Retail Workforce Sizing Strategy for Enhancing Service Delivery and Store Performance

Abstract

The retail workforce is a strategic lever of the retailer for improving sales growth, market share, and profitability. With optimal retail workforce sizing and structure, customers would get prompt sales assistance and service, shelves should be replenished in a timely manner, store employees should be neither idle nor overstretched, and compensation costs should be managed effectively. Undersizing may hurt retailers in the long run as it affects merchandising capability and customer services, which ultimately hurt store sales and profits. Retail workforce optimization keeps store employees happy, improves customer service, and reduces opportunity costs of lost sales. The research provides various frameworks that outline the impact of undersizing in retail stores on sales and profitability and provides a methodology to determine the optimal workforce size. The research also provides an illustration with various scenarios to investigate whether a retail store is understaffed and calculates the financial impact of undersizing on revenue and profitability.