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Ann Taylor Finds Upside in Treating Employees Like Inventory

Ann Taylor Stores Corp. was outed this week for treating employees like widgets and nobody noticed.
I expected more hue and cry after a Wall Street Journal story detailed the impact that workforce management software has on retailers, including an Ann Taylor store in suburban Pennsylvania whose nice retired first grade teacher saleslady's hours were cut drastically after the tracking software noticed big swings in her hourly sales.

Scott Knaul, director of operations at Ann Taylor, said they called the new system ATLAS, for Ann Taylor Labor Allocation System. "[It] was important because it gave a personality to the system, so [employees] hate the system and not us." The Journal's Vanessa O'Connell notes that a year after the rollout of the RedPrairie software, 76 percent of store managers thought it handled scheduling better than the old spreadsheets.

Ann Taylor At Ann Taylor, the ATLAS system scheduled more employees for higher-traffic days and times, and a higher percentage of browsers have become buyers in the stores where the system was tested. Knaul noted that the company did time studies to establish how long it should take for a salesperson to greet a customer or fold a sweater.

Perhaps retailers read the story and took notes. "The single biggest controllable cost in retail is people," Carl Steidtmann, chief economist at Deloitte, told the Journal.

The Conference Board's John M. Gibbons, a former director of human resources at Gap, was more direct. "When you have those clear methods of measurement, and just-in-time delivery for supply-chain management, it's a natural transition to apply it to human resources as well."

But other observers shuddered. "Big Bro is tracking," Newser announced.

At Retail Wire, consultant Bill Bittner kicked off a discussion on workforce management systems by contemplating the need for both qualitative and quantitative benefits. "Everyone understands that labor is the number one controllable expense, but it is also necessary to 'build a team' in the store. It does not help the situation to have the 'alpha dog' be an impersonal scheduling system that pumps out worker assignments from some remote bunker," he wrote.

Nikki Baird, managing partner at Retail Systems Research, invoked the classic GIGO algorithm. "These systems are perfectly capable of setting constraints like, 'Schedule only in a minimum of 4-hour blocks.' They are also perfectly capable of placing greater weight on employee preferences for scheduled times--and yes, for capturing employee preferences in the first place, if the retailer chooses to implement that feature. ... If employees and store managers both aren't happier after a WFM implementation, I would say look first at the configuration decisions, and look second at the change management plan. And neither of those are 'the system's fault.'"

Andrew Rudin of Outside Technologies predicted the software will backfire. At the blog CustomerThink, Rudin called the Journal story "chilling" and predicted the new Ann Taylor would create "a new low in customer experience" as ruthless closers overtake relationship builders as the chain's most effective salespeople.

"To me, ATLAS is a nickname for Employee Manipulation. Its use portends some eyebrow-raising sales behaviors," Rudin predicts.

Automating work scheduling isn't the only innovation that Ann Taylor execs are pulling out of their newsboy caps and ruffled sleeves this fall. The new president of the company's Ann Taylor Stores division, Christine Beauchamp, is a Harvard MBA who spent time at Boston Consulting Group and is believed to bring a more strategic focus. The Loft division president slot is vacant, as is chief supply chain officer and several key design positions, according to Crain's New York.

In an August conference call with analysts, CEO Kay Krill described efforts to tighten inventory, reduce SKU count and make the merchandise more chic and sophisticated in both stores even as Ann Taylor closes 117 underperforming locations. Perhaps the most telling innovation is the partnership between Loft and Procter & Gamble, which is launching its co-promotion of Tide and Downy Total Care brands and Ann Taylor clothing this week. The full-page ads in fashion magazines point out two-thirds of Loft's collection is machine washable, because P&G's research shows that the dual message of saving money on dry cleaning, and caring for clothes to make them last longer, resonate strongly in the current economy.

Image via Flickr by Marcin Wichary

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