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Labor Systems Seen Cutting Costs, Linking Workers

Labor Systems Seen Cutting Costs, Linking Workers

“I think we’re going to see a major investment in workforce management within the grocery industry — and I think it will be a real game-changer.” — Deborah Weinswig, analyst, Citigroup

Given labor’s status as their No. 1 operating expense, retailers have always shown a willingness to invest in technology designed to forecast and schedule their workforce requirements.

But with the advent of Big Data and the growth of mobile technology, the power and scope of labor systems are greater than ever, leading to a renewed emphasis on this technology. The systems are especially relevant to retailers engaged in price battles with alternative formats that may have the advantage of lower labor costs.

“I think we’re going to see a major investment in workforce management within the grocery industry — and I think it will be a real game-changer,” said Deborah Weinswig, an analyst at Citigroup, New York, at SN’s analyst roundtable discussion held last September. “Investing in workforce management frees up dollars to invest in price, and lower prices help drive traffic and ticket.

“And while I’m not going to say this is going to save the entire industry,” Weinswig added, “I think it will really allow retailers to compete better and more effectively with the discounters and the clubs, even in an environment where the grocers are operating with more expensive and less flexible labor.”

In addition to cost savings, some of the new labor systems are helping boost employee morale. For example, United Supermarkets, Lubbock, Texas, which operates 51 stores, has adopted a trio of mobile applications from Vortex Connect, Toronto, a division of Red Prairie. The apps, rolled out chainwide last year in the BlackBerry, iPhone/iPad and Android platforms, give store managers and employees (called team members by United) a better connection to the chain’s Kronos labor scheduling and time-and-attendance systems deployed three years ago.

After the deployment, “we got feedback from team members that they wanted access to scheduling without having to go to the store,” said David Crews, director of strategic projects for United Supermarkets. Vortex’s Mobile Employee Connect gives employees that capability on smartphones or on a PC browser.

Efficiently arranging last-minute shift changes was another issue for employees, as managers would make “random calls” to employees until they found someone available. Working with the Kronos scheduling system, the Mobile Shift Connect app “makes available only those team members who are ready to take on [the opening],” said Crews. The system selects 10 employees, reaches out to them via voice mail, text or email with an invitation to fill the shift. “Whoever responds first gets the shift,” he noted. If no one responds, another group is contacted.

Read more: ACA Adds Complexity to Contract Talks

The two employee- related apps have “positively impacted” morale by “connecting with team members in a new, positive way,” Crews said. About 65% of United’s 10,000-member workforce have a mobile phone and about the same percentage have downloaded the employee app. He could not say how frequently employees use the app, but acknowledged that they are more apt to be used by part-timers, who make up 65% of United’s employee base.

The third app, Mobile Manager Connect, allows store and department managers to use their mobile devices during busy periods to clock in employees as they enter the store – a feature employed often in December during the holidays. Managers can also send out alerts to employees reminding them, for example, to wear a special T-shirt for a store promotion the next day. Each store manager has a company-supplied iPhone for the app and other business purposes.

Crews declined to provide the subscription fee per user United pays for the apps.

Other workforce management providers are also making their systems available to retailers on smartphones and tablets. For example, Reflexis, Dedham, Mass., which rebranded its mobile platform as StorePulse at the recent National Retail Federation Conference in New York, allows store managers to view everything from labor scheduling to task management and receive alerts on a tablet or smartphone. “Managers can spend more time on the sales floor,” said Dave Andrews, director of marketing communications for Reflexis.

Read more: Leveraging Big Data

Reflexis is also broadening the type of data retailers can incorporate into its workforce management system beyond POS transactions, including data from traffic counters, social media analytic services, video, truck delivery notification, and RFID systems. To that end, Reflexis has partnered with other companies, such as Impetus for social media analytics and Irisys for traffic counting.

Another systems provider, Atlanta-based Brickstream, announced at the NRF Conference the release of QueueIQ, a queue management system that captures traffic numbers (distinguishing between children and adults) using smart video devices ceiling-mounted around the store. It can channel the data to workforce management software, as well as provide real-time queue metrics to managers’ tablet dashboards for immediate reallocation of resources. The system also publishes checkout wait times on a manager’s mobile phone and on a store LCD screen for consumers.

QueueIQ “can be used to fine-tune staffing for quicker checkouts,” said Glenn Gibson, chief information officer, Magruder’s, Washington, in a statement. One European grocer has improved scheduling with the system, which it is deploying at the front end and peripheral areas like deli and pharmacy, said Steve Jeffery, chief executive officer, Brickstream.

Wall-to-Wall Schedules

Another trend in workforce management technology is applying it beyond cashiers at the front end to employees throughout the store – what Norm Daigle, manager of labor and productivity for Hannaford Bros., Scarborough, Maine, called “wall-to-wall” scheduling. Hannaford uses Kronos’ application to schedule not only cashiers but also deli workers and production employees in fresh departments like bakery and meat.

For front-end and deli employees, the system analyzes historical traffic patterns to meet the chain’s service requirements, while in bakery and meat “labor is more driven by volume of production and the need to replenish fresh products by a certain point throughout the day,” said Daigle.

Hannaford uses software to schedule cashiers, deli workers and others.
Hannaford uses software to schedule cashiers, deli workers and others.

Hannaford’s labor-scheduling system, which replaced a handwritten process, is powered by more data than ever before, including demand history and traffic patterns, as well as cases shipped and packages produced in the store. “The biggest change is that we can leverage a significant amount of powerful data in the creation of every schedule,” Daigle said. “We’re less dependent on memory, tribal knowledge or anecdotes.”

There are occasions — like the recent snowstorm that blanketed New England — when store managers can make manual adjustments to schedules. “But we monitor the variance between the [schedule] the technology called for and the finished product,” said Daigle.

The upshot is that Hannaford now has schedules that “we’re more confident are meeting our strategy,” which includes better staffing at critical points of the day and improved, more consistent customer service, he said. “It’s an overused line, but it’s about having the right person at the right place at the right time,” particularly critical hours such as 4 to 7 p.m. on weekdays.

Read more: Woods Cuts POS Losses With Video Analytics

Without disclosing investment figures, Daigle acknowledged that Hannaford, which operates more than 180 stores, has achieved a significant ROI from the workforce management technology, including gains in sales per person-hour.

Hannaford is not currently using traffic counters or mobile dashboards, but is considering both technologies. “We’re trying to determine the right [mobile] hardware,” Daigle said. “We can see the value of viewing the schedules and labor metrics on tablets on the sales floor and preventing store leaders from being saddled to their desks.”

The chain also plans to fully leverage a Kronos workforce analytics module when the vendor’s 6.3 upgrade is released this year. “We will use the analytics for department productivity determinations and additional metrics,” said Daigle. Department productivity looks at the number of hours a department has “earned,” based on its production volume compared to engineered labor standards; then the number of hours earned is compared to the number of hours actually used to calculate a productivity percentage.

Tapping the Cloud

Longo Brothers Fruit Markets, Vaughan, Ontario, takes a somewhat different tack from many retailers, including Hannaford Bros. and United Supermarkets, by leveraging its Microsoft-based Dayforce workforce management application and HR information system (HRIS) — both from Minneapolis-based Ceridian — in a cloud-based software-as-a-service platform. The chain pays a flat fee (not disclosed) per employee per month for the service.

“We provide [Ceridian] with our sales on a daily basis,” said John Charleson, the 26-store chain’s director of information technology. “Schedules are built at the stores in Dayforce and [employees] can log in on any browser on Thursday afternoon to see when they are working the following week.” Managers make the final call on schedules, adjusting them for weather and other unforeseen events.

Longo’s cloud-based scheduling system cuts IT maintenance costs.
Longo’s cloud-based scheduling system cuts IT maintenance costs.

The cloud platform has cut costs for Longo’s by reducing IT maintenance, noted Charleson. As a result, Longo’s is paying as much for labor scheduling, time and attendance and HRIS as it previously paid for only time and attendance and HRIS. In addition, the user-friendly scheduler reduces labor costs and improves customer service by creating “better quality schedules,” he said. “Rather than standing around during quiet times, they are scheduled for busier times.”

Like Hannaford, Longo’s uses the technology for all store employees other than managers, with a focus on maintaining service standards in such areas as the home-meal kitchen. Between 30% and 40% of its employees are full-time.

Read more: Tech Effort Transforms A&P: CIO

Longo’s is in the midst of merging its workforce management and HRIS systems into a single Dayforce HCM (human capital management) platform. Those systems are currently integrated but the merger into a single platform “simplifies things further,” said Charleson.

Longo’s has begun to make self-service functionality available to employees, who can log into the Dayforce system to not only see their work schedule but request vacation time. The chain plans to expand the self-service functionality by enabling employees to make change requests (on addresses, for example) in the HRIS.

Dayforce enables the system to be accessed on a smartphone, but Longo’s doesn’t use that capability yet. “We’re working on integrating the payroll piece [for mobile] in the next couple of months,” said Charleson.

Sidebar: Personalizing the Schedule

Workforce management systems have come under criticism in some quarters — notably an article last fall in the New York Times — for enabling retailers to rely more on part-time labor and for adversely impacting part-time employees by frequently altering their schedules.

Hannaford Bros., Scarborough, Maine, has tried to mitigate the effect of schedule automation on part-time employees by providing “model schedules” for different sales volumes to managers and department managers so that they “have a sense of what the schedules are going to look like,” said Norm Daigle, the chain’s manager of labor and productivity. This gives the managers an opportunity to discuss potential schedules with employees in advance of applying them.

“We make sure people are given the time to adapt to schedule changes,” he said. Employees are also asked for input — which is added to the system — on their windows of availability when they are hired or when a new schedule is to be deployed.

Managers also have discussions with employees about store and department service strategies and the employees’ role in supporting them. “The project becomes about the optimal execution of the customer experience, where technology is a supporting mechanism, not a driver of the project,” Daigle said.

Read more: Woods Cuts POS Losses With Video Analytics

Full-time employees may also need to make “slight adjustments” if their schedules don’t “best meet the needs of the business,” Daigle said. About one-third of Hannaford’s employees are full-time, a percentage that has not changed in the past five years. Part-time employees have an opportunity to transition to full-time as well as to increase their number of part-time hours, he said.

Turnover at Hannaford has been down “a bit” over the past five years, possibly due to the recession, Daigle said.

Longo Brothers Fruit Markets, Vaughan, Ontario has an extensive employee development program, including “Longo’s College” where employees can “get ready for future positions,” said John Charleson, the 26-store chain’s director of information technology.

Sidebar: Are Retail Employees Paid Enough?

Over the past year, a number of studies have concluded that retailers should pay their employees more in order to increase sales and profits. This might be considered heresy by some operators, but is there something to it?

Last year in the Harvard Business Review, Massachusetts Institute of Technology professor Zeynep Ton described a 10-year study she conducted of retailers’ salary practices. She wrote that some highly successful retail chains, including QuikTrip convenience stores, the Spanish grocer Mercadona, Trader Joe’s  and Costco, “not only invest heavily in store employees but also have the lowest prices in their industries, solid financial performance and better customer service than their competitors.”

Her conclusion: Bad jobs, which have low wages, poor benefits, and schedules that change with little, if any, notice, “are not a cost-driven necessity but a choice.”

Given retail’s large role in the economy, retail wages have an impact on overall living standards and economic growth. Last November, New York-based Demos, a research, policy development and advocacy group, reported that the typical retail salesperson earns $21,000 per year, with cashiers making $18,500 on average, which it said limits the economy.

SN Blog: Higher Wages Could Be Grocers' Best Investment

Demos studied the impact of raising the wage floor for the lowest paid full-time retailer workers at large retail companies (with at least 1,000 workers) to $25,000 per year. The study came to the following conclusions:

• More than 700,000 Americans would be lifted out of  poverty, and more than 1.5 million retail workers and their  families would move up from poverty or near  poverty.

• Employers would create 100,000 or more new jobs.

• Increasing purchasing power of low-wage workers would generate $4 billion to $5 billion in additional annual sales for  the retail sector.

SN Poll: How Do You Feel About Raising Wages to Boost Profits?

• The cost of the wage increases would amount to $20.8 billion, or 1% of the $2.17 trillion in total annual sales by large retailers, or 6% of payroll for the retail sector overall.

• If retailers pass half of the costs of a wage increase on to their customers, the average household would pay 15 cents more per shopping trip, or $17.73 per year.

One food retail executive, who asked not to be named, said he sees value in the Ton study. “I think retailers should be looking very hard at that research,” he said.

In particular, the executive suggested retailers may want to revisit the link between wages and customer service. “Retailers who are concerned about different distribution channels — like Amazon — should be incredibly concerned about differentiating the brick-and-mortar experience from the commoditized experience.” This is especially true, he added, as Amazon considers same-day delivery in the near future.

Read more: Leveraging Big Data

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