AML Blog - The Scan

Using Technology to Offset Rising Employee Costs

Retailers, are you reading the headlines? The need for self-service technology is rising.

“Obama team to expand overtime coverage”  –(USA Today)
“Louisville’s minimum wage hike survives first court test”  –(Associated Press)
“Ikea to hike minimum wage to $10 an hour.”  –(CNN)
“Target hiking minimum wage to $9 an hour in April”  –(CNBC)

In addition, 14 states have enacted minimum wage increases that will take effect later in 2015 or 2016. The inevitable reality is that the cost of hiring and staffing is going up, putting pressure on retailer’s profits, and it comes at a time when brick-and-mortar retailers need to be focused on optimizing the customer’s in-store experience. Customer retention and prompting purchases in the store is paramount, and it’s going to be a struggle if retailers are faced with the possibility of reducing headcount on the store floor to offset higher employee costs.

Retailers will need to turn to technology and take advantage of the fact that we, as consumers, have already been conditioned for the “self-service” world. Whether it’s simply making an online purchase, using an ATM, getting a boarding pass at the airport, buying tickets at the theater, or using the store directory at the mall… we have all been groomed for self-service. Retailers need to leverage that cultural conditioning with self-service technology.

People don’t often think of mobile devices (smartphones) as self-service devices but if the consumer is using their own smartphone, then perhaps they are the ultimate self-service device. Retailers who develop strategies that incorporate mobile applications and mobile-friendly websites which encourage behavior that brings the consumer into the store and prompts a buying decision will be ahead of the curve. But it’s easier said than done. Developing mobile applications that work effectively has its challenges when working within the limitations of a mobile device. To compound the problem, allowing the customer to use their own smartphone as self-service technology can backfire if they use it to check out the pricing at the competing store down the road.

Retailers should complement their mobile strategy with the use of stationary devices, like small kiosks, deployed throughout the store. These devices offer larger displays and more powerful platforms and can deliver a more impactful digital experience to the customer. Integrated barcode scanning allows consumers to verify prices and some can be fitted with payment technology facilitating transactions. They can also be used for a variety of tasks not conducive to a mobile device, like way-finding. Kiosks can allow an interactive, engaging experience with controlled content that is not possible on a mobile device, taking some of the burden off of store associates especially during peak times when headcount may be stretched. More importantly, kiosks are available at a fraction of the cost of an employee, with little or no recurring costs.

Retailers can offset increasing employee costs without sacrificing customer satisfaction if they capitalize on the cultural shift towards self-service and deploy technology that consumers will find intuitive, engaging, and compelling.

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