Research by Harvard Business Review:
When Retail Workers Have Stable Schedules, Sales and Productivity Go Up
Original by: Joan C. Williams, Saravanan Kesavan and Lisa McCorkell – March 29, 2018
Summary by: Renaud Grimard, Timesphere
The relentless rise of online retailers has led to deep soul-searching among brick-and-mortar retailers to find ways to compete. The traditional methods of competing through convenience, assortment, and pricing are largely ineffective against online retailers who outperform brick-and-mortar retailers in these dimensions. The last arrow in the quiver is to use service as a way to distinguish themselves from online retailers. Yet, research suggests that retailers tend to view store associates as an expense to be controlled rather than as a medium to provide better service for customers.
In retail today, most associates are part-time, and part-time schedules typically change every day and every week, often with only three days’ notice of next week’s schedule.
The author’s goal in this randomized controlled experiment at cloth store ‘Gap’ was to shift retail associates to more-stable schedules and study the business results. Here are a few examples of changes that were made by Gap stores:
- Eliminating “on-calls.” On-calls are when employees are scheduled to work shifts that can be canceled anytime up until two hours before they are scheduled to begin.
- Requiring employee schedules to be posted two weeks in advance.
- Giving a core team of associates a “soft guarantee” or 20 or more hours a week.
- Establishing standard start and end times for shifts.
- Giving more associates a stable core schedule (meaning that associates will have a consistent schedule from week-to-week).
- Using a mobile application, in which associates could swap shifts on their own without getting their supervisor’s approval. Managers could also use the app to post additional shifts.
- Receiving additional staffing during understaffed periods, which were identified based on analysis of store traffic and conversion rate data.
The results were striking. Sales increased by 7%, an impressive number in an industry in which companies work hard to achieve increases of 1–2%. Labor productivity increased by 5%, in an industry where productivity grew by only 2.5% per year between 1987 and 2014. Their estimate is that Gap earned $2.9 million US as a result of more-stable scheduling during the 35 weeks the experiment was in the field.
Unlike the typical way of driving sales through increase in traffic, the sales increase from their intervention occurred due to higher conversion rates and basket values made possible through better service from associates.
According to them, lean staffing with short-hours part-time staff who have unstable schedules can jeopardize customer service in many different ways, most obviously by leading to long check-out lines or situations where customers can’t find someone to help them get a size or style they need.
With predictable schedules, employees found it easier to show up on time, because they were able to more accurately predict their commuting time. Changing company practices so that employees could take the same bus at the same time of day turned out to be a powerful way to improve the customer experience.
Retailers today invest millions of dollars on marketing campaigns to drive customers into stores but don’t invest in labor planning to ensure that traffic is converted into sales.
Here’s the bottom line: a shift to more stable schedules is a win-win for retailers and their employees. During a challenging time in the retail industry, Gap made a commitment to its values and it paid off. Retailers would be well-advised to take the initiative to implement more stable scheduling for their associates and improve customer service to effectively combat the threat from online retailers.