plan to either add or offer these capabilities in the next 2 years. 50% of retailers are building workforce capabilities in the form of scheduling work routine and mobile/ tablet enabled workforce management tools To aid and assist in-store sales, 7 in 10 retailers plan to equip their workforce by 2018 with guided or assisted selling tools that can help pull up customer order or loyalty data, product information and other engagement tools on digital devices while the store associate is on the floor helping customers. Frequent sales and operations training in stores is another vital capability but only less than half of retailers have tools to execute training in an agile manner on mobile and other digital devices. A third of retailers plan to add such capabilities by Within the next two years, a majority of retailers plan to enable real-time messaging between headquarters, managers and the workforce using digital content and video platforms for collaboration which is a much-needed enhancement for fast-paced store environments where business needs evolve rapidly. In fact, self-service accessibility to store productivity tools such as ready access to headquarters helplines, task managers and task builders on both workforce and store-owned mobile and tablet devices is a required improvement. These changes will enable workforces of today to fulfill tasks on the floor while fulfilling their customer duties on devices they use on a daily basis. 11 Data cited in this section has been used from EKN Next Gen Employee engagement and empowerment survey, 2015 Page 6

7 Strategies and Solutions Retailers can engage and empower their workforce by evaluating several real-time headquarter-store real-time communication and collaboration processes and tools. Consider the following options: Training of employees to be more video-oriented as compared to traditional forms. An EKN report mentions #1 focus area to improve employee engagement is training and development programs 12. Gradual shift from prevalent methods of in-store communication such as radios or over-head paging systems to voice-controlled wearable devices that keeps store associates hands-free 13 and enable alerts for customer service, out-of-stocks and other agile sales and operations needs. Digital and smart TV systems that act as dashboards for store workforce updates, incentives, sales/service programs and performance reporting/improvements. Store workforce-friendly mobile first solutions that enable personalized store manager and floor workforce communication regarding product information, tasks, priorities, schedules and other workforce information/ data access areas. Digital content delivery and live broadcasting tools for headquarter-store communications such as town hallstyle feedback sessions or panel discussions to promote better standard operating procedures, best practices, overcoming day-to-day pain-points and obstacles. 12 EKN Next Gen Employee engagement and empowerment survey, Page 7

8 Conclusion Creating the workforce of the future that is both operationally efficient and customer-focused does not require revolutionary changes. At the very outset, retail executives and shareholders need to demand a stronger commitment from headquarter and store teams to attain higher standards of headquarter-store communication and collaboration. Many retailers are off by a wide margin when it comes to enabling and assisting their store managers and workforce to be successful at fulfilling customer service, sales and operational tasks. At the core of any store and workforce management strategy is to figure out how to make it easy and convenient for the stores and its workforce to work and win at the same time in an extremely unpredictable and ruggedized store environment. Ease and convenience of working in stores can be introduced if retailers re-think the static and redundant headquarter-store workflows, look beyond using stores and workforce as an execution tool and turn towards more digital, modern and more connected apparatus that facilitates consistent, easier, fair and seamless store execution. Page 8

9 Our research agenda is developed using inputs from the end user community and the end user community extensively reviews the research before it is published. This ensures that we inject a healthy dose of pragmatism into the research and recommendations. This includes input of what research topics to pursue, incorporating heavy practitioner input via interviews etc., and ensuring that the blend of research takeaways are oriented towards a real-world, practical application of insights with community sign-off. For more information, visit Avanade is the leading provider of innovative digital and cloud services, business solutions and design-led experiences delivered through the power of people and the Microsoft ecosystem. Our professionals combine technology, business and industry expertise to build and deploy solutions to realize results for our clients and their customers. Avanade has 29,000 digitally connected people across 23 countries, bringing clients the best thinking through a collaborative culture that honors diversity and reflects the communities in which we operate. Majority owned by Accenture, Avanade was founded in 2000 by Accenture LLP and Microsoft Corporation. Learn more at Disclaimer: EKN does not make any warranties, express or implied, including, without limitation, those of merchantability and fitness for a particular purpose. The information and opinions in research reports constitute judgments as at the date indicated and are subject to change without notice. The information provided is not intended as financial or investment advice and should not be relied upon as such. The information is not a substitute for independent professional advice before making any investment decisions. Copyright 2016 EKN Registered Office: 4 Middlebury Blvd. Randolph, NJ Ph: (973)