The Great Rethink of working conditions is still impacting the retail industry. The industry has recovered almost completely from pre-pandemic levels, with the Bureau of Labor Statistics showing retail employment at pre-pandemic levels of just under 16 million employees, accounting for around 10% of the total U.S. workforce.
Yet with its reliance on hourly wage-earners, the youth of its workforce, its vulnerabilities to economic trends, its difficulties with hybrid working and the revolution in customer experience brought on by online sales, retail workforce issues present problems and offer opportunities that are similar to few other industries.
New approaches to workforce concerns
Solving workforce issues surrounding attracting and retaining hourly workers in retail must involve approaches across the employee lifecycle that are tailored to the differences in retail jobs from other industries. Many retail jobs are seasonal, and brick-and-mortar and distribution center locations cannot accommodate hybrid working.
“Retailers need to meet people where they are” said Margaret Belden, director of Transformation at Grant Thornton. Retailers have to be more creative around the type of pay – such as using spot bonuses or special pay for certain types of hours. Retailers also can consider more flexibility around days off, particularly after the holiday season, and focus benefits on well-being and childcare programs.
Kevin Kelly, national managing partner of Retail at Grant Thornton, added that, “Many retailers stepped up and offered hero bonuses – COVID bonuses – throughout the pandemic for showing up and serving customers. That went a long way toward building additional goodwill with their workforce.”
Retailers also have to make special appeals to younger workers who make up over 50 percent of industry workers. As has been well established through Grant Thornton’s workforce-related research, higher pay is essentially “table stakes” for attracting and retaining talent, and this is no less true for younger workers, Belden said. But the idea of earning more money by working huge numbers of hours isn’t as attractive.
“They want to work a decent number of hours for decent wages and move on to the “next greatest opportunity,” Belden said. And what counts just as much is the predictability of those hours so they can rely on the wages and maintain their other life choices and commitments.
One, other factor, Kelly said, is employees’ desire to work for a brand where they have some connection, a mission or purpose that they can relate to. Compelling perks for this type of employee often includes employee discounts, which are very motivating to workers, and which have a huge perceived value, Kelly said, which can make them cost-effective as well.
The bottom line, however, is that many of these changes are costly and likely not attainable in the long term. Retailers, and companies need to determine what trade-offs they can make based on what their employees value, Belden added. There has never been a greater time to listen to employees, align offerings and solidify the cost structure for a greater ROI.
Upskilling employees to meet demand
One unmistakable effect of COVID-19 was the rise of online selling and omnichannelling. Those trends were happening before the pandemic, but were accelerated by it. As a result, the way retail jobs were apportioned changes and with that, the need for a new set of skills for retail workers.
“One of the interesting challenges in retail now, is how many stores are being used as distribution centers,” Kelly said, “such that new skill sets for store associates are now needed that didn’t exist previously.” Retailers should look at the growth of omnichanneling as an opportunity to offer a more diverse range of upskilling opportunities to its employees, and thus provide more reasons for them to stay.
Belden also said retailers must recognize how online selling has changed customer service. Handling a customer in-person where you can connect and read body language and portray a personal connection requires a different tact and skill set that managing online queries and complaints. All need to be equipped with the skills and techniques needed to ensure a successful customer experience and standards for what is expected. Kelly said he’s seen increased use of tablets for a store, where even in person, a store associate and a customer will discuss what’s on a screen rather than what’s in a store display, putting a premium on employees’ technology abilities.
One trend Belden has seen that is troubling with the increased use of technology in retail is the use of in-store surveys. Customer service professionals are not only asking you to complete feedback surveys they are indicating what rating you should provide to ensure their review is favorably received. This could be a deterrent for some workers who fear the significant weight of this single source of feedback with no circumstances or dialogue for context.
This diversifying of abilities also includes providing more opportunities for management positions. Belden referenced WalMart’s newly created internal program aimed at moving qualified front-line workers into management. Showing a path to future income and opportunity through a targeted effort to develop and train their workers.
Is the retail boom over?
With the Federal Reserve hiking interest rates in order to stave off spiking inflation, the recent boom in post-pandemic retail sales seems to be over. In this time of adjustment, some retailers have already announced layoffs and there could be more. Pressures to hire new employees will be countered by a stagnation in growth.
Kelly said the key to retail company viability in the coming year is that there is no “trend” – that what matters is a company’s own situation within its own business. Retail is a dynamic industry in this economic environment, where some companies have merged, some have gone bankrupt and some have thrived and grown and are stronger now than a few years ago.
“Retailers that are managing their business well continually evaluate tier team needs to ensure a positive customer experience,” Kelly said. Those that aren’t or that find that their products aren’t resonating with consumers will need to scale back. Businesses that can respond to economic bumps with the agility and flexibility to respond quickly and reinvent their models, including workforce planning, are the ones that will survive and thrive.
There was sustained growth in retail in the years following the 2008-2010 crash and there are signs the retail industry as a whole could enjoy another such stretch. Certainly, Kelly said recent data shows that there is a lot of pent-up demand that, earlier, was channeled into spending around the house. Even inflation isn’t necessarily going to hurt short-term, as inflation enables retailers to raise prices. For customers who continue to make purchases in the retail sector, higher pricing may depress sales but can earn the retailer more from each sale. An increase in margins means the retailer can reinvest into the company where they see fit, such as workforce initiatives.
“What’s so important here,” Kelly added, “is no matter where the economy stands, what’s crucial is the power of your retail brand. If your brand resonates with the consumer, the consumer will show up and spend.” As mentioned before, a strong brand in and of itself can be a strong attractor of talent.
Belden said a more worrisome factor for retailers is not inflation but the remaining uncertainties of supply chain disruptions. With some irony, supply chain disruptions actually drove a lot of retail spending and the need for the workforce to support it across distribution centers and stores because customers anticipating delays, particularly around the holidays, made purchases early.
Continuing supply disruptions, combined with economic conditions paint an uncertain future – but one that can be managed successfully by retailers, Kelly said, that know how to distinguish their business from others to attract the best talent. By tailoring pay, perks and working conditions to attract workers with the right skillset for tomorrow’s economy, retail leaders will go far to set their businesses on a path to growth and stability.
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