Succeeding in a Labour-Impacted Market
By Drew Mize
For Canada’s convenience retailers, the dual issues of rock-bottom unemployment rates, currently at a four-decade low of 5.5 per cent, and the resulting tight labor market have created two uneasy scenarios: recurring labour shortages and skyrocketing personnel costs.
These issues are near universal for convenience retailers. Canadian c-stores employ over 234,000 workers and serve 10 million customers daily, according to the Canadian Convenience Stores Association. The sector makes a significant contribution in stimulating the local economy. While a strong convenience retail sector is a boon to the community at large, the ongoing labour shortage is an issue that can impact convenience retailers’ growth and their ability to profitably serve their customers.
In North America, c-stores typically contribute about 23 per cent of their inside gross margin to labor costs. Sharp increases in labour costs due to chronic shortages or above-market pay to attract employees can drastically reduce profit margins.
The key to c-stores’ success in a labor-impacted market is to find ways that both maximize the performance and efficiency of its existing workforce. Known as workforce optimization, equal-parts strategy and technology, this approach optimizes your team to achieve greater efficiency, improve performance and deliver a healthier bottom line.
Let’s take a look at what c-store operators can do to ease up these challenges:
#1 Connect your staff, processes and data: Even in today’s digital age, many convenience retailers still make do with manual processes or use hybrid systems that are only partially automated. Manual processes are inherently inefficient and create information gaps. Retailers’ accrued data is therefore difficult to assemble, view or act upon, quickly or effectively. Take a look at your current operations and the systems in place; where you are not getting all the actionable data you need to fully understand sales performance, resource utilization and overall operational performance?
Jacksons Food Stores, a wholesale, convenience retail and logistics company with 250 sites operating in the U.S. used disparate systems for many years. The Idaho-based company had endured lengthy paperwork processing times, inefficient billing and load-dispatch processes and a lack of visibility into site operations. When the company finally connected these processes into a unified workflow, it reduced paperwork processing time by 83 per cent, freeing employees from unnecessary desk work and allowing them to spend more time with customers.
#2 Increase your employees’ mobility: When employees are in the store, they should be interacting with and serving customers, or out in the field instead of being stuck at a desk in the back office. If your store has a loyalty program, employee visibility is even more important as they play a crucial role in promoting it. Sites equipped with mobile technologies such as tablets, allow employees to be more efficient and better engage with customers while multi-tasking to process payments and complete transactions. They can also engage in omni-channel activities, such as getting new customers signed up to the loyalty program right there in the store.
Mobile technology plays to employees’ strengths, especially millennials and gen z who expect to work in a digital, mobile-friendly environment. These tools can boost their productivity and morale.
#3 Leverage analytics and data-driven insights for optimal decision making: A better understanding of your operations, whether it’s shrinkage accountability or employee scheduling, will deliver more successful outcomes. Analyzing critical company data, often with the help of artificial intelligence (AI) and analytics can help achieve the depth of understanding needed to improve your operations.
St. Romain Oil, a convenience-store and wholesale company based in the U.S. was experiencing merchandise and foodservice shrinkage, affecting profitability. The organization’s legacy system didn’t have the ability to use the transaction data it collected to help analyze the shrinkage. After switching to an end-to-end enterprise solution with robust analytics, the company’s management discovered they weren’t scheduling enough employees during peak times to maximize foodservice sales. Data-driven analytics helped St. Romain Oil optimize staff scheduling and reduced shrinkage by 33 per cent without having to invest in additional resources. The company was able to reduce its labor costs by eight per cent.
As a convenience retailer, you don’t just sell gas and food — you provide speed and convenience to your customers. Employees working at full productivity are the key to a satisfied, well-served and returning customer. For your 2020 resolution, plan to make your employees as productive and engaged as possible through optimal operations that support their work and your business’s objectives for the year. A smart approach to workforce optimization will help you identify areas where profit margins and processes can be improved, including employee efficiency, and give workers time back to better serve customers and create an environment that will keep them coming back for more.
Drew Mize serves as executive vice president and general manager of ERP Solutions at PDI. He oversees global product management for all retail and wholesale solutions, portfolio convergence and hardware technology. Prior to PDI, he was with Pinnacle for 11 years, serving multiple roles and was president at the time of PDI’s acquisition. Before Pinnacle, he was vice president of TMI Services, Inc. of Fort Worth, TX for 10 years, where he led the convenience store technology division. He earned his B.B.A. degree in Marketing from the University of Texas at Arlington.