How to Overcome Overstaffing and Understaffing in Retail

by Katie Sawyer, 6 minutes read
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This is a guest blog from Dor, the world’s first battery-operated thermal-sensing people counter. You can optimize your staff scheduling based on your traffic data with Dor. Learn more.

Just as businesses need to optimize their inventory levels, they also need to strike the right balance when it comes to staffing their stores, avoiding having too many or too few employees on the sales floor at any given time.

Here, we’ve put together some of the best practices small and mid-size businesses (SMBs) can use to find that sweet spot when it comes to staff optimization.

Understand the specific issues caused by overstaffing and understaffing

As the name suggests, overstaffing is when you have too many employees in your store at any given time. This can result in several problems for your business, such as:

Increased overhead costs. From a store manager’s perspective, this is by far the most critical drawback to overstaffing, as they’ll still have to pay employee wages even when the retailer doesn’t make a sale. If allowed to go on for too long, overstaffing can lead to lowered profitability—and even, in some cases, bankruptcy—for your business.

Congestion. Having too many employees roaming around the store may be distracting or overwhelming for your customers.

Disengagement. When you’re overstaffed, you also run the risk of employees feeling bored or disengaged from the job because they have too few tasks to accomplish.

By contrast, understaffing is having too few employees on hand, which comes with its own host of issues like:

Customer dissatisfaction. One of the greatest assets brick-and-mortar stores have over digital shopping is the element of customer service. If your customers can’t find enough people to assist them while in your store, it’s likely that they’ll leave and seek out your competition. Not only that, but the negative word-of-mouth generated by these unhappy shoppers may lead you to lose out on new customers, as well.

Employee burnout. Understaffing doesn’t just have negative consequences for your customers—it also affects your employees’ productivity and stress levels, which ultimately impacts the quality of customer service they’re able to deliver. Disgruntled, overworked employees lead to high turnover rates, which ultimately leaves store owners and managers in a vicious cycle of constantly trying to find new employees.

Curtailed business growth. Even the most successful retailer cannot expand its operations if there are too few employees to accomplish daily tasks, let alone take on new ones.

So once you know the problems associated with both overstaffing and understaffing, how can you prevent that from happening?

Prioritize health and safety

Depending on which state or even country your retail store is located in, you may still be facing local requirements to combat the spread of COVID-19, such as masks, social distancing, and capacity limits.

For retailers, such restrictions may mean that only a set number of shoppers are allowed to be in your store at any given time — which, in turn, will affect the number of employees you need to have to assist them.

Knowing this information beforehand is crucial if you want to achieve staff optimization while protecting the health and safety of both your employees and customers.

Know the specifics of your store

Not all retailers are created equal, and the “right” number of employees for your store will depend on a variety of factors. Here are just a few examples.

The type of store you run. Are you a seasonal retailer or one that gets customers year-round? This is a critical question to ask yourself if you want to achieve staff optimization. After all, a Halloween shop will have a much more concentrated influx of customers during a few months out of the year, as compared to a fashion boutique that changes its inventory seasonally.

The number of stores you run. A common mistake made by retailers with multiple stores is to hire the same number of employees across all locations without taking into consideration the customer trends of each store. This often results in certain stores being overstaffed while others are desperately scrambling to serve their customers. If you find that this is the case for your retailer, you may consider reallocating employees to other locations on an as-needed basis.

The cost of the items you sell. Do you sell big-ticket items like furniture or electronics? If so, your customers may need much more hands-on assistance than they would at a dollar store, for instance. This need for dedicated guidance from your staff will inevitably affect the number of employees you need to have in store at any given time.

How close your biggest competitor is to your store’s location. This is another important—yet often overlooked—question to ask yourself when it comes to determining optimal staffing levels. If your competitor is located just down the road, your shoppers may be tempted to go there if they see long lines of people in your store waiting to make a purchase.

Pay attention to historical data — but not too much

If you’re a retailer that’s been around for a few years, it makes perfect sense that you’d want to look to years past to see if you can spot customer shopping trends. For instance, do you tend to get more shoppers in the summer or during Christmas time? Knowing that information will help you determine the number of employees you need during specific days, weeks, or even seasons.

That said, do keep in mind that shoppers’ habits change over time. After all, people across the globe spent most of 2020 indoors, relying on online shopping to meet their needs. Depending on the type of retailer you operate, most of your customers might have found this a more convenient option than in-store shopping, which may mean you’ll need fewer employees on the sales floor than you did in previous seasons.

On the other hand, you may also find that there’s a greater influx of customers than in previous years, as shoppers grew tired of being cooped up all the time and want to experience in-store shopping again. Your best bet here is to hope for the best but prepare for the worst.

Have a staff scheduling system in place

One of the best ways to combat both overstaffing and understaffing in your store is to employ staff scheduling software that’s easily accessible by both your employees and your store managers.

These scheduling systems often allow employees to trade shifts with one another or request time off for various reasons such as sick days or vacations. To avoid understaffing, you can set the minimum number of employees needed to be in store on any given day, then let the system do the work for you by preventing too many employees from taking time off at once.

Train your employees well

As most experienced retailers already know, it’s better to have five well-trained employees than a dozen people wandering around your store aimlessly.

By employing a recruitment strategy that prioritizes quality over quantity, you can cut down on overhead costs while delivering top-notch customer service. After recruitment, you also want to implement a well-designed staff training program that lets your employees know precisely which tasks they will be responsible for completing, as well as setting performance standards for each employee.

Consider hiring part-time or temporary staff

Every business has its peaks and valleys, but if you find that you are chronically understaffed during certain days, weeks, or even months, you may consider hiring part-time or temporary employees to take the burden off your full-time staff.

Retailers with multiple stores may even find it useful to work with staffing agencies to meet their needs during these peak periods.

Keep an open line of communication

Your employees are one of the most important assets you have in combating both overstaffing and understaffing. After all, who better to inform you of staffing problems than the people who do the work themselves?

By maintaining an open line of communication within your store, you can ensure that you detect concerns before they grow into full-blown problems. If you find that your employees are reluctant to share such information, you can even give them the option to submit their concerns anonymously.

Pay close attention to foot traffic data

Every business has its rush hours and downtimes, and one of the best ways to determine specifically when those are is to use data pertaining to the number of people who come into your store at any given time. Although store traffic data is often used to measure conversion rate, a less-obvious benefit to having reliable foot traffic data is that it can help you optimize your staff scheduling.

One of the best ways to obtain accurate foot traffic data that can easily be integrated into your point-of-sale (POS) system is using a thermal-sensing, battery-operated people counter like Dor. And with the right tool, you can ditch any privacy concerns associated with video tracking solutions

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