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Optimizing Labor Hours: A Retail Case Study

The Company

A leading US convenience retailer with over 1,000 stores

The Challenge

The convenience retailer wanted to boost deli sales. Management considered increasing the labor hours devoted to the deli in order to boost customer traffic, but was unsure of the precise impact—if any—of labor hours on sales.

The Solution

The retailer launched APT's Test & Learn for Sites™ to put deli labor hours to the test. The software helped the retailer identify a representative test group of stores, in which they tracked the impact of increasing labor hours by 2%. Test & Learn™’s predictive analytics determined that the retailer could expect a 1.0% lift in deli sales in response to a 2% bump in labor hours. This 1.0% lift was not high enough to offset the cost of additional labor across the chain, but Test & Learn™ offered statistically sound evidence that labor increases would be profitable in specific store contexts. The data showed, for example, that shoppers were more sensitive to customer service if competing stores were located nearby.

The Results

Management’s findings with Test & Learn™ helped them avoid the costly mistake of rolling out a labor increase nationwide. The targeted labor strategy that Test & Learn™ informed also generated $4MM in annual incremental cash flow, with labor hours increased in only the most profitable locations.
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