How Retailers Can Scale their Workforces for the Holidays and Beyond

Every year, companies large and small, spanning the entire retail supply chain, compete for workers to help them deliver against peak demand that comes with the holiday season. However, this year, retailers are struggling to hire enough people to meet even non-peak business needs. 

The Covid-19 pandemic saw hundreds of thousands of retail sector workers laid off, during which time many decided to look for careers outside of the sector. The result was a 44% decline in employee applications per opening in August 2021 compared to the start of the year. This challenge is now being exacerbated by the prediction of this year’s sales reaching $1.3 trillion – an increase of 8% compared to last year.    

How can operations and HR leaders in retail organizations bridge this significant worker shortage, both now and in the future? 

Accurate Demand Forecasting

The first step is being able to forecast demand accurately. Unfortunately, Covid has rendered traditional demand forecasting methods, such as year-over-year models, useless. The various shelter-in-place orders changed consumer purchasing habits significantly, and in-store sales fell off the charts for the simple reason that physical locations were often closed more than open. 

This situation drove increased demand for e-commerce and related services such as delivery, drive-thru, and curbside pick-up. It’s impossible to predict if we will continue to see similar levels of e-commerce engagement now that most physical stores are open again. Retailers need to be prepared, regardless of where consumers choose to shop. 

To accurately forecast demand, retailers will need to put their data through much more rigorous analytics than in the past, and it’s here that workforce management solutions that use artificial intelligence and machine learning come into their own. AI-enabled forecasting combines historical data with real-time information on factors that can impact demand, such as events and weather data. This insight enables retailers to predict sales more accurately by determining where customer demand is likely to come from and what it means for business resourcing needs.

In fact, by using AI and machine learning-based technology solutions, enterprises can more accurately predict their future by creating demand forecasts based on any driver, channel, item, and location. These automated forecasts can deliver a high level of precision while automatically adjusting for seasonality and holidays. In addition, machine learning-based models can be self-learning. As more data points emerge, the model becomes more accurate. So, even without valuable sales data from previous years to start with, retailers can still forecast demand far more accurately as additional data comes in. 

Once demand forecasts are in place, retailers need to allocate a budget. Again, AI and machine learning tools are useful. They enable finance and planning teams to easily create and enforce labor budgets using accurate, long-term forecasts that incorporate labor models, wage rates, and other rules for executing weekly schedules. 

In addition, they can automate the process, enabling operations teams to focus on appropriate resourcing based on the forecasts.

By effectively leveraging AI and machine learning, retailers can eliminate, reduce or automate many of the routine or recurring processes that managers have to perform to create and manage schedules and time. This enables them to spend more time focusing on their customers and developing their employees. 

Building a Superior Employee Experience

With a good grasp of workforce requirements and budgets, retail organizations can set their minds to effective workforce management. Being short-staffed can result in costly overtime, burnout, or poor customer service. This situation is exacerbated during the holiday rush when the pressure to deliver a superior experience to consumers is extremely high. Companies cannot afford turnover or unhappy employees. 

Therefore, businesses need to deliver an exceptional employee experience so that existing workers don’t seek higher wages or better conditions elsewhere, and temporary workers see the company as an employer of choice.

The secret to success is understanding what makes employees happy outside of higher wages. A recent survey of 1,000 hourly employees and managers in North America suggests that three major factors contribute to overall employee satisfaction: schedule empowerment, improved communication, and early access to wages. 

Fifty-nine percent of the people surveyed cite scheduling issues as reasons they would quit a job, while 39% say they would leave their current jobs if the communication with their employers was poor. Meanwhile, more than 50% of respondents report a financial emergency at least once per year, and nearly 75% of them said it would be important to get paid early if this happened. 

Smart retail leaders should arm their workers with tools to better control their work schedules and provide options to access pay quickly while ensuring that effective and compliant communications channels are in place.

Win for the Peak and Beyond

2021 has already been a tough year for retailers, and the outlook for 2022 is more of the same volatility and uncertainty given continued macroeconomic uncertainties, distribution challenges, and the tightest labor market in years. The holiday rush will only compound these challenges. 

However, retailers that leverage data and technology in the right way will be able to access insights and applications that will enable them to plan and execute effectively. These same businesses will also benefit longer-term by being able to offer the best customer experiences at a time when consumers will be looking for support.

Michael Spataro is Chief Delivery Officer at Legion.