ReThink Productivity Podcast

The Productivity Puzzle: Navigating Retail's Toughest Challenges

ReThink Productivity Season 1 Episode 164

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Retail businesses face a productivity paradox where despite working harder and implementing efficiency measures, many find themselves "sprinting to stand still" as costs rise and operations grow more complex. Simon Hedaux from Rethink Productivity provided NotebookLM with his thoughts and insights into navigating this challenging landscape through systemic changes rather than incremental tweaks.

Rethink Productivity provides crucial insights into navigating this challenging landscape through systemic changes rather than incremental tweaks.

• All easy efficiency changes have already been implemented in retail
• Labour costs are projected to increase significantly, with UK National Living Wage rising 40% over five years
• The shrinking pay gap between frontline staff and supervisors creates talent retention challenges
• Rising theft presents a security dilemma that often creates additional work for staff
• Technology must drive standardized processes to remove subjective decisions
• Self-checkout changes staff roles rather than simply reducing headcount
• Process optimization should follow "stop, reduce, then digitize" methodology
• Radical rethinking includes questioning traditional management structures
• Businesses need granular understanding of their true end-to-end operational costs
• Productivity improvement requires continuous analysis, adaptation and validation




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Speaker 1:

Okay, let's unpack this. Imagine a marathon runner who is trained relentlessly, you know, shaved off every possible second, only to find the finish line keeps moving further away. That's the feeling many businesses, especially those in retail, seem to have right now when it comes to productivity. Today, we're embarking on a deep dive into precisely that challenge the future of retail productivity. We're drawing some really incisive insights from a groundbreaking strategic report Retail Productivity 2025, by Rethink Productivity. Our mission for you, the listener, is to well cut through the noise, understand the crucial, often counterintuitive shifts and opportunities facing retail right now and, perhaps most importantly, see how these fundamental lessons about efficiency, cost management and innovation extend far beyond just stores. This isn't just for retail insiders. It's really about the broader principles of navigating a relentlessly evolving landscape that apply to well pretty much any organization. We've got sharp data points and some truly forward-thinking scenarios to explore, so get ready for a thorough and, hopefully, thought-provoking journey.

Speaker 2:

It's a really apt analogy, actually, and one that resonates deeply within the current economic climate. This report from Rethink Productivity. It offers a remarkably clear lens into what businesses are grappling with. It immediately sets the scene stating everyone is facing this productivity challenge. That phrase alone tells us a great deal about the current economic and operational climate. It signals a universal pressure right, a shared struggle that transcends specific industries but arguably impacts retail most acutely, given its razor-thin margins, and that direct, highly visible consumer interaction. This isn't a localized issue. It's systemic, a pervasive force driving strategic conversations at well every executive table.

Speaker 1:

Yeah, absolutely. And when it comes to what businesses are being asked by their stakeholders and their balance sheets, the report cuts right to the chase Help us save money. Now, that's hardly a novel request in the business world, is it? But Rethink Productivity makes a crucial observation that truly defines the current landscape. They contend that retailers have already made all the easy changes. Hmm, that simple sentence carries a profound weight. Think about that for a second. The they contend that retailers have already made all the easy changes. Hmm, that simple sentence carries a profound weight. Think about that for a second. The low-hanging fruit, the obvious cost-cutting measures, the straightforward process improvements, the incremental efficiencies that once offered easy wins, they're gone. What does it truly mean for an organization when you've already picked all the easy fruit from the tree?

Speaker 2:

Well, it fundamentally reshapes the entire approach to efficiency. It has to. When the low-hanging fruit is gone, finding new efficiencies is dramatically harder, far more complex, and it often requires a fundamental re-evaluation, if not a complete overhaul of operations. It's no longer about trimming fat, it's about reshaping the very muscle and bone of the business. You're moving beyond simple tweaks to seeking systemic changes, often technology-driven, to unlock that next level of savings. And, as the report highlights, these pressures aren't solely internal, not by a long shot. Customer behavior itself is driving massive change. The seismic shift to online shopping, the pervasive demand for instant gratification, the increasing preference for self-service options these aren't just passing trends. They're creating entirely new operational complexities and, frankly, significant costs for retailers. Think about the intricate dance of fulfilling online orders from physical stores, managing complex returns across channels or accommodating the surge in click-and-collect services. These all add layers of tasks and processes that just didn't exist in the same volume before.

Speaker 1:

It's not just a constant adaptation game, it's a constant reinvention game, wouldn't you say? And then, on top of all these external and internal pressures, rethink. Productivity points to another significant internal drain that impacts profit the profit impact from theft. This connects directly to broader operational challenges. How do you, as a retailer, strike that incredibly delicate balance between securing your assets, preventing loss, and simultaneously facilitating a smooth, welcoming and efficient sales environment? Every security measure, every locked shelf, every tag can potentially add friction for the customer, increase dwell time or, crucially, create additional work for the staff. It's a delicate balance, and theft directly erodes profitability, making the productivity challenge even more acute. It's like a hidden tax on every single transaction.

Speaker 2:

Exactly and given these multifaceted pressures, the central objective for 2025, as defined with remarkable clarity by Rethink Productivity is crystalline to reduce task and process time. This isn't merely a suggestion. It's identified as the critical lever. The why behind this is profound it's to free up valuable human resources and eliminate operational drag. Every minute saved in a back-end task, every redundant step eliminated from a process, is a minute that can be reinvested into higher value activities. It's about optimizing the flow of work, making every action count and ensuring that human effort is directed where it yields the greatest return rather than being consumed by inefficiency.

Speaker 1:

And from this core objective, the report breaks down several strategic goals that really resonate. First, they talk about increased customer time. This is fascinating because it immediately shifts the focus. It goes from simply cutting costs to driving actual value. It's not just about getting tasks done faster. It goes from simply cutting costs to driving actual value. It's not just about getting tasks done faster. It's about what that speed enables. Right, If you streamline your backend tasks, everything from stocking shelves to managing deliveries it means your staff suddenly have more time, more time to spend meaningfully interacting with customers on the floor. It's about quality over quantity in customer interactions, empowering staff to provide better service, helping customers find exactly what they need, solving problems proactively and, ultimately, building deeper loyalty. It's a tangible translation of efficiency into enhanced customer experience.

Speaker 2:

Precisely. The goal isn't just faster processes, but processes that enable a demonstrably better service and stronger customer relationships. Then they highlight the objective to increase capacity at peak. This is the perennial, almost existential challenge for any retailer, isn't it? How do you handle surges in demand during holidays, major sales events or even just busy weekends without overwhelming staff, without leading to long lines, lost sales opportunities or a consistently poor customer experience? The report emphasizes that sophisticated productivity analysis helps businesses manage these peaks more effectively by understanding where bottlenecks occur and how to dynamically optimize staffing levels and processes to avoid them. It's about building elasticity into operations.

Speaker 1:

And linking efficiency directly to revenue growth. Rethink Productivity emphasizes the goal to drive ATV, or average transaction value, which essentially means selling more to the same customers. This objective truly brings it all together, closing the loop between operational efficiency and commercial success. When your processes are optimized and staff are freed up from those non-value-add tasks, they can genuinely focus on sales opportunities. They can upsell, cross-sell, provide personalized recommendations and genuinely engage with customers to increase the average transaction value. It fundamentally shifts the focus from just processing transactions to actively driving revenue and maximizing customer lifetime value.

Speaker 2:

It's about precision. Really, rethink Productivity effectively uses an image in their report a target with an arrow hitting the bullseye. It underscores that these objectives aren't just vague aspirations but precisely targeted goals. It's about hitting the mark with both efficiency and impact, ensuring every effort contributes directly and measurably to these strategic outcomes. It's a testament to the kind of comprehensive insights you can find on the Rethink Productivity website and certainly their podcasts. They're always about actionable, targeted strategies.

Speaker 1:

But if you don't hit that target, the risks are substantial. Boy are they substantial. The report paints a stark, almost alarming picture, describing businesses as running sprinting to stand still. This is a profound paradox that immediately grabs your attention. It suggests that, despite concerted efforts to reduce task and process time and increase output, these actions can ironically lead to more time going into non-value-add activities. So you're working harder, investing more, but not necessarily smarter or more effectively. What exactly does non-value-add NVA truly mean in a retail context, and why is it so well, insidious?

Speaker 2:

Right. Nva tasks are activities that consume valuable resources, time, labor, materials, even mental energy without directly contributing to customer value or enhancing profit. To give you some concrete examples, imagine a staff member spending 20 minutes searching for a misplaced item because the stockroom is disorganized, or constantly correcting inventory errors due to poor data entry, or filling out redundant paperwork that serves no clear purpose and, just you know, sits in a folder somewhere. These are all NVA activities. They don't enhance the customer experience, they don't directly generate revenue and they certainly don't build the brand. The insidious paradox is that if you simply try to speed up existing processes without first rigorously identifying and eliminating these N NBA tasks, you're just accelerating waste. You're literally building a faster treadmill for your staff to run on, but they're still not moving forward.

Speaker 1:

And the costs of this inefficiency, compounded by external pressures, are escalating rapidly, according to Rethink Productivity. Let's delve into the alarming cost pressures outlined in the report. First, labor costs. The European Commission forecasts up to a 6% increase in 2025. And specifically for the UK, the National Living Wage, nlw, is projected to increase by a substantial 6.7% in April 2025. That takes it to £12.21 per hour, or approximately £25,400 per year for a full-time employee, or approximately £25,400 per year for a full-time employee. To put that into perspective, consider this From April 2020, when it was £8.72 per hour or £18,200 per year. That's a whopping 40% increase. A £7,200 pay rise in just five years for a full-time employee Wow. And while this data is specific to the UK, it clearly poses an implicit yet significant challenge for businesses in America and elsewhere. It indicates a global trend of rising labor expenses that cannot be ignored. Every business leader, regardless of their geography, needs to look at their own P&L and ask how they're going to absorb these shifts.

Speaker 2:

Absolutely. This isn't just about paying more. It's about the increased financial burden on businesses that are already operating on very tight margins. And the cost increases don't stop there. Employer national insurance, ni, in the UK is also set to increase from 13.8% to 15% in April 2025, with the threshold dropping to £5,000. For our non-UK listeners, think of NI as a mandatory contribution employers make on top of an employee's salary, sort of like a payroll tax. This is a direct, substantial impact on a business's overhead as it adds another layer of cost for every single employee they have. It's a compounding effect that squeezes profitability from multiple directions.

Speaker 1:

And the final piece of this complex cost puzzle, as highlighted by Rethink Productivity, poses a truly concerning question Less colleagues on the floor equals higher risk. This links directly back to the earlier mention of profit impact from theft. If retailers respond to these rising labor costs by simply reducing staff presence on the sales floor, a seemingly straightforward way to cut immediate expenses, they might inadvertently exacerbate the problem of shrink and theft. It creates a challenging feedback loop. Trying to save money on labor might lead to higher losses from theft, forcing even more difficult decisions down the line and potentially undermining the very cost savings they sought. It's a classic example of unintended consequences, isn't it, where a seemingly rational decision in one area creates a new, equally significant problem in another. This is the kind of intricate dilemma the Rethink Productivity podcast often unpacks in detail.

Speaker 2:

It really is, and that takes us perfectly into the human capital dimension, what Rethink Productivity provocatively frames as the Mind the Gap Challenge. It's a problem that extends far beyond the immediate payroll figures.

Speaker 1:

Here's where it gets really interesting and, frankly, a bit uncomfortable for some organizations. Rethink Productivity discusses the significant ripple effects of increased frontline colleague pay. It's not just the direct cost of higher wages for the frontline staff. It's about how this impacts the entire compensation structure within a retail organization. This crucial challenge across colleagues, supervisory and management pay differentials.

Speaker 2:

Let's look at the precise data from the report. Frontline colleague pay is rising significantly from eight pounds 72 per hour in April 2020 to a projected 12 pounds 21 per hour by April 2025. As we just discussed, that's a substantial jump approximately a £70,200 pay rise for a full-time employee over five years. Now compare that to the average retail supervisory pay which, according to Glassdoor data cited in the report, is estimated at £28,100 in November 2025.

Speaker 3:

Okay. So let me get this straight. If a frontline colleague is making £25,400 a year and their direct supervisor is making only £28,100. That's a pretty narrow gap, isn't it? Just over £2,700 difference. Imagine a career ladder where the rungs suddenly get closer and closer together as you go higher up. Does this still feel like a climb worth making? Does that relatively small pay bump provide enough incentive to take on the added stress? The increased responsibility, the longer and often less flexible hours and the management of people that come with the supervisory or deed of management role is a very real motivational challenge.

Speaker 2:

It creates a significant issue for talent attraction and retention at all levels A huge one. If the financial incentive for advancement isn't compelling enough, who will step into those critical supervisory and management roles, the roles that are so essential for operational stability and growth? Retail already faces challenges with high turnover, and this issue of compressed pay scales can severely exacerbate it, making it harder to build and maintain experienced leadership teams, which in turn, inevitably impacts overall productivity, morale and service quality. It's a complex dynamic that requires careful strategic consideration beyond just the baseline wage dynamic that requires careful strategic consideration beyond just the baseline wage, extending to career paths, development and non-financial incentives too. The report really shines a light on this often overlooked consequence of rising entry-level wages.

Speaker 1:

OK, so we've set a challenging scene rising costs, thin margins and a complex human capital dilemma. A bit bleak, but where are the opportunities? Rethink Productivity offers some truly compelling insights into unlocking efficiency, particularly in process and technology, that give us a roadmap forward.

Speaker 2:

Yes, absolutely. The report highlights a crucial overarching point the opportunity to understand the true cost. This isn't just about the obvious direct costs of operations, but about delving into the holistic, often hidden expenses embedded within every process and activity. It encourages a much deeper dive into every single operational layer.

Speaker 1:

Let's break down some of the key areas for optimization that Rethink Predictivity details in depth. First, they talk about process compliance and pace of work. This emphasizes that it's not enough to simply have processes documented they need to be followed consistently and critically. Efficiently Makes sense. Then a powerful concept Let the tech drive the process, remove decisions and options. What does that truly look like on the ground? It's about standardization, automation and significantly reducing human error or variability by taking subjective choices out of repetitive tasks. Think about a system where a task is automatically assigned based on real-time data, or inventory levels automatically trigger an optimized reorder without any manual intervention, Removing the need for staff to make discretionary choices that might lead to delays or errors. It streamlines decision making, or rather removes the need for it entirely in some cases.

Speaker 2:

It's about leveraging technology to enforce best practices and remove the subjective element wherever possible, leading to predictable and efficient outcomes. This leads directly to the next point Understand the process and cost end-to-end. Why is a holistic end-to-end view, rather than just isolated improvement, so crucial for achieving real impact? Because optimizing just one step in a broken operational chain doesn't fix the whole chain to end view, rather than just isolated improvement, so crucial for achieving real impact. Because optimizing just one step in a broken operational chain doesn't fix the whole chain. It often just shifts the bottleneck somewhere else. You need to map and understand the entire flow, from receiving goods in the backroom to the final customer transaction at the till, to identify true systemic inefficiencies and their associated costs. It's basically a complete value stream mapping exercise.

Speaker 1:

And this connects profoundly to the question how much does it really cost to replenish stock and how many times? This delves into the often hidden labor, energy and logistical costs involved in moving products from the warehouse to the shelf and then potentially back again if it's overstocked. We've all seen the disheartening sorry this item is out of stock sign on an empty shelf, as vividly depicted in the report's accompanying visuals. That's not just a lost sale. It's a symptom of inefficient replenishment systems, a direct cost of failure and a tangible blow to customer satisfaction.

Speaker 2:

And tying into that rethink, productivity, poses a really bold, almost provocative question what is the cutoff when you don't make profit? Buyers responsible for shrink and waste. This is a fundamental challenge to traditional retail structures. It really is. It suggests connecting inventory buying decisions directly to the profitability and waste metrics, shifting accountability directly to the buyers. The idea is to ensure that what's purchased is not only sold, but sold profitably, minimizing loss from theft, damage or spoilage. It's a powerful mechanism to ensure inventory efficiency from the very first decision point.

Speaker 1:

Then there's the physical space itself, which is often overlooked as a productivity lever. New stores refit are the layout's optimum From a stock storage, front end and collection point of view. This highlights how physical design directly impacts operational flow and efficiency. A poorly designed store can inherently create non-value-add tasks, just by the way staff have to move, product access, stock or process customer interactions. Optimizing the physical layout can significantly reduce wasted time and effort. Seems obvious, but maybe often missed.

Speaker 2:

Oh, definitely. And Rethink Productivity points to specific cutting-edge technologies that are poised to drive these improvements, offering tangible examples. First, computer vision focal systems. This technology, leveraging advanced camera systems and AI, can provide real-time granular inventory tracking, identify out-of-stocks the moment they occur and ensure shelf compliance without any manual checks. Imagine a store where cameras constantly monitor shelves, instantly alerting staff when a product is running low or a display is disheveled, eliminating the need for tedious manual counts or visual inspections. Then there's Easel Plus, that's electronic shelf edge labels with picking functionality. Like pick-to-light systems, these systems streamline order fulfillment, whether it's for in-store picking, for online orders or click-and-collect. Think of a warehouse or even a store backroom where lights illuminate the exact bin location of an item needed for an online order, guiding staff through the most efficient pick path, significantly cutting down search time. And finally, qr codes and NFC near-field communication. These have myriad applications, from simplified inventory management providing instant product information to customers via their phones or facilitating seamless tap-and-go customer interactions. These aren't just futuristic concepts they're here and they're transforming the back-end and front-end alike.

Speaker 1:

But it's crucial to remember, as Rethink Productivity also notes, it's not just about the tech. The human element is still paramount and profoundly impactful. They make the intriguing observation that when a task is completed impacts pace, efficiency, time of day and or time to end of shift. What does this suggest about motivational factors, fatigue or perhaps even strategic scheduling influencing productivity? Perhaps completing certain high concentration tasks earlier in the day, when energy is higher or before a major rush, could yield significantly better results? Seems logical. And then the crucial link that cannot be overstated there is a link between colleague tenure, turnover and productivity. This is vital. Retaining experienced, knowledgeable staff can lead to significant, tangible gains in efficiency, reduce ongoing training costs and foster a more knowledgeable, empowered and ultimately productive workforce. Their institutional knowledge, their understanding of nuances and their established relationships with customers are invaluable assets that directly impact output.

Speaker 2:

These observations powerfully underscore that while technology is an indispensable enabler, the human factor remains paramount Absolutely. It's about optimizing the synergy between technology and human capabilities. This focus on efficiency extends right to the consumer experience with Rethink Productivity's insights on reinventing the retail front end, not just tills.

Speaker 1:

That's right. Rethink Productivity highlights a significant opportunity for holistic front end change, moving far beyond just the traditional checkout till as the sole point of interaction.

Speaker 2:

We're seeing a fundamental, irreversible shift in how customers expect to interact with retail. The report details these shifts in customer interactions Increasing self-scan and self-pay transactions. Okay, the benefits for retailers are clear Increased speed, reduced labor costs and often a perception of convenience for the customer. But there are also challenges. Customer adoption rates vary significantly, security concerns around theft can rise and, as we'll discuss, potentially unintended consequences like increased work for staff in loss prevention roles or the need for more customer assistance. Naturally, this shift leads to fewer colleagues at TILS, which fundamentally impacts staffing models. It necessitates remaining staff to be more versatile, acting as mobile problem solvers rather than static cashiers.

Speaker 1:

And e-commerce integration is placing entirely new, sometimes unexpected, demands on the front of the store increasing click and collect and third-party parcel volumes. This brings new logistical burdens right to the customer service desk managing pickups, processing returns and handling third-party deliveries and outgoing parcels. It's a whole new, significant set of tasks for store staff that requires optimized processes and often dedicated space. But even with all this automation and integration, the human element stubbornly remains crucial. The report wisely reminds us that staff still need to handle refunds, queries, etc. These are the complex, often emotionally charged exceptions, the problem-solving scenarios that simply cannot be automated. They require human problem-solving skills, empathy and judgment.

Speaker 2:

And thinking boldly beyond the traditional store model. Rethink Productivity explores radical ideas for rethinking product access. They pose the idea Sell stock that must be behind a screen or to fill empty boxes vending. This explores the concept of unintended retail for certain product categories, reducing the need for staff to manage those items directly while still making them accessible. Similarly, for service augmentation, they challenge us to consider how AI could assist for services that require a person lottery, age, approval, etc. Ai, while AI could help verify identities or process initial requests with speed, human approval is still necessary for regulated services, highlighting where human judgment remains critical and where technology augments rather than replaces.

Speaker 1:

And a fascinating technology mentioned with vast potential for retail is open banking. This isn't just about faster payments. It has the potential for truly seamless payments, integrating loyalty programs directly at the point of sale or even incorporating broader financial services directly into the retail experience. Imagine a customer walking into a store, making a purchase and their loyalty points are automatically applied. Their preferred payment method is ready with a single tap and perhaps even a personalized financing option pops up, all seamlessly integrated Because their bank account and the retailer's system are securely and pre-approvedly talking to each other. It streamlines transactions and opens up new avenues for customer engagement. But ultimately, rethink productivity acknowledges the core frustrating struggle for many retailers, many struggling to optimize for now with flexibility for future change. This highlights the immense difficulty of building agile systems and processes in a landscape that's evolving at breakneck speed. It's like trying to fix the car while you're driving it down a rapidly changing road Not easy.

Speaker 2:

Not easy at all. Building on that challenge, Rethink Productivity doesn't shy away from provocative ideas. They really don't. They encourage what they call creative thinking, using the classic lightbulb image in their report as a powerful metaphor for sparking radical new ideas.

Speaker 1:

So what does this all mean for radical change? They dare us to ask what would happen if? And then pose some truly audacious, deeply uncomfortable questions that challenge long-held retail paradigms.

Speaker 2:

These are not incremental tweaks. These are fundamental challenges to long-held retail norms, designed to ignite truly transformative thinking For rethinking management and structure. They ask there wasn't a store manager in every store. This implies exploring new models like cluster management, where one manager oversees several smaller stores, or sophisticated remote management, or even self-managing teams enabled by advanced technology and transparent data. Then, pushing the envelope further, offices were closed. Other than interviews and disciplinaries. This suggests a radical shift towards more on-the-floor presence for managers and supervisors, with administrative work handled remotely or centralized, freeing up valuable store space and leadership time.

Speaker 1:

And colleagues worked across multiple stores and been on local shifts. That's radical flexibility for staff, right Allowing for optimized labor allocation across a wider geographic area based on demand, potentially fostering a stronger community engagement among staff and providing employees with more control over their schedules. Interesting, then, for efficiency in regional management field visits were conducted 50% of the time via technology. This dramatically reduces travel time and costs for regional managers, freeing them up for more strategic data-driven tasks rather than simply being on the road. And to reduce communication overload, a perennial pain point for store teams. They ask Head office couldn't contact mill stores other than via one approved portal on selected days. Imagine the drastic reduction in distractions and fragmented communication for store staff, allowing them to focus entirely on customers and core operations. That's a big one.

Speaker 2:

Huge and streamlining operations and compliance offers equally bold and frankly liberating ideas. You stopped completing all the checklists other than legally required ones. This suggests a ruthless elimination of unnecessary administrative burdens, bureaucratic tasks and redundant paperwork that consume valuable staff time without adding significant value. Promotions were simpler and less more frequent. This addresses the significant merchandising effort and complexity involved in constant intricate promotional changes that often drain store resources, in constant intricate promotional changes that often drain store resources. Then the logistical challenge of overstock. You could send bulk overstock back to the DC distribution center. This improves inventory flow, reduces the need for valuable in-store storage space and minimizes the risk of obsolete stock gathering dust.

Speaker 1:

And related to that, for optimizing deliveries. Deliveries were less frequent, with flexibility and planograms. This proposes optimizing logistics and reducing the labor required for receiving and stocking by having fewer larger deliveries and allowing for more dynamic shelf planning For perishable goods a critical area of waste Better forecasting of hot food to grow sales and zero waste. This is about leveraging AI and advanced analytics for real-time demand prediction for items like bakery or deli products, minimizing spoilage and maximizing freshness, and a truly cutting-edge concept that ties into broader digital transformation. You had digital twins live for every store. Imagine a virtual, real-time replica of every store, allowing for powerful simulation of layout changes, staffing levels, customer flow and process optimizations before any physical changes are made.

Speaker 2:

Wow. The radical stock management ideas are particularly eye-opening, challenging long-held beliefs about inventory no stock counting, relying entirely on technology like RFID or advanced computer vision for perpetual real-time inventory accuracy, eliminating the highly labor-intensive and often disruptive manual counts. Then a shift in aesthetic expectations. Senior leaders accepted stores shouldn't be 100% phased all the time. This is a fundamental change in presentation standards to prioritize efficiency over absolute constant, perfect visual merchandising Controversial maybe. Pushing that further, they ask you only phase up for one hour per day. That's an extreme vision for visual merchandising efficiency, focusing staff time on higher-value tasks.

Speaker 1:

And adopting a truly lean approach, Only replenish when needed. A just-in-time approach to stock on the floor, Reducing overstocking, minimizing handling and freeing up backroom space For slow-moving items that take up valuable real estate. Slow sellers delivered as singles then discontinued. Minimizing dead stock and optimizing shelf space for more profitable items and for display efficiency. Displays were all original outers, no singles, which drastically reduces labor for display setup and presentation, focusing on speed and simplicity.

Speaker 2:

Automation of customer-facing and back-end services also features prominently. Induction was done in under two hours by AI. This envisions rapid, standardized and highly efficient onboarding for new employees, getting them productive much faster. Self-service post office, expanding unattended services within retail spaces, leveraging existing footfall for new revenue streams. Dynamic pricing for hot food, real-time price adjustments based on demand, time of day or nearing expiration, maximizing sales and minimizing waste for perishable items.

Speaker 1:

And thinking creatively about underutilized space. Use spare space for the community local produce providers. This is an innovative idea for revenue generation and deeper community integration, turning dead space into a vibrant hub. I like that More tech-driven efficiency, auto-beat checking for product freshness and compliance, reducing manual checks and ensuring food safety. Outsource cash accounting, leveraging specialist third parties for back office efficiency and security, freeing up in-store staff from tedious financial reconciliation. And a benefit for employees that can also offer a tax advantage Salary sacrifice, which are employee benefits that can offer tax advantages to both the employee and, potentially, the employer without direct cost to the employer.

Speaker 2:

These are the kinds of forward-thinking discussions you'll often find on the Rethink. Productivity is also clear-eyed and pragmatic about the unintended consequences, particularly concerning loss prevention, work creation. They highlight that every action has a reaction. It's critical to remember that.

Speaker 1:

This is a critical point and Rethink Productivity provides direct visual cues in their report Images of security tags, locked shelves and items behind full glass doors like toothpaste or razors. We've all seen that the paradox here is striking. Efforts to prevent theft by locking up high-value or easily pilfered items can inadvertently create significantly more work for staff and dramatically slow down the customer experience. Think about it A customer has to actively find a staff member, wait for them to unlock a cabinet and then potentially wait for them to escort the item to the checkout. This adds layers of friction, significantly slows down service, requires additional staff assistance and creates frustration for the customer. It's a trade-off that needs incredibly careful consideration. Is the cost of preventing that theft, factoring in the lost sales from frustrated customers, plus the increased labor and decreased customer satisfaction, truly less than the cost of preventing that theft, factoring in the lost sales from frustrated customers, plus the increased labor and decreased customer satisfaction, truly less than the cost of the theft itself? It's a genuine catch-22, a dilemma that businesses are grappling with every single day.

Speaker 2:

It absolutely is. Every security measure, while mitigating one risk, can introduce another in the form of operational inefficiency, reduced sales and customer frustration. Inefficiency, reduced sales and customer frustration. It powerfully highlights the need for a truly holistic view of productivity, where you weigh these complex factors against each other and to help navigate this intricate landscape, rethink Productivity offers a concrete productivity roadmap with immediate actionable opportunities for retailers.

Speaker 1:

Let's guide our listener through these actionable strategies, because this is where the rubber meets the road. The first point on the roadmap is task management reinvention stop, reduce, then digitize, eg compliance audits. This order is absolutely crucial, isn't it? It's a powerful principle. Don't automate a broken process. First, rigorously identify and eliminate unnecessary tasks the NVA tasks we discussed. Then simplify the ones that truly remain, making them as lean and efficient as possible. Only then should you consider digitizing them. This prevents simply speeding up inefficiency and cementing bad habits into your systems.

Speaker 2:

It's a foundational principle for any true transformation. If you digitize a redundant task, you've just made waste more efficient. Basically, the second point addresses physical space optimization, optimizing storage. Storage is often inefficient and in a poor spot. Lockers can be in the car park. This encourages truly creative out-of-the-box solutions for back-of-house efficiency and stock accessibility, thinking beyond traditional, often cramped stock rooms.

Speaker 1:

Then a clever strategic insight leveraging footfall drivers. Parcels drive footfall. Yeah. How can retailers capitalize on the significant traffic generated by services like parcel pickup or drop off people who are already walking into their stores to encourage additional sales? It's about converting that incidental footfall into intentional purchasing and revenue.

Speaker 2:

Point four addresses redistributing labor Move task to colleagues Likely to have to move tasks to keep people busy when there must be two in store for safety, extra colleagues to do delivery and then colleagues not occupied later. This highlights the critical need for flexible staffing models and extensive cross-training to balance safety requirements with productivity, ensuring staff are utilized efficiently throughout their shifts even if and as self-checkout rises to prominence, the fundamental question becomes what is the staffing model?

Speaker 1:

with rise of SGO, rethink productivity acknowledges that while self-checkout reduces the need for traditional till operators, it doesn't eliminate the need for staff entirely. It necessitates staff for assistance, for security monitoring, for age verification and for addressing a variety of customer service tasks, fundamentally changing the nature of front-end roles rather than simply reducing headcount.

Speaker 2:

Automating administrative burden is another monumental opportunity. Automate task planning and admin for stores. This is about leveraging technology to freeate task planning and admin for stores. This is about leveraging technology to free up store managers and supervisory staff from mundane, time-consuming administrative duties, allowing them to redirect their focus towards high-value activities like leadership development, direct customer engagement, sales coaching and strategic planning.

Speaker 1:

And a major theme we've touched on repeatedly more stock than needed, which creates double triple handling. How to move closer to just in time for stock? This is about the profound benefits of reducing excess inventory-less handling time, less storage space required, reduced risk of shrink or obsolescence and improved cash flow. It's about supply chain synchronization.

Speaker 2:

Point nine explores diversifying business units pharmacy, funeral, travel, coffee shops, etc. This encourages retailers to think beyond their core offering. How can they strategically integrate other business units or services to leverage their existing retail footprint and staff more efficiently, creating new revenue streams and increased footfall from existing infrastructure? It's about maximizing the value of every square foot.

Speaker 1:

And finally, point 10, which really brings it all together as a continuous journey Regular efficiency studies to refresh and create ideas, validate process change. Example full impact of Uber Eats model integrity, funding V output. This stresses that productivity is not a one-time fix or a project with a defined end. It's an ongoing journey, continuous cycle of improvement. It requires constant analysis, adaptation and rigorous validation of changes to ensure they are truly yielding results and delivering on their promised outcomes. The world doesn't stand still and neither can your productivity strategy. This is a point frequently emphasized on the Rethink Productivity podcast, underscoring the need for ongoing analysis. Absolutely, it has to be continuous. So what does this all mean when we bring it back to the core insights from Rethink Productivity? The report's summary points aren't just conclusions. They are a manifesto underscoring the urgency and fundamental complexity of the productivity challenge facing retail and, frankly, most industries today.

Speaker 2:

The first and perhaps most profound statement is all the easy stuff is done. This isn't just a casual observation or a lament. It's a stark, undeniable reality that demands a completely new level of strategic thinking and courage from retail leaders. Incremental adjustments, mere tweaks to existing models simply won't cut it anymore. They just won't.

Speaker 1:

And, intertwined with that, a challenging inevitability Costs will continue to rise. This isn't a forecast with uncertainty. It's a foundational truth. This means proactive, deep-seated, often disruptive change isn't just a good idea. It's an absolute necessity for survival and growth. You can't simply hope these cost pressures will disappear. You have to fundamentally plan for and adapt to them.

Speaker 2:

Then a critical operational, imperative Manage change via the workload model to ensure fair funding. This emphasizes the importance of balancing aggressive efficiency targets with the absolute necessity of supporting staff. It's about ensuring that resources and staffing levels truly align with the actual tasks that need to be done, preventing burnout, maintaining morale and optimizing output. It's about marrying efficiency with human sustainability.

Speaker 1:

And the dual focus again, which can't be stressed enough Drive ATV. It's not just about cost reduction as an isolated goal. It's about actively growing revenue through enhanced customer interaction. Productivity in this modern context isn't just about reducing inputs. It's about strategically maximizing outputs and value.

Speaker 2:

Understand how much is cost to run the business. This is a powerful call for deep, granular, data-driven insights into every single aspect of operations. You cannot truly optimize what you do not fully and precisely understand. It's about knowing the true, fully loaded cost of every process, every product, every square foot of your operation.

Speaker 1:

And the necessity of a structured, dynamic approach, have a productivity roadmap. This isn't about ad hoc fixes or reacting to the latest crisis. It's about a strategic, structured, long-term plan for continuous improvement, Building agile systems that can adapt to rapid market shifts.

Speaker 2:

Point seven succinctly captures the ultimate goal get the right work done by the right role at the right cost. This encapsulates the optimal allocation of human capital and technological resources, ensuring that tasks are performed by the most appropriate person or by the most efficient technology at the most cost-effective point in the process.

Speaker 1:

And finally, a point that Rethink Productivity really drives home, tying back to our earlier discussion and serving as a foundational principle for any transformation Stop NBA processes, pre-digitization it's the essential foundational step. Rigorously eliminate waste before you automate, Otherwise you're simply creating a faster, more expensive and more complex way to do something that fundamentally adds no value. Its automation is an accelerant of efficiency, not an enabler of embedded waste.

Speaker 2:

The report truly highlights the sheer depth and courage of analysis required to navigate these challenges. It really does. It's not just about simple tweaks or superficial changes. It's about a fundamental re-evaluation of how retail operates, from the physical store floor to the highest levels of head office strategy. It's clear why organizations turn to Rethink Productivity for these kinds of transformative insights, which you can delve into further on their website, RethinkProductivitycom, or through their dedicated podcast.

Speaker 1:

What a comprehensive journey we've taken through the Retail Productivity 2025 report. From Rethink Productivity, it's abundantly clear that the future of retail, and indeed many industries facing similar pressures, hinges on how boldly and strategically we tackle these evolving productivity challenges.

Speaker 2:

Given that, as the report emphatically spades, all the easy stuff is done and costs are undeniably going to continue rising. What's the single most uncomfortable truth a retail leader, or really any business leader today, must confront to truly secure their future? It's that superficial fixes and incremental adjustments are no longer viable. They're just not. They must move beyond short-term cost-cutting to a fundamental, often painful transformation of their core operating model, embracing radical ideas and critically anticipating and mitigating potential unintended consequences, rather than shying away from them.

Speaker 1:

That's a powerful thought, a true call to action and for you listening, we encourage you to reflect on this. How can you apply the stop, reduce, then digitize principle to your own workflows, your own projects, even your daily tasks? What's the unintended consequence? You might be overlooking, in your own quest for efficiency, that little bit of work you're creating for yourself or others in the pursuit of a perceived gain. We hope this deep dive has given you plenty to mull over and perhaps even sparked some creative thinking of your own as you navigate your own complex environments. Thank you for joining us on the Deem Dive.

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