The engine that powers a successful retail business must be balanced between two things: high-octane fuel to accelerate sales and premium motor oil to lubricate the supply chain.
The fuel that drives retail sales is composed of:
Knowledgeable and motivated store associates
Outstanding customer service
The oil that lubricates the retail supply chain is composed of:
Resets and planograms
Superior and consistent execution of non-selling tasks
The challenge in today’s world is that many retailers tend to hyper-focus on only one of these components: driving sales by moving customers as quickly as possible from the front door to the cash register.
While driving sales growth is critical to any retail business, it is equally important to have sufficient oil in the engine to keep things in balance so the engine doesn’t overheat and the business remains viable in the long run.
Perhaps one the best examples of poor balancing between “fuel and oil” was the tenure of Robert Nardelli at Home Depot. During his time as CEO Nardelli aggressively cut labor costs in an attempt to improve profits. Although the moves made Home Depot numbers look better in the short term, they also crippled customer service, which opened the door for rival Lowes.
The main reason that Nardelli and other retailers “get out of balance” is because the financial benefits of cutting costs are immediate, direct, and easy to measure — whereas the downside of cutting costs is indirect, long term, and difficult to measure.
Without a doubt, retailers must carefully monitor and manage labor expense based on point of sale data, foot traffic, and other variables. That said, success in retail does not hinge entirely on optimizing labor expense. Rather, success in retail hinges on a careful balance between labor expense and labor efficiency.
To maximize labor efficiency, retailers must inject disciplined task management into store operations -- which leads to consistent and amazing experiences for consumers and an improvedbottom-line for shareholders.
Interested in learning more? Schedule a demo now to see how Natural Insight injects task management discipline into retail operations.
Husband and father. Software innovator, entrepreneur and marketer. My wife is my soul mate. My 3 kids are my greatest accomplishment. I love innovation and marketing. Also running, yoga, wine, Baltimore Ravens and Avalon, NJ. Sales and Marketing VP at Natural Insight. Founder & CEO of ZoomSafer. Co-founder of SMBLive. Marketing VP at Groove Networks and USinternetworking.