This article is part of a larger series on Retail Management.
The right retail store hours can drastically improve your return on investment (ROI) and revenue. But when your store schedule is haphazardly put together without much thought, you risk missing out on some of the most profitable opportunities and overspending on operating costs.
Follow these seven steps to optimize your retail store hours:
1. Analyze Your Foot Traffic
First things first: You’ll want to know how many people are in your store at a given time. If you have a lot of foot traffic for certain times of day, you’ll know that it’s important to be open during those hours. On the flipside, if you have very little foot traffic at other hours, you may consider closing for those times—or looking at ways to boost foot traffic if you want to stay open.
While you certainly can manually count foot traffic, this isn’t the most efficient or accurate way. There are many tools and platforms you can use to count the people coming into your store and analyze the data for trends and to forecast future traffic. These analyses will help you best determine which hours your store should be open or closed.
See our guide to analyzing foot traffic for recommendations on tools and software. Some popular and more affordable options for retailers include:
- Dor: Understand in-store traffic, peak hours, conversion rates, and marketing effectiveness.
- RetailNext Traffic 2.0: Get accurate, real-time foot traffic measurements.
- Blix: Optimize staffing, measure the customer experience, and increase revenue through foot traffic analysis.
But you also want to understand the foot traffic outside and around your store, as you might be closed during potential peak hours. If there’s a lot of foot traffic outside and your store is closed during that time, you’re missing opportunities. Here are some tools to help you understand external foot traffic:
- Kepler Analytics Property Toolkit: Document passersby traffic volumes, compare traffic trends across different locations, and forecast sales.
- AreaVibes: Not exactly traffic counting, but AreaVibes shows valuable geographic lifestyle and demographic data for free, including information about the local population, amenities, and walkability.
Document which times you have a lot of foot traffic in your store and around your store, as well as which times you don’t. Make note of trends—Mondays might see less foot traffic from 1 p.m. – 4 p.m. while 1 p.m. – 4 p.m. could be your busiest Sunday hours, for example. These trends will come into play when determining your retail store hours.
2. Look at Your Sales Data
Lots of foot traffic doesn’t always translate to lots of sales. Sales reports are helpful to see when customers make the most purchases. You’ll want to map the sales data back to the times of day so you can see which times you make the most sales and which times don’t see as much revenue. You can use your point-of-sale (POS) system to pull reports about sales and revenue.
Tip: Look for your sales or transactions by hour report. This will map the sales data back to the time of day for you.
Once you have both your foot traffic and sales data, you can start connecting the dots. High foot traffic and high sales would predictably correlate, but this isn’t always the case. You might have high sales times but see the foot traffic is typically low. This could indicate you have a few regular customers or otherwise high-spending shoppers that visit during that time frame. Maybe you’ll run some campaigns and promotions to lure more traffic during those times.
Or it could be vice versa—busy foot traffic times might see few sales. This could signify a need to improve staffing levels or optimize the checkout experience to reduce wait times.
A high number of transactions and lots of foot traffic means you should definitely keep those store hours open. Few sales and low foot traffic could indicate that you can afford to close the store at those times; otherwise, you’ll need to come up with a way to boost foot traffic to make it worth your while.
3. Understand Your Operating Costs
Sales and foot traffic aren’t the only metrics to consider. You might know how much it costs to launch your business, but what about running it? When setting your retail store hours, you need to know how much it costs you to be open—referred to as your operating costs, which includes cost of goods sold (COGS) or operating expenses (excludes COGS).
It’s helpful to break this down into a per-hour cost, if possible. Here are some expenses you’ll want to think about including:
- Staff wages
- Supplies (receipt printer paper, for example)
- Marketing and advertising
You may pull your historical profit and loss (P&L) statement from your POS data to find out your hourly operating costs. Use the following formula:
Operating cost per hour = total expenses / total number of hours open
When you have your sales, foot traffic, and operating cost data, you can compare them against one another to determine profitability for any hours you’re considering being open for business.
4. Consider Fluctuations & Abnormalities
While it’s great to take a data-driven approach, outliers can often skew the data, resulting in ill-informed decisions.
For example, you might make a huge sale one week early Monday morning while most Monday mornings are slow. It’s important to make decisions based on trends and not one-off chance events.
Go through your historical data and see if any unusual fluctuations or trends occur. Flag those and then dig deeper for the cause. In the example above, you’d omit the sales data from that Monday morning transaction to get a more accurate view of your business and which hours are most profitable for you.
Tip: Plan ahead for fluctuations as much as you can. For example, even if your store typically gets very little traffic Saturday nights, there might be increased foot traffic or demand on Small Business Saturday or Super Saturday (the Saturday before Christmas). The same could be true for any local events happening in your town or community.
5. Check Your Staffing Availability
While you can set your retail store hours using the data and approach listed above, you won’t be able to be open if you don’t have anyone to work those hours. That’s why it’s so important to check with your staff to see their scheduling availability. If it doesn’t align with your new retail store hours, you may need to expand your team.
Here are resources to help you do just that:
Having trouble finding qualified applicants? Consider offering a pay boost for undesirable hours to your existing team—similar to how employers may offer extra pay for overtime or holiday shifts.
6. Test Your New Retail Store Hours
Generally speaking, you want to set your hours and keep them fairly consistent. This makes it easier for shoppers to remember when you’re open, increasing the likelihood of both planned and unplanned visits. Plus, predictability in your schedule makes it easier for shoppers to plan their visit if they need to do so—if they’re traveling a fair distance or need to visit while on break from work, for instance.
That’s why it’s a good idea to test your new retail store hours before making any permanent changes. One way to do this is to send out a survey to your customers and simply ask what they think of the new proposed schedule. You might be challenged or validated by their responses.
7. Think Outside the Box
If you want to expand your retail store hours but not permanently, you can approach it creatively. It’s OK to make changes to retail store hours temporarily—the holiday shopping season necessitates this for many retailers, for instance. But you can try other approaches to test ideas or temporarily commit to expanded hours:
- Offer appointments for shopping outside of business hours: Many retailers started offering by-appointment shopping hours for customers when the COVID-19 pandemic first put limitations on in-person business.
- Host in-store events: Schedule the events outside of operating hours, and allow people to shop before, during, and/or after the event. You might also throw exclusive in-store shopping events for email subscribers or loyalty program members.
- Open for mobile sales: Make yourself available to the public in different places at different times. Get involved at your local market, sell your items with another retailer, or host a pop-up outside of your regular operating hours.
Whether you are just starting your retail business or managing an established store, optimizing your retail store hours should be a key consideration. It’s important to take a data-driven approach to make sure you’re making money and not losing it. Remember to check in with some of the reports and metrics mentioned above to ensure your store hours make sense. Shopping habits change, and your store hours may need to as well.
Once you’ve optimized your retail store hours, consider optimizing the in-store experience for the customers who visit during those hours. Here are some resources to help: