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3 Ways A Retail Management System Can Help To Lower Labor Costs

Hand holding a bag full of cash

A retail management system can help businesses determine optimal staffing levels at a competitive cost.

The key is to gain visibility into your labor expenses, which include more than an employee’s salary or hourly pay. For instance, does having more employees working on the weekends lead to more in-store sales? And how will employee overtime pay affect store profits?

Technology holds the power to provide valuable insight into these labor expenditures. You’ll want to look closely at three areas in particular: employee pay, staffing levels and technology.

  1. Consider all expenses associated with employee pay: A store associate’s wages aren’t the only expense to consider when calculating labor costs. You also need to look at payroll taxes, Social Security, Medicare and other benefits like paid vacation or paid sick days.

    Managing these indirect costs, known as the burden rate, may feel like keeping too many balls in the air. But a retail management system can help you to sort out and better manage these expenses, which allows for the creation of an efficient staffing plan.

    Look for a retail ERP solution that has a staff management feature. Typically, this functionality provides the ability to create and see at a glance nearly everything about your staff, including work hours, vacation schedules, and title or management level such as manager or cashier. The solution should also be able to track the store’s staffing history and calculate the daily cost of an individual employee.

    Here’s another key feature: a retailer can input restrictions in a retail ERP solution that prevents unplanned labor expenses. For example, the system keeps track of each employee’s weekly hours and days worked, allowing a retailer to configure the system to prohibit assigning overtime hours to specific employees.

  2. Better correlate staffing levels with store sales: Part of determining your staffing needs is to know the patterns of your customer and sales traffic. When does your store typically experience high traffic? Is it during lunchtime or in the evening? How about weekdays or weekends? What about staffing during seasonal periods — do you need to hire more employees during the holiday shopping season?

    This all depends on the history of your sales and labor costs as tracked by a retail ERP system. For example, the system can track store sales by dollar amount sold, types of products sold and quantity sold during any given period. Then you’re able to compare the sales information to the time period’s staffing level.

    So, if the data shows that your store generates a high level of customer traffic and sales between 10 a.m. and 2 p.m., you should make sure there are enough employees to assist customers during that period.

  3. Use self-serve technology to improve staff efficiency: While interaction with a customer is generally considered a best practice, sales associates may spend an inordinate amount of time locating and ordering a product for a customer who’s ready to buy. This could hinder employee efficiency in other responsibilities like processing merchandise returns or helping other customers.

Technology, particularly self-serve information kiosks, can help customers with basic product information and services, freeing up your employees for more important tasks. For example, many big-box retail chains have price-check kiosks throughout their stores. Customers simply hold a product’s bar code to a kiosk’s scanner to verify price. But these kiosks can do more than check prices. They have the capability to display the product’s in-store inventory availability, stock level at other retail locations, variations such as size or color, and more.

Self-serve information kiosks help to reduce personnel costs, but not at the expense of customer service, since they’re able to quickly and conveniently display product information.

Labor costs will easily eat away at store profits if they aren’t managed efficiently. That’s why it’s important to look for a retail management system with the ability to drill down into labor expenses and streamline all associated personnel costs. 

Author: Thomas Nielsen, Consultant at ArcherPoint

Thomas Nielsen is a presales consultant with ArcherPoint. For nearly 20 years, Thomas has held leadership roles in private industry and within Microsoft Dynamics NAV Partners including Tectura and AVF Consulting, working exclusively with retail organizations and specializing in Dynamics NAV and LS Retail installation across Europe, Asia, and Australasia. Thomas holds a Bachelor’s degree in Finance and Administration and a Master’s in Information Technology. He is a Microsoft Certified Professional (MCP) and a Certified LS Retail Consultant.

To learn more about how to lower your labor costs with a retail management system, schedule a demo of ArcherPoint's Retail Management Solutions.