Hannaford Bros. is seeing some promising results from an early test in which added labor in the deli departments of a handful of stores, the chain’s director of retail services said in a presentation at the National Retail Federation’s 2014 "Big Show" on Monday.
The Scarborough, Maine-based chain, a division of Salisbury, N.C.-based Delhaize America, added staffing in the service delis at six stores after working with students at the Massachusetts Institute of Technology to evaluate the potential to drive increased sales by adding more personnel.
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“By looking at transaction data, by looking at customer interviews, and looking at video of the deli, the students could readily see an opportunity,” said Norm Daigle of Hannaford at the presentation.
After adding labor to the six stores, “it certainly seems like we have seen a return on investment in terms of increased service packages, and increased sales at those departments,” Daigle said. “In terms of the sales-to-labor curve I think we are much closer to a place where the marginal cost of a unit of labor is near the marginal revenue gain from that unit of labor.”
Daigle credited input from Kronos, the labor-scheduling technology supplier that also presented at the session.
Read more: SN's coverage of supermarket deli
Charlie DeWitt, VP of business development at Kronos, said the company is working with retailers to re-evaluate their labor standards to find opportunities where additional labor could benefit the bottom line. He likened the effort to the re-evaluation of baseball statistics described in the book “Moneyball.”
“Sales per labor hour is not a good predictor of labor productivity, just like batting average is not a good predictor of success in baseball,” he said. “Retailers need to have a much better handle on percent operating margin instead of sales per labor hour.”
This margin needs to be measured across stores and across time to calculate how to best deploy labor to maximize returns, he said.
The NRF 103rd Convention and Expo is taking place this week at the Jacob Javits Center in New York.
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