I've worked in retail a long, long time. The majority of my experience working has been in retail. Yet something I've noticed is that no matter the industry, companies go through this phase where they try to increase profits by reducing labor costs. "We need to cut hours to save labor" is a phrase that I've heard numerous times. It's so frequent you could set it to music. Every company does this, and no one ever learns from every other company that does it. The problem with cutting labor to increase profits is that it does not work.
Cutting labor hours never actually accomplishes what a corporate entity thinks it will because they are only looking at numbers. The problem with using numbers to try and determine profit margins is that those numbers are actually people, and individual contributions in the workplace are not necessarily equal. Every retail job has that one crusty old veteran who has been there since the store opened knows more about any random product than anyone else working there. It also has that one person so utterly obnoxious and lazy that no one else can stand to work with him or her. These are people, and people aren't easily quantified.
That crusty old veteran? That's who everyone turns to when they get a strange question from a customer and no one else seems to know the answer. Customers come to the store specifically to speak with that employee, because they know that person will be able to help them. And that obnoxious, lazy person no one likes? That person networks like crazy and ends up getting a promotion, which somehow makes him or her a more valuable employee than the ones doing the actual work. Based off sheer numbers alone, the veteran who's worked in the store for ages and never gotten a promotion is less valuable than the newbie who worked his or her way up the chain of command into a position that is not deserved based off merit.
This week I stumbled across an article about how Target decided to quietly rearrange and eliminate back-room stocking jobs in order to have more people out on the floor facing customers. On the surface, this is great. Improving customer service typically increases sales and improves customer retention. The issue, according to the article, is that their process for doing so has made the workplace unstable or unsafe for the ones still working there. Unfortunately for Target, they failed to take into account the fact that others have done this before and it didn't work for them, either.
As I mentioned before, this isn't my first time seeing this kind of behavior from a company. Typically, as the holiday shopping season approaches, retail stores hire on large groups of temporary "seasonal" employees. Seasonal employees are people who will work October to January and then be let go. Target seems to be taking a different approach: instead of hiring more people, squeeze more out of the ones they already have. Long term, this kind of behavior never works out. In an overly generous estimate, it might increase profits by a tiny percentage; something less than 10%. The cost, however, is ultimately paid by the employees first. Overworked and underpaid retail employees end up with health issues, mental issues, and typically lose all sense of loyalty they have for their workplace. This ends up costing the company money in the long term as employees start to feel that minimum pay should equal minimum work.
The solution is simple: invest in employees instead of cutting their hours. Give them reasons to want to work for your company instead of any other company that would treat them the same way. Real reasons, not silly team-bonding exercises or store award ceremonies. Ask your employees what they want and have real conversations with them about expectations. Set those expectations and then don't change them. People perform better if they understand the rules and know they aren't going to arbitrarily change. The hardest thing for a company to do is willingly reduce it's own profit margins, but that is the cost of staying in business in the long term. Not making as much money as possible as quickly as possible, and not putting the desires of shareholders above those of consumers and employees. Companies that feed shareholder profit margins first are imploding, and not just because they failed to fully realize the power of online shopping. No, it's because they are choosing to be unrealistic in their expectations when it comes to long-term viability. There are limits to how much money you can make and how many customers you can appeal to. Companies are trying to find "more" instead of focusing on what they have.
That is why they fail.