Retail Forecasting Best Practices: Staffing to Demand in the New Normal

After being closed due to COVID-19, retail storefronts are starting to reopen in many areas, but it’s hardly business as usual. Retailers are juggling many variables — state, county, and corporate guidelines, flexible fulfillment models, expanded roles and tasks, and heightened customer expectations for cleanliness and safety — all of which make it challenging to forecast demand and align staffing accordingly. While the industry finds itself in new, uncharted territory, that doesn’t mean you’re flying completely blind. 

Kronos has been working closely with retail customers as they prepare to welcome shoppers back into their brick-and-mortar stores. Based on this collaboration, I’d like to share some best-practice recommendations to help your organization address forecasting and staffing challenges during your phased reopening.

1. Let customer service be your guide

At least initially, maximum occupancy restrictions set by state and local authorities will dictate how many shoppers are allowed in your stores at any given time. In some cases, retailers are issuing their own occupancy directives that are below government-mandated limits. Early feedback from retailers indicates that traffic levels are fairly comparable to last year (LY). Therefore, you could use LY traffic numbers as a baseline for anticipating how many potential shoppers to expect — taking into account maximum occupancy figures. Higher volume/traffic stores may feel the pinch, especially on the weekends, as traffic restrictions limit the number of people who can shop at once. 

It appears that customers are not only eager to visit stores, but they still expect a high level of service when they shop in person. Even with social distancing and PPE guidelines in effect, consumers are seeking product recommendations and actively engaging with sales associates as part of the in-store shopping experience. Some retailers are using ideal customer to staff ratios that result in the best KPIs, such as Units per Transaction, Average Dollar Sale, and Conversion Rate, and modeling those against the directed capacity guidelines to better ensure a great customer experience. Until a more fact-based business trend can be determined after re-opening, I recommend erring on the side of overstaffing to ensure high service levels as you welcome back shoppers. 

2.    Take a close look at minimum staffing levels

Your minimum staffing may need to be flexed up compared to pre-COVID levels because your store will operate differently — at least for a while. Based on corporate guidance and increased sanitation measures, you may need to staff roles that were not needed before the pandemic. For example, your post-COVID minimum staff might include a manager, a cashier, a fitting room associate, and a greeter to control occupancy, hand out masks, or offer hand sanitizer at the store entrance. In addition, you’re likely to see continued demand for alternate fulfillment methods such as curbside pickup, BOPIS, and ship from store. Depending on order volume, you may need to staff a dedicated team member to handle these fulfillment tasks.  

In the new normal, you need to rethink not only the tasks that needed to be performed, but how long it will take to complete them and adjust labor standards accordingly. Consider a simple point-of-sale transaction, which may have taken two minutes on average to complete in pre-COVID times. As stores reopen, transaction time will need to take into account additional sanitation procedures such as wiping down the pin pad, touch screen, and counter, adding as much as thirty seconds to the task. You’ll need to factor adjusted labor standards like these into staffing models to ensure a satisfying and efficient shopping experience. 

3.    Use historical data as a baseline and factor in unique volume drivers

While you may not have apples-to-apples data you can leverage to forecast demand in these unprecedented times, you don’t have to resort to guesswork either. Chances are you have at least one to two years of historical volume-driver data from your point-of-sale system that can be used as a baseline for forecasting. Then, once you’ve reopened, you can temporarily leverage your Kronos® system’s exponential smoothing algorithm to get a more fine-tuned forecast using volume actuals recorded in the first couple of weeks. 

After an extended shutdown, you may be sitting on a lot of excess or out-of-season inventory that you’ll be selling at a deep discount to make room for new merchandise. If this is the case, you’ll want to take clearance sales into account as you do your forecasting. With items being sold at a lower ticket value, you may require more labor to produce the same average dollar sale. For instance, you’ll need to staff additional team members to replenish stock and re-face the store for visual standards as more product is sold at higher rates. 

Don’t forget to factor returns into your volume forecast as well. Many stores that closed brick-and-mortar locations have extended their return policy windows. Plus, many customers have been waiting to return online purchases in reopened stores to avoid shipping hassles. All of this could impact the volume of product being returned. Given that a return transaction could take 25%-50% longer to complete than a sales transaction, you may need to add more staff to maintain service levels. If you’re using Return Transactions/Units as a volume driver, exponential smoothing can help you forecast with actuals after you’ve been open for a few weeks.  

4.    Be as proactive as possible — even in unprecedented times

As you reopen stores, you need to stay flexible and adjust to the new normal using emerging and historical forecasting data in conjunction with corporate guidance. However, there are steps you can take up front to stay agile, simplify staffing adjustments, and deliver a consistently great customer experience. 

• Make sure the employee data in your HR system is up to date so managers can easily reach team members to cover call-outs or help out during peak periods. 
• Consider creating Genies or Dataviews to give managers at-a-glance access to employee contact information. 
• Use mobile technology to post and fill open shifts quickly and conveniently in anticipation of spikes in demand.

At Kronos, we’re here to help you navigate these uncertain times with innovative workforce strategies and technology solutions. Feel free to reach out to your Kronos Sales Representative or Customer Success Manager with any unique forecasting challenges you may be facing as you reopen. We’re ready to partner with you to facilitate your post-COVID comeback.

Learn more about how UKG can provide solutions for retail forecasting.