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The client is a western regional drug and convenience store retailer experiencing a decline in profitability due to low margins and high labor costs. They started an initiative to improve the effectiveness of the management team by implementing store managing tools and expanding management training.
SPG’s Consulting Assignment
Members of SPG partnered with the clients management team to design and implement store control and reporting tools. Key areas of focus would include store manager and department head training.
SPG - Business Analysis Findings
The SPG analysis utilized a variety of participative tools and methods to identify the factors having the greatest impact on performance. Specifically, the analysis revealed that:
Transaction processing (cashiers) and staffing requirements were “level loaded” for peak periods.
Poor coordination between weekly media advertising and inventory management resulted in lack of product availability and/or lack of display materials.
Minimal store manager and department head training caused unclear roles and hurt performance against operating plan expectations.
The lack of training led to high turnover.
Ineffective or non-existent daily/weekly performance reports and metrics prohibited proactive managing and made it unclear as to actions needed.
Results and Quantitative Benefits
SPG consultants conducted “rolling” workshops over a six month period with store and region managers to implement a system for managing. After the training, on-site visits to review compliance and provide one-to-one coaching were performed with regional managers to ensure on-going improvement. The following results were achieved:
Effective utilization of staffing model for transaction processing improved customer service and reduce labor costs.
Implementation of shelf space allocation and planning tool improved margins and inventory management.
Labor costs were aligned by department or product “quadrants” to provide increase focus and clarify responsibilities.
Advanced communications of advertisement runs were aligned with inventory management and merchandising/display distribution to the store.
Improved management training enabled region managers to more effectively develop staff and establish advancement goals based on capabilities.
The financial improvements resulting from the implementation of these changes were significant. They included:
Labor costs reduced by 15-20%.
Margins improved by 5%.
Employee turnover significantly reduced.