Background and Challenge
A leading wellness provider was attempting to validate management’s perception that its retail staffing levels were not optimized to service its customer volume. This misalignment was believed to result in increased labor costs during periods of overstaffing and decreased customer satisfaction during periods of understaffing.
The company selected L.E.K. Consulting to review its staffing processes, quantify the cost of any staffing misalignments and recommend a strategy for achieving the identified cost savings opportunity.
Approach and Recommendations
We pursued a three-pronged approach to assess the efficiency and effectiveness of the client’s current staffing practices and identify the key drivers of misalignment.
- Staffing process review — we conducted a detailed review of the company’s formal and informal staffing policies to better understand the key drivers of staffing misalignments.
- Employee activity assessment — we designed and executed an employee diary survey to gain a comprehensive understanding of store-level employee responsibilities by hour of day and day of week. This data was mapped to store traffic to determine an optimal customer service rate and identify areas for improvement in the overall employee workflow.
- Savings opportunity identification — we developed an hourly-level optimization model to measure the financial impact of labor misalignments on the broader business.
Based on these findings, we developed actionable recommendations for the client to begin realizing the savings opportunity. The strategic plan that we delivered included recommendations on the development of new staffing guidelines, a realignment of employee work schedules and store hours of operation, and a modification of employee job descriptions.
We identified a pathway for the client to reduce its store labor costs by approximately 15% across its North America retail operations while enhancing customer service levels at peak hours. With this insight, the client gained the clarity they needed to begin implementing meaningful changes for their business and improve their profitability and in-store service levels.