Retail Leaders Set Their Sights on Better-Trained Workers to Drive Operational Efficiency

When thinking about how to drive additional productivity within a retail operation (e.g., distribution, customer support, store support), it's easy to assume that adding more digitalization and technology is the fastest and most cost-effective way to move the needle. While technology can indeed inspire and drive productivity, many leading retailers are going back to basics by focusing on enabling their best assets: people. People are the key to kick-starting and sustaining productivity improvement. Otherwise, supporting technology can be severely underutilized.

Here's some back story on this trend: As COVID-19 spread in 2020, labor availability became an increasingly problematic limitation, and retailers began feeling the impact of a workforce that had become less reliable. For example, many essential retailers saw associate callouts spike and increased turnover in stores and distribution warehouses (child care availability was a major factor). This resulted in store and warehouse leaders placing additional emphasis on labor productivity to mitigate the risk of ongoing and future labor shortages.

Data Supports the Move to People-Focused Productivity

North Highland’s 2021 Beacon Report, a survey of senior retail managers, offers data that substantiates the shift to focusing on investments in people, not more technology. The survey found that “digital capabilities” was further down the list of 2021 priorities than expected — tied for fourth on the list — despite operational efficiency being the top priority. Clearly many retail leaders believe they can achieve greater operational efficiency without investing heavily in digital.

Operational leaders are realizing that digitalization can provide valuable visibility into productivity challenges, and even point to its root causes, but it takes front-line leaders and associates enhancing behavioral routines to actually improve performance. Here’s an example of how well-intended digital investments can backfire: Many retail call centers have implemented intelligent workforce management systems that accurately measure multiple productivity metrics and pinpoint resource bottlenecks down to the individual. Unfortunately, these types of technologies often fail to actually inform leadership action, rendering them futile. Data-driven feedback and effective coaching, moving in tandem, are the answer.

Upskilling Continues to Yield Significant Productivity Gains

Retailers should continue concentrating on upskilling. Continuously reinforcing a performance-driven culture that focuses on the right routines and behaviors will enable retailers to maximize the benefits of existing digital capabilities.

Here are ways to promote and establish a performance-driven culture within a retail operation:

• Maximize labor utilization by leveraging real-time performance data and intelligent planning tools to position people in the right place at the right time.
• Utilize real-time performance data to continuously inform associates of their individual contribution and how it ties to the performance of the larger operation. This same data can also be used to direct front-line leaders to targeted coaching opportunities with individual associates.
• Offer leadership development workshops and role-play trainings to practice effective coaching, and then establish a formalized process to ensure these sessions are an ongoing priority.
• Develop enhanced onboarding processes that focus on improving new associate ramp-up time. For example, employee incentive programs should promote longevity and fast-track expected performance, driven by frequent catch-ups with front-line leaders during the first few weeks of starting.
• Establish incentive programs for existing associates that instantly reward them for individual performance that's consistent and outstanding. This provides instant gratification, which drives performance.
• Establish incentive programs for front-line leaders, too, rewarding them for exceeding performance goals for their part of the operation. Facilitating frequent, impactful coaching conversations should be one of the criteria that’s graded.

Successful retailers are going back to basics to establish performance-driven cultures that actively celebrate the optimal behaviors across front-line leaders and associates. Highly trained and motivated workers, paired with the appropriate technology, is the right recipe to achieve operational efficiency in 2021.

Warren Wills is a strategy principal in the retail & consumer products practice at North Highland, a change and transformation consulting firm.