If you’ve ever worked the shop floor, you’ll know the pain of being understaffed. Long queues forming, frustrated customers. But its effect goes way beyond stressed-out sales assistants. Company profits can feel the impact too.
Sometimes understaffing is a deliberate cost-cutting measure. Other times, it's due to a lack of anticipation around demand. Either way, it's a serious issue for retailers who want to drive productivity.
In this article, we’ll take a closer look at:
- The problems caused by understaffing
- What measures you can take to address it
Why is being short-staffed bad for business?
Let's look at three repercussions that understaffing can have on your company's performance.
Productivity and profits suffer
Understaffing will lose your business money in the long term. Now, that may strike you as counterintuitive. Payroll accounts for a big portion of operating budgets, so isn't reducing it is going to positively impact year-end results?
Quite the opposite. Study after study has shown retail stores leaving money on table due to inadequate staffing levels — sometimes as much as 14% of potential sales. Across national and international chains that quickly adds up.
So why does it keep happening? Well, it’s simply easier to understand short term gains — in this case, savings on weekly payroll — than long-term, more complex losses.
We’ll give MIT visiting professor Rogelio Oliva the final word on this. His study on understaffing in U.S. retailers found that even a slight increase in employee numbers could trigger an uptick in sales. He concluded, “Stores should staff to maximise sales and profits, not to minimise costs”.
Morale takes a nosedive
We all have the occasional bad day at work. But lean staffing levels can make them the norm.
In a 2019 survey, U.S. retail workers called out understaffing as their “biggest frustration” — above salaries or holiday time. In the UK, 47% of retail workers felt understaffed over the festive period.
How does this translate to the business level?
- Staff are more likely to make mistakes
- Be snippy with customers or too rushed to serve them
- Become stressed and burnt-out, resulting in more absenteeism and a high turnover rate
In that same 2019 survey, 80% of respondents said that their job satisfaction would improve with better managed staffing levels. It’s fair to say that addressing these concerns is a real step in the right direction.
Your brand loses its luster
Joan Jett once sang, “I don’t give a damn about my bad reputation”. Joan obviously didn’t work in retail.
Long waiting times and poor customer service damage trust in a retailer’s brand. Not only through word of mouth, but also online, with negative reviews on sites like Trustpilot or Facebook. And a whopping 67% of consumers won’t make a purchase from a company with 1–3 bad online reviews.
Speaking of the web, what’s one advantage physical stores have over online ones? Great face-to-face customer service. It’s a foundational value for most retailers. Take that away and you’re giving people one more reason to stay home.
Dealing with retail understaffing problems
So what's the solution? Here's two approaches to take.
Look ahead with data
Time machines are hard to come by. This makes planning future shifts a tricky balancing act. Overestimate customer demand, and you’re left with staff standing around doing nothing. Go too far the other way, and suddenly you’re struggling to cope.
Decision-making built on data helps get rid of the guesswork. With a workforce management (WFM) solution like tamigo, retailers have a wealth of numbers and KPIs at their fingertips, including:
- Historic labour costs and sales
- Expected wage percentages
- Automated forecasting tools
This data is available to people throughout the business, from store managers to the Chief Financial Officer. And it’s easy to integrate with other systems, such as payroll. It’s planning ahead, minus the guesswork.
Simplify your communication
Schedules in retail businesses tend to fluctuate. A lot. Your workforce is split between full and part-timers, evening workers and weekend assistants. And there’s always plenty of shifts being swapped.
Keeping track of this is tricky. On top of that, you’ve got to keep everyone informed of their hours in this ever-evolving schedule. Otherwise, you may be faced with a short-staffed shop floor.
Workforce management solutions take away the confusion.
The latest schedule is always viewable in the app, for both managers and employees. And whenever changes are made, workers get an instant notification.
Lakrids by Bülow, one of Denmark’s most recognisable confectionary brands, began using tamigo in 2012. It replaced their old system of scheduling staff via emails (which often went unanswered).
When you only have young people employed, it is a huge plus that communication about the schedule and shift exchange takes place via text message on tamigo's user-friendly app.
Anita Møllebro, Retail Design Manager, Lakrids by Johan Bülow
Want to learn more about how apps fit into the workforce management equation? Read our article on shift planning during the holidays.
That about wraps things up. Thinking that tamigo could be a fit for your retail business? There's no easier way to find out than by booking a free demo. It's a completely free video call with one of our specialists, who have years of experience working alongside retailers.
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