Six Ways Digital Tools Can Cut Retail Labor Costs, Boost Productivity
With wages for retail employees increasing faster than they have in decades, at an annual growth rate of 7.4 percent, retailers face a unique quandary, where they must find new ways to counter swelling labor costs, but do so without compromising either the customer experience or the employee experience.

By Grant Harland – Retail, Restaurant and Hospitality Industry Analyst, Windstream Enterprise

To pull off this delicate balancing act, companies are going to need to understand their employees, their customers and the nuances of their own operations better than they ever have. And that’s where the latest wave of digital network and communications capabilities — driven by machine learning, artificial intelligence, the Internet of Things (IoT), advanced analytics and the like — can really help retail businesses, giving them the deeper insight and intelligence they must have to relieve the extreme pressure that the prevailing worker shortage, rising labor costs, inflation and other factors are putting on their profit margins and bottom lines.

Having helped companies across the retail landscape integrate cloud communications technology and data tools to become more intelligent, here are six areas where digital capabilities are proving particularly valuable in helping retailers reduce labor costs and get more from their workforces: 

  1. Elevating the employee experience to boost productivity.

    Today’s retail employees expect their employers to support them with versatile, mobile-enabled communications and productivity tools to help them be more productive and collaborative in their jobs. They want fully integrated, friction-free omnichannel communications tools to support their interactions with customers, streamline processes so they can work more efficiently, and measure their performance compared to their peers and with respect to team or organizational goals. And if they don’t get tools from one employer — via solutions like UCaaS (unified communications as a service) — they’re liable to look elsewhere. A commissioned study conducted by Forrester Consulting on behalf of Windstream Enterprise found that companies see a strong business case for investing in UCaaS. Close to half of study respondents said they expect a UCaaS solution to improve employee productivity, and 46% said it can improve employee experience.
  2. Automating where possible.

    Not only can automation technology provide cost savings by performing tasks that otherwise would require people, and in the process speed the customer’s journey, it also frees employees from repetitive, mind-numbing work so they can focus on higher-value undertakings that require more of a human touch, such as interactions with customers at key points in the purchase decision. It’s why more retailers are turning to smart carts, electronic shelf tags, self-checkout terminals, touchless BOPIS options, automated price updating and inventory management tools. Automation also can streamline and strengthen training, and manage key aspects of a retailer’s communications network, including security, which can reduce costs.
  3. Strengthening security.

    From credential phishing to malware to ransomware attacks, retailers are the victims in nearly one-quarter of all cyberattacks, according to figures cited by the cybersecurity firm Fortinet. And those attacks can be costly, as the average cost of a retail data breach in 2021 was $3.27 million, according to Security Intelligence. Taking additional measures to protect the communications network as well as the users, assets and apps attached to it helps to avoid those costs, while also avoiding productivity-crushing system downtime. SASE, or Secure Access Service Edge, is gaining appeal among retailers for the multiple layers of security it provides (in tandem with a software-defined wide-area network, or SD-WAN) to shield a retailer’s data and systems from these growing threats.
  4. Driving consistently better, data-driven decision-making.

    Retailers can get a better handle on labor costs simply by relying more heavily on data to track those costs and to drive decisions about staffing. As more IoT devices find their way into stores, retailers are becoming more data-rich than ever. By applying analytics to the labor-related data they collect, they can more readily uncover insight to maximize their human resources.
  5. Improving talent attraction and retention.

    As tight as today’s talent market is, as much difficulty as the retail sector has had retaining workers, and as costly as recruiting and onboarding new employees can be, the competitive edge goes to retailers who excel at finding and keeping quality employees. The secret sauce here is providing a superior candidate and employee experience, supported by technology that augments the entire journey, from initial contact with the prospective employee, through hiring, onboarding, training and beyond. Hiring and training apps can be helpful at the front end of the journey, making onboarding and training processes more efficient and impactful. From there, technologies that employees can use to boost productivity, communication and collaboration help to shape the employee experience.
  6. Boosting efficiency by connecting brick & mortar with online in the cloud.

    Retailers can capture new efficiencies, increase productivity and cut costs by more tightly integrating their online and brick & mortar operations and processes — order management systems, POS, CRM solutions, etc. – so data and insight flow seamlessly and silo-free across the organization. This tighter integration also enables options like order-by-text-message, which can increase revenue without increasing headcount. 

Retail sales in the United States are expected to grow by 6% to 8% in 2022, levels not seen in more than two decades, according to the National Retail Federation. But with a labor shortage, inflation and other factors complicating matters, taking advantage of that demand surge could well depend on a retailer’s ability to excel in these six areas — with the help of digital technology.

About the author

Grant has more than 11 years of experience in retail, contributing to his deep knowledge around business development, technology, product development, sales and merchandising. His unique background in retail and SaaS businesses makes him a credible thought leader and voice of the retailer within Windstream Enterprise. Prior to being Retail Analyst at Windstream Enterprise, Grant spent two years as a senior consultant at retail management consulting firm, Boston Retail Partners, where he delivered upon superior design and implementation of strategy, technology and process solutions. Before that, Grant spent eight years working in the retail industry for a retailer doing greater than $100 million dollars annually as a Senior Buyer and Business Development professional.

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