Retail Workforce Management: Why Cutting Labor Costs Isn’t Enough

 

00:06 — Anthony Presley:

Well, Bobby, thanks for hanging out with me today.

00:08 — Bobby Bauer:

My pleasure. Likewise.

00:10 — Anthony Presley:

Yeah. Yeah. We go back a decade or two at this point in time, so we’ll try and keep the inside jokes to a minimum today. But in case there’s anybody in the retail market that doesn’t know who you are, would you mind introducing yourselves?

00:25 — Bobby Bauer:

We’re Bobby Bauer with bmc. We sell into, you know, grocers, liquor stores, pet stores, and meat markets, predominantly on the retail side, as well as some restaurants. We do that in about 32 states.

00:39 — Anthony Presley:

Only 32 states. Wow. Okay. That sounds like world domination. Like, would you mind. I mean, I’ve heard the story before, but would you mind describing a little bit how. How did that progress Tell us a little bit about BMC? You probably didn’t start in 32 states.

00:55 — Bobby Bauer:

Sure. Yeah. So we’ve been in business since 1958 and started as a single office in the Lansing, Michigan area. And our office footprint is still predominantly the Midwest in Michigan, Ohio, Kentucky, and Indiana. And so a lot of our customers are in those regions. And then as the chains were taking care of drew and really a lot of our thrift business is pocketed nationally. We began to grow and expand from there.

01:29 — Anthony Presley:

Love that your business has adapted a lot. I think you and I talk a couple times a year, for sure. Deep dive into some of the challenges that retailers are facing. Are you seeing anything new pop up? Anything new challenges that retailers are running into?

01:47 — Bobby Bauer:

I would say as the. The older generations, the baby boomers, start to retire, there’s a lot of turnover issues. I think everybody’s always had issues with cashier turnover, but department manager turnover and executive turnover, and in general, just as everybody ages out, putting qualified folks back into their employment pipeline has been a challenge for everyone because the younger generation has different rules they’d like to play by and different. Different accommodations that they feel they might deserve.

02:24 — Anthony Presley:

There you go. That was a very PC way to say that. I like it. I like it. Yeah. I was at a. An NGA show for the Grocer’s Association a couple of years ago. Was in an elevator with a guy, and right before we got into the elevator, were coming down from our floor. He. He was taking a phone call about several people who didn’t show up. Right. I was only hearing half the conversation, but people who didn’t show up to work. He was having to shut down parts of his grocery store. We get in to the elevator, he starts just giving me the what for of, you know, these young kids, these whippersnappers. They don’t show up. They’ve got no allegiance. They, you know, all this stuff. Then we. The doors open and we step out, and he’s.

03:10 — Anthony Presley:

He realizes I’m wearing a badge for the show. And he’s like, well, what do you do? And I said, well, I. I help make sure these young whippersnappers know when they’re supposed to be at work and how that’s supposed to go. And anyway, it was a very interesting conversation, and I talked all the way to the show floor from the hotel about how his dad ran the business and his grandfather ran the business, and he’s never had to do this kind of accommodations before, which I thought was an interesting deal, because every time I’ve run into that, I’m curious about your. You know, there’s these generational transformations. Like, it seems like they’re new problems, but they. They’re almost always old problems that we have forgotten about. Or they might take a new view. But is that what you’re seeing when you hear this?

03:57 — Anthony Presley:

I mean, you’ve been in business a long time. Is this. These are kind of old problems, restarted, it seems to me. What’s your view on that?

04:05 — Bobby Bauer:

Yeah, I think the same. I think when the generation transition happens, there’s so many new people, the old norms get tested. And it’s not that the problems weren’t there. They didn’t exist. They just resurface because the new people question the way you’ve always done it, how it’s happening to make sense and looking for an easier way. Should we really be making these labor schedules on a spreadsheet and printing them off once a week? Or should we have some kind of actual system to manage this and intelligently create it versus somebody spending three hours creating it manually?

04:42 — Anthony Presley:

Yeah, it’s amazing. It’s amazing. The default system I’ve always found in just about any part of any business is Excel or a sticky note. And you have to really be engaged to build the system above and beyond that, you do a lot of work with retailers within thrift, within grocery stores, you know, ignoring labor for just a minute. What, what are you seeing? What are you seeing there? What are they having to compete with? You got Amazon, you got. You got all kinds of craziness going on with the big boys coming into rural markets in a lot of cases. What do you. What are you seeing there?

05:18 — Bobby Bauer:

Obviously, those that have a value proposition that’s not just geographic footprint, being in the right place and always has been, they have to have a reason why customers want to continue to shop with them. The employees need to continue to have a reason to want to work for, as opposed to the Walmart that’s now only 20 minutes away, whereas before they were perhaps the best in town. But there really wasn’t a lot of options for employment, so that was what they chose. And I think many people are struggling with that right now. Is, like you said, the proliferation of the big guys. They are expanding into the rural markets and just being good people isn’t always a reason for them to stay anymore. There’s benefits they can get elsewhere that can meaningfully help their families.

06:14 — Bobby Bauer:

And they’ve lost quite a few employees as a result of that.

06:20 — Anthony Presley:

Yeah, yeah, I would imagine you’ve got that on the employment side. What about on the shopping side? Are you seeing the same kind of thing, like, hey, go choose the right benefit for what you want?

06:30 — Bobby Bauer:

Yeah, I mean, it’s no secret that Walmart competes on price and has done well with that method for a very long time. And so, you know, sales numbers are. Folks struggle to compete, like I said, unless they have some other meaningful benefit they can provide to the shopper. And they’re all learning, I think, better about themselves what that might be, if they haven’t already figured it out.

06:56 — Anthony Presley:

Yeah, it’s. I did a panel last week at the UT Dallas and it was a retail panel. There’s about 300 retailers that showed up. A couple of students who are part of the NRF organization and I had the privilege to lead a panel that happened to be. We did a panel on retailers who were talking about customer success and customer service. And then the very next panel was the one I led, which was all about restaurant customer success. And we had somebody who had at what, 50 or 60 restaurants, he just sold that business and now has several hundred. Then we had a franchisor who has 500 locations and then we have a franchisee who has 900 or 800 locations. So it was a very interesting cross section. And we had this whole debate about employee first or customer first.

07:48 — Anthony Presley:

Like, if you only have a dollar to spend, do you enhance the employee experience or do you enhance the guest experience? But one of the most interesting things that we talked about was that this concept around hospitality and it came out in the retail segment as well. And like, what does hospitality mean now? And there is an entire segment of both the employee and the customer base where to have a great experience is like, do not talk to me, like, do not interact with me. I want to place my online order. I want it to be the least hospitable experience possible, but that is the most hospitable to me. And so, you know, I want to place it online. I want to go make sure, I want to show up and get my food. I don’t want anybody to talk to me.

08:37 — Anthony Presley:

I want to pick up the bag. It needs to be perfect. I’m going to leave an online review probably. And it was kind of interesting. So I had these three CEOs on stage and they were like, that’s been the biggest shock for our business, which is that there’s a segment of the market that is like, don’t talk to me, don’t interact with me. Let me know when it’s there, my size, my whatever. And that’s when I will engage with you. And then, and then don’t talk to me again. Also don’t send me a follow up, don’t ask me for, you know, and it was a very interesting, you know, whether or not that’s 5%, 10%, 15% of the market, but that is definitely a consideration to have to build into your stack of how you’re going to interact with your customers.

09:23 — Anthony Presley:

Are your customers seeing that as well? Like there’s people who, I mean, is that a thing? You’re tailoring your solutions and your mix around is like, hey, how do we automate this away? Or find little places where we can interject our uniqueness into the stack as people don’t want to talk to us.

09:42 — Bobby Bauer:

Yeah, I think that’s true. Everybody’s hospitality means something different to every person. Personalization is certainly a buzzword in the world as a whole right now and how AI might make that simpler or even possible to create at the individual level with technology. And I think it’s interesting how you don’t want to overstep that. There’s a line where folks might want to be left alone, but they also don’t want to think that you know everything about them either. They also don’t want to feel like, you know, Big Brother’s watching over them the second they walk inside the door. And, and now they have your cameras looking over their shoulder.

10:26 — Bobby Bauer:

And though you always turn left at the third aisle, I think there’s a fine line in that personalization where you want to build it in and make it beneficial to the guest or in our case, even to the retailer as well, but not find that sweet spot where you’re not crossing that line.

10:44 — Anthony Presley:

Tell me something Exciting you’re doing at Osprey. What are you doing with Osprey? What’s new? What are your retailers asking about?

10:51 — Bobby Bauer:

Retailers? I think every one of them asks us, where is AI going? What’s next? What can it do? What’s possible? The answer is it really depends on what data you have available and, you know, how committed are you to maintaining it so that what the AI can find and look at is useful to you. And so we spent a lot of time looking at those things and trying to make it easier for our customers to get the data they’re looking for and make it accessible to them and then present it to them in meaningful ways.

11:32 — Anthony Presley:

Has there been any. We’ll call it revelations or. Hey, now that we have this data, we’ve unlocked this new easy button that everybody was waiting on.

11:41 — Bobby Bauer:

I’ll give you an example of something that might go too far across that threshold of where maybe you don’t even want to know about. So, example, we hook it up to loyalty data.

11:51 — Anthony Presley:

Okay.

11:52 — Bobby Bauer:

And this is in a liquor store chain. We’re just, as an example case, we look at who comes in every single day and buys a fifth every single day. The folks that follow that pattern, likely alcoholics.

12:06 — Anthony Presley:

Yeah, yeah.

12:08 — Bobby Bauer:

What do we do with that information? Is that a good thing to know or is that a bad thing to know? And now what? And I think AI will likely present a lot of interesting scenarios like that where, well, now you have the information, what do you do with it?

12:24 — Anthony Presley:

That one’s tricky. That goes back. That took me back a few years when Target got in a little bit of trouble for outing a pregnant teenager. Right. Because they. They could see several things that she had acquired from Target, and she hadn’t told her parents yet, but they. They started sending mom and dad and her very targeted ads for the bids. Yeah.

12:50 — Bobby Bauer:

Yep.

12:50 — Anthony Presley:

Yeah, yeah. That’s a little bit. It’s a little scary, but, I mean, it’s where the world’s going, I guess. Once you put enough of this data together. Let’s see here. What do we think about the future of retail.

13:01 — Bobby Bauer:

As it relates to AI as a whole? Those that continue to serve a purpose, serve a customer, serve a real cause and problem, and not just use it as a buzzword, will be successful, and they’ll be able to do so at three, not three, ten times the speed they used to be able to do it without it. And because of that, I think direction and vision have really become more important than ever, because you can get where you want to go really fast. And if you don’t know where that is, you can get there really fast too. But it might not be very useful to anybody.

13:41 — Anthony Presley:

Yeah, I’m glad you brought that up. There’s a friend of mine that has been talking a lot on LinkedIn lately about their software. They have a loyalty software, sticking with this loyalty thing. And he was very proud of the 400 plus non deterministic offers that each person can get personalized with. And I was like, well, give me an example of that. And the example was, hey, you know, at a, you know, at a retail shop maybe at the bookstore, you get a 10% off a book. Like that might be an, a non deterministic offer, but it also could be that you get the book for free, like that’s a non deterministic offer. Or it might be that you get a thousand dollar shopping spree, that’s a non deterministic offer. And so he was walking me through these 400.

14:30 — Anthony Presley:

Every person getting one of these 400 and I’m like, I don’t know a CMO worth their salt that’s going to go turn on 400 non deterministic, like might offer you some parts of the Brooklyn Bridge, you know, like, you know, I don’t know what this thing is going to kick out, but AI will have analyzed all the data and said, hey, to keep all of your customers coming back for free, give them all 100% off the next time they come in the door. So it seems like just because you can do a thing, I don’t know that it’s the right thing to do to serve all the constituents that you, I mean that might be the best thing for the customer right then.

15:12 — Anthony Presley:

But I guess in a week when they’re out of business, it’s still probably not the best thing for the business or even the customer. I don’t know. World so topsy turvy on this AI stuff. What else are we seeing with AI? Are you guys pursuing any other, you seeing any super advances in how the POS system is working or. I mean obviously you can collect the data and that kind of thing, but is it really helping out how operators operate on the day to day stuff?

15:41 — Bobby Bauer:

Yeah, I think that most people have to be very thoughtful with how they execute upon that. Where is the right place to put it? Does it get presented automatically or is it something that has to be called upon? Because in retail, if you’re just trying to change the price of one item because your cost of bananas went up A couple of pennies. You don’t need AI slowing down that task. You don’t need it to be in the way to analyze that decision for you. You’re just trying to do one thing very quickly. So I think there’s a right way to do those things in a wrong way. And being thoughtful about it is really what. What can help a retailer is giving them the option to bring the AI in and.

16:28 — Bobby Bauer:

Or automatically presenting, if that makes sense, depending on where they are in this various systems.

16:36 — Anthony Presley:

Yeah, there seems to be this maturity curve. I don’t know what you’re seeing with retailers, but it’s very much a maturity curve that hasn’t. I mean, they’ve been teaching that in consulting school since the 40s, I think. But there’s this nice. You’re not getting from A to D. You’ve got to go from A to B and then B to C and then C to D. Like, it just is what it is. You’re not going to grow up and mature your organization overnight. That seems to be true of AI as well. Although it may be. Maybe it can move a little faster. To your point, if it moves real fast, you can get to the wrong place much quicker. Much quicker.

17:13 — Bobby Bauer:

Yeah,.

17:13 — Anthony Presley:

We’ve seen some customers do that. My favorite analogy or example of this was at a National Grocers association meeting not that long ago where a retailer, I won’t name hundreds of locations, billions of dollars in revenue, got up on stage and shared a fun story where, if you didn’t know this, by the way, this year, upcoming year, Valentine’s Day and Super bowl on the same day. And so they were trying to do some planning ahead, do some acquiring of food place, some orders, supply chain, all of that. So they were using their favorite AI tool to go back in time and be like, the last time this happened.

17:56 — Anthony Presley:

And anyway, they put together all these spreadsheets and everything and then got up and presented all the data to the C suite of all the things they needed to do and how much more money they need to spend to be prepared for flowers and chicken wings or whatever the things were. And mid sentence, like, the CEO was like, hey, I don’t think this has ever happened before. Like, I don’t know, we just spent hundreds of hours collating all this data. Like, AI helped us put it all together. No, it’s absolutely happened before. And like, well, no, the league’s added some more games. It’s extended further into February. This has never happened before. No, no. Anyway, ended up ultimately pulling out their AI tool Typing in the chat bot like, hey, are you sure?

18:42 — Anthony Presley:

And like immediately it was like that meme, like, no, you’re right. This has never happened before. We’re sorry we sent you on this goose case. You know, AI without an expert right now seems to be a losing proposition. How are your customers seeing labor? I mean, labor’s. We talked briefly about it, but like, labor seems to be hard to find folks, hard to keep folks. You mentioned manager turnover. They’re either aging out and retiring or they’re not sticking around. You know, we’ve seen some studies in the grocery space that like manager’s tenure has gone from 12 plus years pre Covid to sub 3. Is that kind of. Are you seeing that? Are you. Are your retailers saying that?

19:26 — Bobby Bauer:

Yeah, very similar. I think some independents are better at holding on to them than others because they give them a path forward into the future. That’s not just the same grocery floor manager position for the rest of your life. But in general, it’s harder to hold on to people as a whole. And definitely seeing that across. Yeah, I would say all verticals that we serve.

19:46 — Anthony Presley:

That’s interesting. So same thing in thrift and liquor and some others. Are you seeing any tools that you mentioned giving them a path forward? There’s a lot of change management in that. There’s a lot of like reskilling or upskilling your team. I mean, all of your customers, I assume, are having to figure out how to deal with A.I. Also, there’s not, I mean, 15 years ago there was not, you know, an A.I. Grocery clerk position or whatever. Right. Like, so this is all new to them as well. Are you seeing anybody do anything novel with their approach to that?

20:19 — Bobby Bauer:

I would say, you know, not yet. In general, going back to hospitality and personalization, I think that good leadership, you know, identifies the individual below them that has a vision for something in the future that could be useful to the business. They help support them in that and then give them training opportunities for growth and or responsibility paired with it, so they can test and trial their thoughts and ideas and see what works. And some of them will fund some of that learning, even if it’s just as simple as paying for their subscription and letting them use it a couple hours a week to try and fix a problem. But I wouldn’t say anything particularly novel that we’ve seen.

21:06 — Anthony Presley:

We’ve had. I interviewed a restaurant leader at the National Restaurant association show. I thought he had an interesting system where he said, hey, look, you’re probably not you being a manager in the store or an owner of the store, you’re probably not the hippest AI person that on your team. Somebody who’s on your staff that’s on TikTok or Instagram every day, you know, find them, give them a little spiff, pay them a little extra, have them run that for you, have them train your team. Right? Just find the, to your point, you know who’s on you, under you on the totem pole. And can you actually go figure out who your leaders are that know this and the leader may not look like a regular leader.

21:54 — Anthony Presley:

You’re used to it, maybe a 17 year old hostess that knows how to do this stuff and find them, recruit them, get them to train everybody and start small, right. You don’t have to go real big out of the gates.

22:08 — Bobby Bauer:

What are you seeing that helps folks with retention?

22:14 — Anthony Presley:

Retention right now is such a hard topic. And it’s a hard topic I think because there are more opportunities for what would be typically be a restaurant or a retail worker. And so, you know, prior to Covid, the local watering hole was where you kind of went and got a job, right? Especially for rural Americans. And now you can instead pull out your phone, enroll as an Uber driver or a Amazon delivery driver, a Walmart driver. Right? You can, there’s all these kind of gig workers and you can enroll, get approved the same day, go do your first job and then clock out of the app and get paid.

23:08 — Anthony Presley:

It’s a little crazy and that’s very different than maybe how most retailers operate where you’re going to have to come in, you’re going to have to do two or three interviews, you need to fog a mirror as they say. You need to, you’re going to get an apron or something, you’re going to get trained for weeks possibly you might have some learning management system you’re going to have to go through and mess with. And then once every week, once every two weeks you’re going to get paid. And so you end up in this like I can get this now. And maybe going to work at a local retailer is probably a better long term position. I don’t know what a gig worker like the next tier up is.

23:56 — Anthony Presley:

I don’t think you manage gig workers like you just continue to be a gig worker, whereas at least you might have some ability to climb a career ladder. You might have an ability to go learn some new skills. And so the retention and keeping those employees there really turns into employees, in my opinion, an internal marketing task. And I don’t Think most retailers treat it that way because it is a marketing task. Right? It’s a, hey, we’re teaching you new skills, customer service, overcoming objections, overcoming challenges. What do you mean that cooler is not working and there’s water all over the floor? Like, yeah, that sucks. And this is a task, a challenge. Let’s go fix it. You’re learning critical solving and problem solving and all kinds of things.

24:43 — Anthony Presley:

And so I don’t know, I think that retailers in general do a bad job of explaining all of the things you’re going to learn and the soft skills and the longer term potential which might be with that retailer, it might be somewhere else, but it’s probably not as a gig worker picking up a package and putting it in the back of your car and driving it somewhere, which is fine. I mean, there’s nothing wrong with that. But so I think the retention, they’re having these benefits, same day pay where you could actually copy that same model, get pay. Somebody clock in, they do their shift, they clock out, they get paid before they get to their car. That’s certainly something that we’ve seen. Retirement plans, there’s all kinds of interesting retirement plans for hourly workers now that didn’t exist 15 years ago.

25:32 — Anthony Presley:

So that, you know, same thing with insurance and insurance plans. So I think there’s a lot of benefits that are not outrageously expensive that again need a little internal marketing push to go after those employees so that they know there is a reason to stick around, for lack of a better term.

25:52 — Bobby Bauer:

Sure. You mentioned gig work a while back. You and I discussed how gig work could be coming to a retailer near you and that might be an interesting path forward due to these retention issues and turnover issues and you know, who’s going to stock the shelves today? Is that something that you’ve seen take off? Is that something that retailers you’ve seen are actually taking advantage of?

26:18 — Anthony Presley:

It’s been interesting to watch the adoption or lack thereof. So I think when gig work became these marketplaces, there were a number of them, they went out and raised hundreds of millions of dollars and then went and tried to, you know, it’s hard, right? You have to get retailers or employers to say, yes, I have these jobs and I want to bring someone in. And then on the other side, you have to get these employees or gig workers to register with their skill sets and their hourly rates and you know, are they insured and what happens if they fall and you know, all that kind of stuff. And then you have to get the legal paperwork in the middle so you have to, and then you have to match everybody up. And it turns out you might just like hiring an employee.

27:04 — Anthony Presley:

You might not like every gig worker that comes through or they might not show up and be presentable. And so like, or they may not have the skills. And it turns out that, you know, stocking shelves does require some level of skill which is different than a bartender who is slinging drinks. And then if you end up in, you know, the bartender skill set, then you know, my bar may have different, you know, may call the same old fashioned. They’re still an old fashioned but your old fashioned is smoky and it, you know, gets made a way. And so even though we might hire the same bartender skills, they actually need to be cross trained. And so I think the gig working stuff has turned out to be quite a bit harder to staff.

27:45 — Anthony Presley:

There are a couple, we’ll call them niche marketplaces that you know with gig work coming to you kind of thing. And I think that some of the very large retailers, Kroger has had some success with gig work but most of the mid market I think has been very challenged with gig work. And because of all the reasons, by the time you do all this work it’s like, shouldn’t I have just hired a guy? Like.

28:12 — Bobby Bauer:

Yeah.

28:12 — Anthony Presley:

So I think there you end up in this situation where employers and retailers are going, well hey, this is actually going to be quite complicated. And like anything else, you can’t just like add a person and it just shows up at your place and then like doesn’t actually get trained. You still have to train them to some degree. So, so no, we have not seen the proliferation of gig work beyond what you would expect with delivery,.

28:41 — Bobby Bauer:

Uber,.

28:42 — Anthony Presley:

Uber kinds of things, you know, someone, a driver to you know, take something home for you or whatever. So yeah, that’s what we’ve seen. How about you, have you seen any of your retailers like mass adopt it or even adopt it?

28:53 — Bobby Bauer:

None have to this point. I think the idea intrigues them and they think through some of the same things that you’re talking about. Well, are they going to do it my way when they come in? Where are they coming from? What do they know? How’s that really going to work operationally, I suppose even separating the how do I find them and they find me component. But like once they actually get here, how’s it actually going to work? Because there are a lot more details to manage than meets the eye.

29:21 — Anthony Presley:

I think the retail in general, you know, like where you’ve got like the hallmark employees that are going into Walgreens and are stocking the shelves like, or they do that at Walmart. Like that’s a whole interesting ecosystem that most of the, we’ll call it the mid market and SMB market doesn’t have to deal with. And I think as you start getting into those tiers, things get kind of interesting. But now you’ve got a, you know, a Hallmark employee that’s come into a Walmart to make sure that all of the cases are, you know, and the displays are laid out exactly like Hallmark and Walmart agreed to. And, but it’s kind of a different problem.

30:00 — Bobby Bauer:

They already know what they’re supposed to do when they get there. There’s a spec that they can follow clearly if they don’t know what they’re doing. Yeah,.

30:06 — Anthony Presley:

Yeah,.

30:07 — Bobby Bauer:

That makes sense. You obviously have a lot of experience in labor management, scheduling, that sort of stuff. We haven’t talked about a whole lot of this recently. What, what problems do you see like in multi state operations where they cross these different thresholds and have to deal with schedules differently because there’s different laws? Are those laws changing more rapidly? Is there a lot of, are your customers seeing a lot of challenges in these areas and how do they address them?

30:38 — Anthony Presley:

That’s a good question. I just did a webinar with Grocery Warehouse and we talked about this for probably 15 minutes. It’s not getting easier. I mean, ignoring everybody’s political beliefs. There has never been a year that I know of in my adult life where the government got smaller. And so it continues to grow. There continues to be more, we’ll call it worker rights, employee rights, more states that are getting involved in that. California leads the pack by far, but there are other states, right? You know, New York is one, Illinois is one. Florida interestingly enough, has some interesting laws there. Colorado is not far behind with their de minimis tasks of one minute.

31:32 — Anthony Presley:

So like if you’re in Colorado and you look at your phone and you look at a text message and you can argue that you spent one minute on that task, like the employer needs to pay you for it if they were expecting you to read it. And so like keeping up with that is hard. There’s a lot of those laws. If you’re a multi state retailer, operating in the mall can get very challenging, especially if you have employees that work in multiple states. And so if your employees are doing shift swapping between states, you know, so it really becomes a function of your corporate policies and making sure that you adopt something that’s as standard as possible. So that you’re not having to retrain and confuse people at different times.

32:22 — Anthony Presley:

I mean, if you have a different policy for every state you operate in, it gets very complex very fast. Now, a system like ours might help you with that because we’ve got all that, you know, contained in the settings. But even then, you know, you asked about changing, like every year minimum wage goes up in various states. And so you have to go redo that. And then you quickly find out your new employees are hired in and they maybe are making more money than somebody you hired two years ago because you didn’t keep up with the minimum wage and your raises. And so now you’ve got kind of this weird situation where your older employees are making less money than your new employees. And that can cause all kinds of issues with your culture pretty quickly.

33:06 — Anthony Presley:

So, yeah, I would say there’s a lot going on at any given time and people are having to adapt. We Talked to a 400 store retailer the other day that is building schedules manually. Doesn’t enforce the schedule. This is eight or nine thousand employees. They don’t enforce the schedule. So they’re not enforcing breaks. So they’re just hoping everybody wrote the breaks down properly and that they did the breaks. And the local manager, as we’ve already discussed, who’s probably been there less than three years, knows all the rules and is keeping up with it. And it’s, you know, it’s ultimately going to land them in some compliance hot water, I’m afraid.

33:49 — Bobby Bauer:

What do you find? I mean, I guess selfishly plugging yourself for a moment, like, how does time porch help people with some of those problems or maybe with all of them or which ones do you help with to make some of that a little bit simpler?

34:02 — Anthony Presley:

Yeah, it’s really A. I would go back to that. Change management. Right. You’re not going from A to D without going through B and C. So it’s really about going, hey, we’re at A, we’re at stage A. We don’t enforce the schedule. How do we turn that on? So we enforce the schedule in a compliant way. Time for it to check a box. You know, there’s actually four boxes that are said before the shift, after the shift starts. And there’s before the shift ends and after the shift ends. So there’s four boxes we can set all of up. And then now you’re getting to have a culture conversation. Hey, we’ve never done this before, but now we have this new tool Time Forge.

34:44 — Anthony Presley:

Time Forge is the bad guy or the good guy, depending on how you want to phrase it, helping us with the change in the organization, then the next thing you might do is start enforcing the breaks. Or maybe you don’t enforce the breaks. Maybe you just turn on that. You want to have the reporting around the breaks, see how extensive of a problem you actually have, and then you go turn it on. And again, you’re doing change management. And you do this slowly over some time, let’s call it 60 days. And so every week, you’re implementing one or two changes, and you look up a quarter later. And now all of your stores are compliant. They’re compliant with everything you’re supposed to be doing. The managers don’t have to remember all these esoteric rules.

35:27 — Anthony Presley:

And it turns out that now, you know, if there’s an issue that shows up when the Department of Labor shows up, you go print a report right out of Time Forge with your full audit log, and you hand it to them and give them a sandwich or whatever, and you say, hey, thanks for coming by. We’re compliant. We’re doing what we’re supposed to do, which is a very different scramble than what happened now when the workforce commission shows up and you’ve got to go find all the sticky notes and all the things. And, yeah, maybe Bobby was here 10 minutes late that day. I don’t remember. And, oh, he’s alleging. We keep him late every single time. And now I got to go track that down and give you a camera feed. And it’s way easier. We just try and make everybody’s life easy.

36:08 — Anthony Presley:

Nobody signed up to be a general manager or independent retailer because they wanted to manage their labor. Like, that was not anybody’s. Anybody’s decision was like, you know what? I’m going to sell groceries and retail items because I want to have a large workforce and work with them every day. That’s not how you get into this business.

36:29 — Bobby Bauer:

Sure. I think you said it well. Like, you can’t just skip from A to D. You have to walk the path. So, like, of those that you helped, like, if A is the starting point, like, what does that normally look like? And what does B normally look like in C? And, you know, D is Everything’s nirvana. Yeah. It’s all just managing itself. But, like, the retailers that come to you at A, what types of problems do they normally have that you could help them with? And same for B and C.

36:59 — Anthony Presley:

Great question. And I would tell you that I wish there was a universal answer, but there’s not because everybody is at a different spot. Two kind of extremes of this. We recently worked with a retailer where their A was that they had another system. They had a system that they had been sold. Their sales guy for the competitive product did a great job of selling it. And it turned out it didn’t do all the things that they wanted it to do or that they thought it did. And so after a couple years with that solution, they decided to pivot. But they were used to, or at least the expectation that they had was that it had automated scheduling, that it had automated messaging when people were in overtime or they weren’t in overtime, or they didn’t show up for work. And so.

37:44 — Anthony Presley:

So when we turn those things on for them, they were like, oh, well, that’s what were expecting two years ago. And so they were at a very advanced A. They might have been at a C or a D already, or at least their expectations of it were. But we helped them like they were looking for automated scheduling. And with the old system, they were spending two and a half hours per department building a schedule. And we turned that on its head. Now they do an entire store with 100 plus employees in about 15 or 20 minutes. And so that’s awesome. I have another retailer that came to us, and he’s third generation. You’ve heard this story before, Third generation owner. He is building the schedule just like his dad showed him how. His mom still runs the books for the business.

38:32 — Anthony Presley:

They’ve got 30 employees. They don’t have a lot of turnover, but they have a little bit in the front end. And I said, well, how are you doing this? And he’s like, well, I write the schedule, it’s in Excel. I print it out, it goes on the wall. And then if somebody stays late or comes in early, they just scratch it out and they write in the Times and they put their little initials by it. And then at the end of the week, mom takes the schedule down and she goes over and she types in and totals up everybody’s hours and plugs them in, and that’s how everybody gets paid. And I was like, what? How are you handling breaks? And what happens if someone disagrees with the time adjustment? What happens if they forgot it?

39:13 — Anthony Presley:

You know, have you ever had a sideways split with an employee where they leave and come back and go, hey, they forgot to pay me these hours? And it’s never happened to him because he’s been very lucky is what. What the story is. But, you know, they’re essentially paying employees off the schedule. So if you’re two or three minutes late or two or three minutes early, they’re hoping it all just works out in the wash. And, you know, they just need to have one bad experience and it’s going to cost them thousands of dollars to fix that problem. We actually offered to help them for. Give them some consulting as to why this maybe wasn’t the best way to do this anymore.

39:51 — Anthony Presley:

But, yeah, I mean, their A is a very different A that they started at, and so their B is going to be a different place than we would normally go as well.

39:58 — Bobby Bauer:

You talked about changing the schedule, you know, creation process from being, you know, two and a half hours per department down to 20 minutes. Not to, you know, give away your trade secrets, but how are you able to make it that simple for folks and presumably make it accurate to the need to. Where folks aren’t staying late every single night longer than their shift, where the shift is actually representative of the need of the business?

40:24 — Anthony Presley:

Yeah, no, it’s a. I would say that one also requires a little bit of nuance. Right. Different types of retailers need. And even in a department, you need different types of labor. And so grocery is probably the most complex labor model that anybody can put together. So how we ended up starting in grocery first was just an unlucky pick of the draw, I think. But it’s given us a lot of scars to go into other industries with that kind of functionality. But if you think about, like the front end of a grocery store where you have cashiers that are ringing up items and you have like, how many items per minute can they ring up? Right? There’s these metrics that you can pull out of the point of sale, and then you can predict that information.

41:10 — Anthony Presley:

You can say, how many items are they going to sell? How many people do we need to have? You kind of work your way backwards through the math. You can get into some fancy. We’ll call them AI algorithms. Now, they could be AI, depending on how you do it. And you’re predicting that. And then you look at other departments maybe where they have fresh food, they’re doing prepared foods, they’re stocking. You may have other metrics. Some of those metrics may be leading or lagging indicators. Like you need to cook the food two hours before it’s actually ready to go. You may need to bake cookies. And so we have ways to consume all of that data and build a labor model. And then we forecast out that model. We also, for more, we’ll call them simple departments.

41:57 — Anthony Presley:

You might have a Vitamin department or a HBC department. And you might bring. That department may just have one person working. And maybe it’s just a, you know, a rotating schedule, who works Monday, who works Tuesday. And so we have these things called templates that we bring in. And so you can have templates, plus you can have, we’ll call them demand forecasts for when you have a spike or when you have a lull. And then you have all the state rules, right? We talked about compliance. It might not be legal to bring somebody in for one hour and. Or you might not want to. You piss off your employees if you bring them in for an hour. So maybe you want a shift that’s at least four hours long. And so that’s kind of our secret sauce.

42:38 — Anthony Presley:

Our secret sauce is going through and building the software that puts all these layers in and can do it fairly quickly. And then it looks at what you’ve done historically and puts all that together into one smart schedule and then says, here you go. Are you good with this? And then managers can adjust or not adjust based on their permissions. Some brands that we have won’t let the managers adjust. Like Time Forge is the rule. And if Time Forge is wrong, we’ll take it up with Time Forge. But otherwise, if the manager’s in there messing around and changing times, then you know, they’re going to blow their budget.

43:12 — Bobby Bauer:

Very interesting. I guess that leads me to the next question. Like a lot of people have always classified, you know, your labor should be this percentage of sales, whether it be for the entire store or a particular department. With all this complexity, do you find that holds true? Does it hold true? Like, you know, you get down to a certain amount of revenue, as an example, and you still have to have somebody there to sell the things or ring up the things, regardless of what those sales numbers are. So have you found anything interesting as it relates to that old adage,.

43:44 — Anthony Presley:

You know, and you work in a number of other not grocery industries, right? And so one of my favorite examples is like pool stores, right? They’re doing pool repairs, they’re doing. They’re selling parts. Like they might be open for four or five hours and sell nothing. And then someone comes in and buys a pump and a vacuum and like $3,800 gets rung up in four minutes, right? And so it’s kind of, you know, every industry is a little bit different. To staff those first four or five hours, you still needed a labor body. And if you look at it as a percentage, it was 0% for hours. And then suddenly it was like 1% or 2%. Right? Like, and so different industries have different benchmarks.

44:35 — Anthony Presley:

Labor percentage, I would say, is kind of the baseline if you’re going to start with a labor percentage, because it’s not really a productivity metric. And I like to do labor in a productivity metric way. And so in restaurants, we like to look at entree sold or tickets served, groceries, somewhat similar items or transactions. Same kind of thing in pool stores or thrift or whatever. Like it needs to be a productive metric. But to your point, there’s always a base level like that you have to have a body there or your sales will always be zero. And so you know, somebody’s got to turn on the lights and open the store to begin with. And so not anything universal. And again, you can get very complex. I’ve got a friend that does labor modeling for brands like Nike and Columbia and their retail outlets.

45:31 — Anthony Presley:

And they’re tracking per item. Like it takes longer to deal with a parka that has to be sized a certain way and it’s got to be custom ordered. And the ordering process is hard and the colors and all that are hard. And so it takes longer to service that than it does. Here’s a pair of shorts. And so like, you can get into these very complex labor models. But generally speaking, they’re all different for every brand I have ever worked with. Sales for labor hour, I think is a standard generally and a labor percentage. And I don’t love either of them because they’re not productive measures.

46:11 — Bobby Bauer:

Yeah, I think that makes a lot of sense. You know, staff for what should be possible and expect your labor to perform. And if they’re not, you can deal with the performance issue versus having a bunch of bodies around doing nothing or half of what they could be. I think that makes a lot of sense.

46:33 — Anthony Presley:

It’s also interesting, since we’re talking about it, that this is the one industry that I know of. Retail and restaurants both fall into this deal where when times are tight, when the economy is uncertain, they will go and cut essentially their sales staff. Right? There is no other industry that I know of that’s like, you know what? Times are tight, we need sales up. Let’s cut our sales staff. Doesn’t happen, right? It doesn’t happen in software, it doesn’t happen in government contracting. There’s not a roofing company on the planet that’s like, hey, sales are down. Let’s cut everybody that goes around and does door knocking on like that doesn’t happen. They increase them. Right. But in restaurants and retail, it’s, you know, hey, this is a variable cost. I can control it. I can.

47:25 — Anthony Presley:

And I think that’s really what the issue is they can control it. So they’ll shave down the variable cost. Even though really, to a large degree what they need to do is make those sales, as you just said, more productive, get them out there focused on those soft skills, get them out there trained so that they can help elevate the sales at the store rather than be a bump on a log and not actually doing any sales for them. But it’s amazing to me how many leaders I talk to that are like, yeah, we cut it. We, you know, we cut our variable hours. Like that’s your salespeople.

47:59 — Bobby Bauer:

Yeah. I’d be curious what your experience is on that with, you know, larger operations versus, you know, a smaller independent. Kind of going back to the beginning of the conversation with this changing of the guard and baby boomers retiring in general, our customers, what I’ve seen is you might have a first or second generation American running this independent store and they value their own time very differently than the next generation. And, and so yeah, they might cut their sales staff or their labor, but they fill it with themselves as opposed to not filling it at all. They just say, well, I’ll work more like. And if it’s in a startup situation, I think we all see that. But somebody, you know, the previous generation would do that for their entire career and not think anything of it.

48:46 — Bobby Bauer:

Sorry, honey, I’m not coming home until we close tonight. And that was the decision that was made over and over again. And the next generation doesn’t really want to make that same choice. I don’t. It’s not. At least that’s what I see. And I’m curious. Yeah. When you say those cuts happen, do you see that in small operations as well as the larger chains, or what do you see with that?

49:11 — Anthony Presley:

I see that across size, it doesn’t matter if they’re independent, if they are, if they’re VC backed or PE backed, like it seems to be that’s kind of a universal thing, that they’re going to just trim back the hourly. Now in the best cases, they reallocate them to your point, like they go, okay, look, we have two floor managers. They should be able to and should in theory be even better at this than some of our hourly staff. And so we’re going to put them front and center instead. And I think when that’s done with tact and thought rather than an after effect of the decision. I think that makes a lot of sense, but sometimes it’s just a, hey, whoa, what’s going on with this labor? Let’s cut these hours. And then you’re.

50:01 — Anthony Presley:

As you and I have discussed about, nobody ever cuts their way to a growing business. It just doesn’t happen. Right? You, you might cut your way to profitability for a little while, but you’re not going to cut your way to a growing business.

50:14 — Bobby Bauer:

That makes sense what problems you can solve for folks and make sure that we can kind of present that to them in an easy to digest way. I think we’ve done some of that here already. Time clock and payroll. You do payroll now, I think you said. Right,.

50:29 — Anthony Presley:

We do payroll now.

50:30 — Bobby Bauer:

How’s that going?

50:31 — Anthony Presley:

Great. Because I’m not. Because I’m not doing the payroll. No, it’s great. Dirty secret of payroll is that there’s probably like 10 total payroll engines on the planet, right? At least that operate in North America. Most of the payroll systems here have legacy of 10, 20, 30 years. We did not want to be in the payroll servicing business because there’s, I guess the way I would say it is this folks like seven shifts and folks that embed other people’s payroll are embedding a product often called a product called check and cheque is kind of like the stripe of payroll. Like embed it’s easy, it works, it’s great. And if you have a small customer base or small number of employees, it’s awesome.

51:26 — Anthony Presley:

But where things get sideways with payroll, as you know, as a business owner is never in the hey, I just ran a check. Like perfect, Anybody can do that. That’s not that hard. The hard part is that, oh, I messed up, I overpaid them now, or oh, I forgot their retirement account or I forgot to put in the health insurance. And oh, the health insurance changed this year. Our tax rate changed, but I didn’t update it before I ran. And so now we’re going to be short and the Department of Labor wants to have a conversation about this thing, this garnishment or this IRS tax withhold.

52:05 — Anthony Presley:

All those things take up in the case of if you don’t choose the right payroll provider, then the customer ends up on the phone doing all of these things because the payroll provider is really just providing the happy path, best case scenario for a paycheck. And we didn’t want that for our customers, so we wanted a real payroll service. Bureau that would deal with all the weird problems and would have a phone call with the Georgia Department of Labor or the Colorado Department of Labor and go, hey, where are your taxes? Oh, we’re one day late. Can we get this fee waived or whatever? And so we have brought in a co branded payroll solution that can work with all of those crazy scenarios.

52:55 — Anthony Presley:

And when you get a letter and you have to deal with the IRS or whatever, that they’ll be there with you. So that’s awesome. And it’s going great. What else do we, you want to cover anything else?

53:06 — Bobby Bauer:

No, I just realized I’ve been watching the clock at the top here, but I realize we’ve gone past our time, so I don’t want to keep you if you get some. Russell, you got a vo so,.

53:15 — Anthony Presley:

Yeah, awesome.