Store Operations is universally the most common customer-facing functional area for retailers. Store Operations must typically interface with every other functional area of a retail business as well. Facing daunting challenges such as high employee turnover, excessive workloads, and inherent uncertainty in traffic and customer needs, stores strive to execute merchandise preparation and display, employee hiring, training and management, as well as cost control and risk management, all on top of their number one priority – to sell merchandise and/or services and provide world class customer service!
Sales per Labor Hour (SPLH): Sometimes referred to as Sales Per Employee Hour (SPEH) or inverted as Labor % Sales, this traditional benchmark intends to indicate how efficiently the store transacts sales and addresses how productive its employees are.
SPLH cannot be benchmarked appropriately without context. The type of product or service being sold has a great impact on this metric. To prepare cut vegetables in a grocery environment is typically more labor intensive than placing a TV on a shelf and selling 500 televisions through the warehouse. Retail
sectors (grocery, jewelry, sporting goods, etc.) must be considered independently to ensure actionable benchmarks result. Benchmarks with inappropriate context are commonplace and can prove more detrimental than helpful as they are often misinterpreted.
SPLH cannot be benchmarked without reference to other measures of success. Perhaps there is a tradeoff with customer service: low SPLH and high customer satisfaction are often inversely correlated, but not always. Perhaps low SPLH in the stores is enabling higher throughput at the distribution center (when retailers move tagging or preparation processes from the DC to store personnel). To appropriately benchmark SPLH, related metrics must also be considered.
The Process Connection:
The retail chain has low SPLH compared to its peers with context and after examining the related metrics: so, what next? The benchmark is meaningless if how retailers achieve higher SPLH is not included. Herein lies the Retail Benchmarks difference: based on years of retail consulting experience, we survey our members not only about their results, but also about the related, contextual, and driving processes. In the case of SPLH, they could include:
- Payroll Planning
- Labor Analysis and Management
- Task Assignment and Management
- Store Transaction Processes
- Store Communications Processes
- Multi-unit management involvement
- Employee Retention Processes
Our members will learn, through the correlation of process characteristics and related results over the entire member base, infused with years of practical retail experience, what may be opportunities for them to improve fundamental business processes.