Why more people creates less efficiency

In Southeast Asia and in many other regions in the world there is a relatively low cost of labor. Retailers often point to this as a reason for not investing in technology that automate various processes in the store. Why implement technology when you can just add more people, right?

But does more people really improve operations and do low salaries really mean low cost?
I argue that’s typically not the case.

There are key processes in a store that will have a huge impact on the quality of store operations and the customer service level. Just because you can hire more people, doesn’t necessarily mean that you should.

Are you fixing one problem but creating another?

• You get what you pay for – you pay low salaries to inexperienced people. How customer-focused are they? What incentive do they have to go the extra mile for your customer?
• What happens when salaries increase in your market? At what point will you realize that your over-staffing has led to high costs?
• If you have solved operational inefficiencies with more people – how easy is it to remove them fast when the situation changes?
• When these resources are not needed, they become idle and just stand around in your store. Do you really want to pay for that?

Let’s briefly look at three revenue-generating processes where you are currently using too much manpower in my opinion:

Updated prices on the shelves

Shoppers expect to find accurate and attractive prices on the shelves. Research show that missing or inaccurate prices in your store will lead to lost sales. Also, remember you customers can use their smartphones and compare your prices with your competitors. If your staff didn’t have time to update the prices, that can lead to lost sales. What if these prices could be automatically updated instead? That would protect your sales and allow the staff to focus on the customers instead.

High-priced items promoted and stocked up

There are many high-value items in your store that are exposed to theft. All retailers have some shrinkage on these. A big part of this theft comes from the staff. Because of their low salaries, items like batteries, razor blades and tobacco are especially attractive to pocket for them. So adding more people also means adding more pockets where these items could end up.

One way retailers fight these losses is to hide items away behind a manned counter – again, adding more people to solve a problem. Another action is to keep a smaller product range, shying away from the top products (e.g. razor blades). So now your customer can’t find the items they want because you can’t afford to stock them. What if these items could be protected until after they are paid for? Then, the staff cannot take them.

Time to pay for the items

Everyone hates queuing – this is a fact. Open cash drawers in the checkouts slows down the checkout process. Even with all checkouts open, the cashiers have to focus on the process of handling and counting cash rather than focus on the customers and the speed of payment. Forget about up-selling, your cashiers don’t have the time, or the incentive, to think about that.

The person bagging the items could theoretically be used to open up an extra checkout to help kill the queues. But that person is not paid to make such a decision and you probably have to get the float from the back office as well, resulting in a 10-minute delay before the extra checkout can be opened.

This can result in that customers leave their baskets and walk out or not even enter your store at all after having seen long lines of people queuing.  What if the cash could be managed automatically, without any manual counting? Then, the checkout process would take less time, require fewer resources and allow for a customer focus instead of a counting focus.

Unleash and empower the potential of your employees

No doubt, most of employees are great people; service-oriented and hard working. But the truth is that many manual processes are not ideal from a revenue and operations perspective. The talented employees should be focusing on your customers – smiling, talking and helping out to create a great shopping experience. When they can do that, they will increase the chances of customers returning to the store, again and again.