Case Studies > What Are the Most Profitable Operating Hours for Our Stores?

What Are the Most Profitable Operating Hours for Our Stores?

Company Size

1,000+

Region

America

Country

United States

Product

APT’s Test & Learn®
Test & Learn for Sites

Tech Stack

Test-and-Control Analysis
In-Market Experimentation

Implementation Scale

Departmental Deployment

Impact Metrics

Customer Satisfaction
Productivity Improvements
Revenue Growth

Technology Category

Analytics & Modeling - Predictive Analytics
Functional Applications - Enterprise Resource Planning Systems (ERP)

Applicable Industries

Retail

Applicable Functions

Business Operation
Sales & Marketing

Use Cases

Predictive Replenishment
Retail Store Automation

Services

Software Design & Engineering Services
System Integration

About The Customer

The customer is a leading specialty retailer with a significant number of stores across various markets. The retailer experiences heavy in-store traffic on weekends and is focused on optimizing its operating hours to maximize profitability. The company is large, with over 1,000 employees, and operates in a competitive retail environment where customer convenience and operational efficiency are critical. The retailer is keen on using data-driven approaches to make informed decisions about store operations and has invested in advanced analytics tools to support this goal.

The Challenge

Executives at a leading specialty retailer wanted to identify the optimal operating schedule for their stores. Given heavy in-store traffic on the weekends, management planned to open stores two hours earlier on Saturdays, but first wanted to understand the total profit impact of the change. Specifically, the client sought to understand if the extended hours would generate a sufficient increase in sales to offset the associated costs.

The Solution

Using APT’s Test & Learn for Sites software, the client designed an in-market experiment to test the new hours in a representative subset of stores and measure the incremental impact on profit. The software compared 'test stores,' where the hours were changed, to customized groups of similar 'control stores,' that did not undergo hour changes, to isolate the incremental profit impact of the operating hour changes. APT’s rigorous test-and-control analysis showed that the extended hours led to an 8.4% ($210 per store) lift in Saturday gross profit throughout the test period. The software revealed that the lift in profit came primarily from the extra hours and only caused slight cannibalization of mid-morning profits. However, while there was negligible impact on weekday profit, the analysis identified a 1.1% ($28 per store) decline in Sunday gross profit. Accounting for this cannibalization of Sunday profit and the required $170 in additional labor/operating costs per store, extending hours would cause a $43 decline in profit per store on average.

Operational Impact

APT software identified select stores in the network where the hour changes would have a positive impact.
The software automatically analyzed thousands of factors, such as market demographics and store attributes, to identify characteristics associated with higher performance.
In stores located in areas with lower income, larger households, and more competitors nearby, the extended hours would drive a large enough profit increase to have a positive net profit impact.
A network-wide rollout of the hours change would have caused a decline in profits, but by employing a Test & Learn® approach, the retailer limited implementation of the change to the stores predicted to respond best.
Targeting the operating hours change to the right stores made the program profitable and resulted in a $2.5MM incremental annual profit improvement.

Quantitative Benefit