Store operations improvement for a leading U.S. women's fashion retailer
As part of a company-wide SG&A cost reduction initiative, a women’s fashion retailer targeted store operations as a potential savings opportunity. Store payroll as percent of sales ranked high in comparison to peers and close to half of payroll hours were allocated to non-customer-facing activities.
Challenge
The retailer’s objective was to reduce store payroll while maintaining or increasing client-facing hours. Despite having recently implemented a labor management system, time standards (and resulting allocation of hours) for specific activities were unclear, requiring a comprehensive assessment of key store processes. Improvements identified in pilot stores would have to be replicated across banners, regions, and store formats.
Approach
The team began by conducting a quick, focused assessment of store operations across a representative subset of stores. The assessment included store observations to assess the value and efficiency of key store processes, including receiving, replenishment, price changes, cash management, and visual updates. The in-store assessments in each geographic region were augmented with a comprehensive survey for store managers and field management workshops to validate findings.
Based on the assessment, the team was able to implement improvements in three critical areas:
- Streamlining and automating key processes to free up store associates’ time
- Improving effectiveness of upstream corporate practices and policies affecting stores
- Optimizing store labor mix, including staffing levels, manager/associate ratios, full-time/part-time mix, etc.
Changes to store processes and policies were piloted across a number of stores, formats, and regions, with active involvement from corporate store operations, field management, and store personnel. Results were statistically measured and tracked against control stores using productivity and customer service dashboards before rollout to the rest of the chain.
Results
As a result of these improvements, the retailer was able to free up over one million hours of store labor across the chain. This efficiency translated into more than 10 percent payroll savings, while increasing client-facing hours because of the favorable changes to the labor mix.
Contact
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Dean Hillier is a partner in A.T. Kearney's Toronto office.
Esteban Bowles is a principal in A.T. Kearney's New York office.
