The False Economy of Blanket Labour Increases in African Retail
The False Economy of Blanket Labour Increases
In South Africa, many Retailers follow a common yet misguided practice: they automatically increase labour costs in direct proportion to sales growth, usually by 3-5% each year. This blanket approach assumes that rising sales require a corresponding increase in staff hours or headcount. While this may seem like a logical way to meet demand, it often results in inefficient labour spending without significantly improving store performance or customer experience.
Without real-time and holistic performance insights, Retailers risk overspending simply because they lack a complete picture of where and when associates are truly needed.
Rethinking Labour Spend: A Targeted Approach
Cape Union Mart, a leading South African Retailer, recognised this challenge and took a different path. Instead of increasing labour spend in tandem with sales growth, they focused on optimising their workforce strategically. They turned to StoreForce’s intelligent workforce management solution.
With StoreForce, Cape Union Mart was able to:
• Identify the Best-Fit Contracts: StoreForce provided real-time performance insights, helping the Retailer analyse which types of contracts worked best for their stores. They could identify underperforming labour agreements and make necessary adjustments, ensuring that they were only investing in contracts that maximised efficiency and cost-effectiveness.
• Put the Right People in the Right Place at the Right Time: Through StoreForce’s analytics and scheduling, Cape Union Mart gained visibility into hourly sales trends, peak traffic periods, and associate productivity. This allowed them to dynamically adjust staffing levels and ensure that their best-performing associates were deployed at high-impact times and locations.
• Eliminate Increasing Labour Cost Year-over-Year: With a data-driven approach, they were able to strategically allocate staff, ensuring that payroll hours contribute to both sales’ growth and service quality.
The results were impressive: Cape Union Mart reduced wasted labour costs by 5% while still maintaining exceptional service levels and achieving growth.
The strategy they refer to as “Cutting the Fat, Not the Muscle,” resulted in overall cost savings—estimated at around 250 million Rand (~£10M)—demonstrating how it’s not about the quantity of labour, but the quality.
The Next Big Opportunity for African Retailers
The key takeaway from Cape Union Mart’s approach is simple: Retailers don’t need to spend more on labour to grow. In fact, unnecessary increases in labour costs can be detrimental to the bottom line.
With advancements in technology and workforce optimisation, African Retailers have a unique opportunity to rethink how they manage their labour resources. Rather than adding staff or increasing hours across the board, smart labour management allows for a more precise allocation of resources, enabling brick-and-mortar Retail companies to maintain efficiency and profitability as they scale.
Take Action: Optimise Your Workforce Today
Optimise your workforce, enhance service quality, and drive sustainable growth with StoreForce’s intelligent labour management tools—just like Cape Union Mart.
Donovan Cooper
