Back to School Shopping and Revenue Loss from Frustrated Customers that Wait in Line and Decide to Leave

My kids have been in school now for about a two weeks. So, the whole back to school shopping thing is still all-too fresh in my mind. Which is why this recent article on back-to-school and Queueing was so relevant. You can also view all 40+ articles on Queueing Theory.

According to a recent study, back-to-school retailers are losing up to 39% of revenues due to long lines and in-line frustration. With overall K-12 and college spending combined expected to reach a whopping $55 billion this year, back-to-school shopping is the second largest event for retailers, right behind the winter holidays.

According to the study, $21 billion of that revenue is lost to poor customer queue management. That is an outstanding number – and tremendous opportunity.

Back to School Shopping Waiting Line Survey Data

According to the survey results,

In the nationwide study of 500 parents with school-aged children, the vast majority, 75% of respondents say long lines are the worst part of the back-to-school shopping experience. Nearly four in ten (39%) parents, leave stores while back-to-school shopping without purchasing a single item because of long lines. Long lines are cited by 35%, 1 in 3 parents, as the primary reason for leaving the store — worse than high prices, lack of supplies or inexperienced sales personnel.

According to the researchers,

Time is money — reducing walkaways’ and optimizing queue time is the end game. By deploying a smart queue management strategy, retailers can take control of and ideally manage the customer journey, from when they enter the store, at the retail point-of-sale, in-line at checkout and once they walk out the door.

Convert Wait Time to Shopping Time

This is a tremendous opportunity for the retailer – by converting Queueing Time or Wait Time to extended Shopping Time. Potentially, retailers can cost-effectively convert waiting time into extended shopping time, boost impulse sales, improve retail efficiencies and eliminate customer frustration and employee stress during the back-to-school shopping season, enriching the overall customer experience and ultimately increase margins.

Lean Thinking Applied to Queues

How might Lean Thinking be applied?

The Theory of Constraints teaches us that the overall output of any process is determined by the bottleneck. So it’s critical that we do the following at the bottleneck:

• eliminate or reduce steps at the bottleneck
• eliminate or reduce waste (muda) at the bottleneck
• create more capacity at the bottleneck

For a retailer, the point-of-sale or the cashier or the cash registers is the bottleneck step.

Ideally, we would want to design a pull system, such as as one customer leaves the system, another enters the system. But, in a point-of-sale queue, such as we see in retail, we do not see a pull system – we see a push system: customers line-up and wait, regardless of customers leaving the system or regardless of exit rate in the queue.

In general, If a customer is already waiting in line, one can eliminate waste at the server (or point of sale). Doing this could potentially reduce wait time, increase flow, which means revenue recognition much sooner.

Here are a few specific suggestions:

1. Make sure the cashier is only (a) scanning and (b) taking payment. There should be baggers to offload unnecessary steps that the cashier should not be doing.
2. Make sure payment systems and scanning systems are functioning perfectly, are easy to use for the cashier; that the payment system is clear and easy to use for the customer.
3. Make sure the customer is ready to pay, removing the need for the “search, reach, grab, pay” steps during the payment steps. If the customer is ready when the cashier if finished scanning, that could eliminate a few seconds of wait time for the entire queue.

It’s Your Turn

If you were to provide advice to Wal-Mart or some other large brick-and-mortar retailer, how might you suggest they manage their queues in order to convert wait time to shopping time?

source: http://www.lawrencemetal.com/about/news.aspx