Store labor is the #1 controllable expense for retail businesses, with costs rising every year. One way to help reduce labor expenses is to optimize your labor. If you operate a grocery business, your largest and costliest department is usually your front end, which includes all your cashiers and baggers. Optimizing your cashier labor has many benefits, such as shorter lines, better service, and cost savings. So let’s dive in and look at 5 easy steps to optimize store labor.
Step 1 to Optimize Store Labor: Examine past schedules
Before you start crunching numbers, it’s important to sit down for a moment and think about your schedules thus far. Here are some questions to ask yourself:
- How many times last week did you or your managers get called to ring or bag? What times of day and on what day of the week did this happen the most?
- How many times last week did you send cashiers home early to cut labor? What times of day and on what days of the week does that happen the most?
As you probably guessed, the first set of questions is meant to help you identify periods of understaffing. You needed more cashiers to help keep lines at the lanes short. Likewise, the second set of questions is meant to help you identify overstaffing. Go back to your schedules, attendance, and sales for these days and jot down some notes. For your busiest and slowest hours, record: a) sales for each hour, b) how many cashiers were scheduled, c) how many cashiers actually worked.
Tip: Try not to include your first hour or two of opening/closing the store. Most likely, you’ve got your cashiers tackling extra duties outside of ringing during these hours, so any metrics you calculate would be skewed by opening/closing duties.
Step 2: Convert your examples into some data
Now that we’ve got a few good examples of being overstaffed and understaffed, let’s do some math. For each of your examples, let’s divide your sales for that hour by the number of cashiers you had working.
For example, if you made $3,000 in sales and had 4 cashiers, you’d covert that to $3,000 in sales / 4 labor hours = 750. This number is called your “SPLH,” or sales per labor hour. SPLH is one metric used to gauge efficiency and can seriously simplify scheduling. (For more info about this metric, check out our post about the sales per labor hour formula. You might also hear it referred to as sales per man hour.) We’re going to try to find the ideal SPLH for your store, which you can use as a reference when building your schedules.
Store Labor when “Too High”
Let’s go back to the notes you took during Step 1. For each of the times you were understaffed on cashiers, how much did you sell that hour? How many cashiers were on the clock? Take those sales and divide by the number of scheduled cashiers to get your “too high” SPLH number. It’s too high because your cashiers were unable to keep up with the amount of sales. You needed more staff on hand to keep customers happy and make the most of the sales demand.
For an example, let’s use the above and say that we were understaffed at an SPLH of 750.
Store Labor when “Too Low”
Next, for each of the times you sent cashiers home, what were your sales for that hour? How many cashiers were supposed to be on the clock? The calculation is exactly the same: sales / labor hours = SPLH. Except this time, the numbers will serve as your “too low” SPLH. It’s too low because your cashiers were able to not only keep up with demand but had ample time left over. In other words, you were overstaffed and likely spent more on labor than you needed to.
Let’s use an example of $1,000 in sales and 4 cashiers for our “too low” number. Meaning, we were overstaffed at an SPLH of 250.
Step 3 to Optimize Store Labor: Get an initial SPLH target
Now that we have a “too low” and a “too high” SPLH, if we average them together, we can get a rough starting point. In our example, that’d be (250 + 750)/2 = 500. That’s our SPLH target.
With this number, we can pick a particular day of week for our scheduling and use our target SPLH as our guide to build the day’s shifts. To do this, take your total estimated sales for the day and divide it by your SPLH target. That will give you the number of labor hours you should schedule for the whole day.
For our example, we’ll use $14,000 as our sales estimate. That means we should plan on using 14,000/500 = 28 cashier hours for the day. For simple 8-hour shifts, that could be a full opening, mid-day, and closer cashier, with a 4-hour swing shift during the afternoon rush.
Step 4: Repeat for the whole week
Now that you know how to calculate your target SPLH and use it to distribute shifts across the workday, you’ll want to do this for every day of the week you need to schedule. To make it easier, keep your normal schedules in mind while building this new schedule. You don’t want to build it in a vacuum.
For example, if you know you need 40 hours of cashiers on Sunday, but the calculation only provided 32, that might be a good indicator that the SPLH target is a bit too high and needs to be reduced.
Step 5 to Optimize Store Labor: Review the week afterwards
After you try out your new schedule, you should take some time to review how well it did. Did it help you optimize your store labor? Was your coverage better on some days and worse on others? Did it reduce your amount of overstaffing and understaffing on the days/times that were most troublesome before? Since you’re working with hour-long chunks of time, you may need to do a little tweaking to get your numbers just where they need to be. That’s normal and to be expected when you’re doing things by hand.
With these steps, we covered a very basic scenario, but you can actually get even more granular. With a sales integration into TimeForge, you can take those same SPLH calculations and dive down to 15-minute intervals of your workdays, making sure that your 12:30 lunch rush is properly handled and that you aren’t ringing for another hour. TimeForge also lets you take your data even further by forecasting your sales, which will provide you with extremely accurate estimates. You can enter sales thresholds, enforce your sales to labor ratios, and view your labor metrics and sales analytics from anywhere using our Manager mobile app.
