In today’s grocery industry, retailers who don’t increase their staff appropriately run the risk of losing out on same-store sales growth.
But, employers are struggling to fill job openings across industries as the financial crisis stifles hiring in a historic labor shortage. Retailers have to pay more to attract employees, and many can’t afford the higher costs.
How can grocers afford to attract talent while growing their same-store sales? The answer lies in maximizing the spare capacity grocers have sitting idle in-store today, like empty checkout lanes and untouched inventory. Putting that existing capacity to use doesn’t touch operating costs, so retailers can use new profit earned to serve customers better and pay higher wages.
Capacity utilization is the measurement of how many transactions occur during a specific time frame compared to how many transactions could have occurred during the same time frame if resources were fully utilized. In the grocery industry, utilizing capacity appropriately means you'll earn more customers and sell more products — resulting in the need for more employees. Luckily, with the additional profit from partnering with Upside, you'll be able to afford them.
To maximize these resources, you need to increase reach by casting a wider net and changing customer behaviors, so they start visiting your locations as part of their routines. Naturally, this influx means your store will need the labor capacity to keep up. Without enough employees to work the registers and stock the shelves, you won’t be able to maximize your capacity utilization — or your incremental profit.
So let’s discuss creating a sustainable way to hire grocery store employees that leverages the incremental boosts of capacity utilization as a resource for staff and profit growth.
Learn more about how to calculate capacity utilization for your grocery store: How to Calculate Capacity Utilization, According to Upside Experts
According to IBISWorld grocery industry data, the average employee is responsible for processing $25,000 in grocery sales per month, requiring 180 labor hours. At a wage of $15 an hour, each additional $25,000 in sales would require another $2,700 in labor.
By default, earnings before interest, taxes, depreciation, and amortization (EBITDA) over $2,700 means you’ll still come away with incremental profit and have room to hire additional staff to meet increased demand. With capacity utilization driven by Upside, we bring incremental customers that boost EBITDA and allow more labor spending while remaining profitable.
Retailers on the platform can expect:
As Upside changes individual buying behavior, retailers see higher capacity utilization. And those new sales that fall straight to your bottom line.
Consider this snapshot of how a grocery store grew from using Upside:
From that new EBITDA comes a range of possibilities for how grocers can sustainably hire to support their new capacity created using Upside.
Hiring employees at $15 an hour is tricky, particularly during a hiring crisis. With many states and major grocery chains offering a competitive hourly wage, smaller grocers must be savvy to compete with larger retailers while accounting for existing staff’s pay.
There are a couple of ways to approach this:
Now, let’s reframe this in the context of the incremental profit from Upside. The EBITDA increase of 7.1% brought a new profit of $9,104. If your operating costs for additional staffing are $3,600, you can cover the wages and still see incremental profits of $5,504 — a 4.3% increase from pre-Upside sales.
Tackling competitive wages while rewarding existing staff prevents churn of active employees (a significant drag on efficiency in today’s market) while allowing resources for you to bring on new talent.
If your focus on capacity utilization continues to produce incremental profit, your EBITDA needs to provide enough room for operating costs to meet your labor demand.
Upside is the platform to help you boost capacity utilization at your grocery store and enable you to attract grocery staff in this competitive labor market. Read more about Upside’s impact on grocery capacity utilization and growing labor demand with a detailed breakdown from Tyler Renaghan, Upside's Vice President of Grocery here.
Upside polled thousands of retailers to understand the biggest challenges they currently face, and a common theme emerged.
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