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24th January 2020
Retail always feels tough. There can surely never have been a tougher time for retail as we endure a perfect storm of change, uncertainty, cost challenges and lack of consumer confidence.
If that alone isn’t enough reason to look hard at your operating model and productivity; what are the reasons your business will benefit from a hard look at productivity?
1. The pace of change in customer behaviour and customer experience expectations has never been higher. The retailers that thrive are the ones that ensure their operating model is relevant and engaging for customers. Reviewing productivity is a great way to create a fact base that helps you know if your operating model is in good shape or needs a change. Productivity data can diagnose the challenges your organisation should focus on and where the opportunities to grow sales lie.
2. Margins are under pressure as customers expect meaningful reductions throughout the year. Remember when sales were January and July? Those days are long gone as brands entice customers to spend with reductions and huge discounts year-round. Margin pressure and the need to invest in price reductions means every penny counts for other spend lines. A productivity review identifies opportunities to reduce your cost base without having a negative impact on the service and operational activities that mean most to your customers.
3. Productivity reviews can measure what proportion of time you spend on the things that differentiate your brand and drive value for your business. Do you know what proportion of colleague time and salary budget goes on the things that make your business stand out and deliver your customer experience promises?
4. A good productivity review will identify waste in your business, and that matters because they are usually the quick win areas to reduce your cost base. Waste can be wasted effort/ time and other costs such as consumables, energy and more. At ReThink we typically identify circa 5% of operating costs that can be reduced.
5. Efficiency reviews create a set of data on your business that can be benchmarked against your sector. Want to know how you stack up versus your peers on the time you spend on tasks and processes and the pace your teamwork at? A productivity review is the answer.
With the ongoing change in the retail sector, don’t just plan to look at productivity in 2020. Start a habit of ongoing productivity review to keep your operation in tip-top shape all year, every year.