Understanding Retail Labor Forecasting

As a retail manager, one of the biggest headaches you face involves ensuring you’ve got the right number of people working at the right time. Understaffing can frustrate customers and hurt your reputation while overstaffing can hurt your bank account. That’s where retail labor forecasting comes in.

Through forecasting, you can accurately estimate your labor needs based on historical data and business trends. This means you can use forecasting to find the perfect balance between having enough workers and not overspending.

Did you know that there’s software that can help you with forecasting? Try When I Work for free and see how it can save you time and money. 

Key takeaways:

• Retail labor forecasting helps you meet customer demand without overstaffing
• You can boost overall productivity and ensure smoother operations
• Forecasting helps you prevent burnout by avoiding over-scheduling
• You can cut down on labor costs without hurting the customer experience
• Forecasting simplifies scheduling by accounting for seasonal trends  

Table of contents:

• Retail labor forecasting: What is it and why it’s important
• 5 benefits of labor forecasting in retail
• Things to consider in retail labor forecasting
• Methods of retail labor forecasting
• Retail labor forecasting with When I Work

Retail labor forecasting: What is it and why it’s important

Labor forecasting involves predicting how many employees you will need to match customer demand. The process relies on sales trends, foot traffic, seasonality, and historical data. 

A labor forecasting strategy can help you decrease labor costs by minimizing the risk of over-staffing. You’ll also get a better idea of how many customers will walk through your door on a given day. It’s about balancing labor costs with customer demand for prompt service. 

What makes retail labor forecasting unique? 

Many different forces can impact retail labor needs. You’ll need to stay apprised of seasonality, economic factors, and shifting customer preferences. These and other variables can cause your staffing needs to fluctuate widely throughout the day, week, and year. 

For instance, you might need more people during holiday shopping seasons or sales events. But you probably don’t need many workers during quiet weekday mornings. On top of all that, you need to account for employee availability and shift preferences. Retail labor forecasting helps you sort through all of these variables to meet staffing needs. 

5 benefits of labor forecasting in retail

Labor forecasting comes with a number of benefits for your retail business, from helping you match seasonal demand to preventing burnout.

1. Matching seasonal demand

One of the biggest advantages of labor forecasting in retail is the ability to match staffing levels with seasonal demand. Think about how busy your store gets during the holiday season compared to a typical Tuesday in the middle of the year. Forecasting uses past trends to predict when you need to increase or decrease staffing levels. 

You don’t want to miss out on sales opportunities due to understaffing. On the other hand, you don’t want a group of people standing around doing nothing during the slow season. 

2. Boosting productivity

Your store runs more smoothly when you’ve got just the right amount of people working. No one will be overloaded with tasks. Instead, each employee can focus on carrying out their responsibilities and coming through for customers. 

Adequate staffing has trickle-down effects for the whole team. Lines will be shorter, and customers can receive quicker service. This means back-office workers won’t have to stop what they’re doing to take over a register. They can worry about responsibilities like restocking shelves and processing new inventory. 

3. Preventing burnout

Your team members are going to get burned out if they are frequently overworked. Don’t let it happen. Use labor forecasting to ensure workers aren’t over-scheduled or forced to work shorthanded. 

Retail labor forecasting can also help provide your team with peace of mind. Conversely, working short-handed can lead to stress and safety concerns. In fact, 63% of retail professionals say that staffing shortages have hindered their ability to keep the stores safe. 

4. Reducing labor costs

Labor represents one of your biggest expenses. Forecasting can help you reduce unnecessary costs and make every payroll dollar count. 

You can use forecasts to accurately predict how many employees you’ll need and when. This can help you avoid overstaffing and minimize your reliance on overtime. 

5. Improving customer satisfaction

Your customers expect prompt service. You can’t deliver a quality experience if your team is understaffed. Frequent understaffing can diminish customer satisfaction and your brand. 

However, labor forecasting helps you meet or exceed customer expectations by delivering a great in-store experience. You can keep wait times to a minimum and ensure you’ve got enough people working to handle any issues that pop up. 

Things to consider in retail labor forecasting

Not sure how to effectively schedule employees when customer demand is uncertain? Here are three key things to consider:

Sales forecasts and traffic

One of the most important things to consider when forecasting labor is projected sales. In retail, sales volume directly correlates to labor needs. If people are making more purchases, you need additional staff to process these transactions. Overall foot traffic is another concern. You need enough people in the store to assist customers who need help finding products or resolving product concerns. 

Seasonality

Sales can drastically change depending on the time of year. Special promotions and holiday rushes can impact how many customers walk through your doors. Make sure to account for these trends, as well as any local events that bring additional traffic to your store. 

Employee availability 

Your labor plan will only succeed if you account for employee availability. Do your best to respect worker shift preferences and accommodate reasonable time-off requests. Make sure you keep track of who is off so you don’t accidentally put them on the schedule. 

Methods of retail labor forecasting

There are right and wrong ways to go about retail scheduling. Before you can optimize your scheduling processes, you’ll have to determine how many people need to be at work. Here’s a look at three popular retail labor forecasting strategies to consider. 

Historical data analysis

If you’ve been in business for a while, you can use the historical forecasting method. Look back at trends to identify patterns in customer traffic and sales. For instance, if customer volume increases by 50% in December, you know you’ve got to scale up your team for the holiday rush. 

Customer traffic analysis

This method monitors foot traffic patterns throughout the day, week, or year. Consider which days and times your store is busiest and when it gets slow. Adjust your schedule accordingly. 

Sales projections 

Sales projections for upcoming periods like holidays or special promos can help you gauge staffing needs. This method works well when you have specific events or promotions coming up.

Retail labor forecasting with When I Work

With labor forecasting, you can protect your brand, your pocketbook, and your team all at once. When I Work employee scheduling software makes it easy to keep up with your team and labor needs. You can visualize each shift and quickly identify coverage gaps that may lead to understaffing. Our platform allows you to look back on past schedules to ensure you aren’t overstaffing an upcoming shift as well.

When I Work is also packed with tools to make your life easier. The team messaging tool facilitates secure communication with your staff, and the time clock ensures accurate labor hour reporting and helps you compensate your team fairly. You can even combine our scheduling platform with When I Work payroll software and run payroll in just one click. 

Sign up for a free trial and experience the When I Work difference.