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"aldi smashes through the minimum wage pay scale"

Bet this got your attention, and there is no hyperbole here! BUT it is an historical quotation, so let’s look back to 11 years ago when The Grocer told us this tale of wonder…Aldi was “smashing through the minimum wage pay scale”. “Smashing” was the right word – Aldi were paying £7.20/hour compared to the then current minimum wage of £5.05/hour – a whopping 43% difference!

No one else was doing this – so how could Aldi fund it and still grow in the marketplace? It was a simple, but effective, productivity proposition

The Operating Model for Aldi’s 300+ UK stores was already well established – staff worked very very hard, uniforms were worn till they were worn, waste was kept to an absolute minimum. On their 2005 recruitment adverts they told the UK workforce “Aldi store assistants earn more because they do more"

The most important part of the Aldi operating model was that everyone did everything all the time – and this was at a time when almost every UK food retailer had segmentation of tasks – HR organization was about “Departments” and “Teams”. Indeed, many of the UK retailers were investing in solutions to achieve the prize of “Multi-tasking” across teams with the promise of significant labour cost reductions

Of course this high pay approach was not well received everywhere. Interestingly the trade union USDAW was OK with the hourly rate, but amazingly it did not like the Aldi work content, which it saw as putting too much pressure on workers. There was certainly a truth that the Aldi model didn’t work for everyone – many staff moved from other supermarkets to Aldi, and then moved right back again. This is the clearest support for the idea that the 42% extra wages was a good plan – it was yielding more than 42% extra work

So what’s the point here? Well 11 years on everyone is talking about £7.20/hour, but now it is because of the National Living Wage. Yet again this turns every Retailers mind to cost management and then onto productivity

The difference is that now that this cost increase is the law… and so following the “Productivity Imperative”, which McKinsey’s correctly liken to a Business Holy Grail, remains difficult but is increasingly attractive. Everyone still wants to make their business more competitive and productive, but everyone must employ a method which works for their current situation

  • Aldi is now investing in Customer Price, not wages
  • Waitrose is investing in Customer Loyalty
  • Tesco is now taking a holistic approach which goes to the heart of Direct Product Profitability, delisting products through Project Reset (certainly not a Carlsberg Moment!)
  • Argos invests heavily in Technology
  • For HR productivity McKinsey’s tell us that “Activity Based Planning” is the next big thing (is that different to 2006 “Task Management”?)

WHAT WE KNOW FOR SURE AT SWL is that our SMARTBUDGET approach is Unique. Retailer specific Labour Modelling and individual store budgeting is an excellent foundation for future flexibility. We can forecast by sales, £ or hours and produce the correct budget to serve the objectives of the business as it follows its productivity journey

SWL Customers always know that their cost budgets and service targets are current and correct, which means that SWL’s brave new retail world is managed by smiling, stress free, colleagues in the crispest of branded uniforms

watch as the english mountains fall…

…Plastic bag mountains, that is. Slowly but surely, this bag mountain is going to shrink as England introduces the 5p charge for plastic bags from the 5th of this month.

The 5p charge is applicable to all retailers that employ at least 250 members of staff, while small shops can charge if they choose to. The money from the charges, after production costs, will be donated to charity.

According to WRAP, The Waste Reduction Body, 8.5bn thin-gauge plastic bags, were used last year by customers of UK Supermarkets. Most of these are not biodegradable, but over centuries break down into smaller pieces of plastic.

A similar 5p charge was introduced in Wales in October 2011, in Northern Ireland in April 2013 and in Scotland in October 2014 and all 3 countries reported significant reductions in the number of bags taken from shops.

The government estimates that from the charge in England, over the next 10 years, up to £730m will be raised for good causes. A £60m saving on litter collection costs is forecast and a carbon saving of £13m.

Retailers have the double benefit of saving money, as production of branded plastic bags is now covered and increasing the profile of their company sustainability plan. Any community engagement or charity programmes can be highlighted to customers in store and online from the bag charges.

Recent studies by McKinsey, Deutsche Bank and Harvard Business School and Universities of London have quantified the positive effects of sustainability activities on corporate value. McKinsey found that 39% of those surveyed believe that a clearly communicated sustainability message will increase a company’s value.

WHAT WE KNOW FOR SURE AT SWL is that the 5p charge is a small step, but can help your business build a sustainability strategy. SWL can help you become sustainable with CLEARMATCH mapping human resources with customer patterns and customer service needs, making you more efficient in store.

catapult centres and sandboxes

What an article in The Economist June 5th…as soon as I saw that Rolls Royce had halved the time it takes to manufacture fan discs and turbine discs I knew it would be a thumping good read. Turns out this is a real smack in the eye for everyone who thinks UK is to Productivity what Mad Men is to good taste. Apparently this innovation comes from the introduction of “Catapult Centres” where Academics work with Industry and which create a “sandbox environment” for experimentation.

Of course right now the UKs G7 peers are powering ahead of UK in productivity terms. (we are 9% behind USA and even France’s productivity is growing more quickly) so this Rolls Royce oasis of productivity is indeed a welcome sight

So what are we getting so wrong? Well for once the reason for overall low UK Productivity isn’t our love of holidays. its a sticky mix of Bank overregulation slowing investment funding, plenty of cheap labour making new plant & equipment look expensive and inflexible, and in case these aren’t enough we live in an economy suffering from post 2008 extreme business caution.

Innovation isn’t our problem in UK, it is keeping growth and costs in alignment whilst serving Customers through increasingly complicated Operating Models

WHAT WE KNOW FOR SURE at SWL is that real productivity gains in mature businesses are hard won.
Every Retailer is working hard to operate through all the channels their Customers want to buy through, and to deliver all the Customer Service touchpoints which are needed to make logistics slick and keep Customers happy & spending. Of course this sales growth is only of value if it is built on better Productivity – “Sales per Worked Hour” is the King of KPIs here. Having said all this we have to “stare down” Caution, because it takes a brave Director with a real zeal to consistently maintain service standards by mapping resources with changing Customer activities every day.

At SWL we KNOW how to deliver Best Customer Service and how to grow productivity using Science and Experience – and so on this occasion we can leave the Catapult Centre for Dennis the Menace