The Supply Side: Workforce shortage top concern for retailers
While inflationary fear and slowing consumer spending are among the top external worries among retailers, the No. 1 internal concern is the ongoing workforce shortage, and the difficulty retailers are having attracting and retaining employees.
According to the National Retail Federation, workforce insiders and economists say the problem will be around for a while even though one in four U.S. jobs is in retail at 52 million. As retailers continue to be challenged by a frontline workforce shortage, Coresight Retail warns that the balance of power is shifting from capital and profits to labor.
The U.S. Department of Labor reported on average, retail added 16,000 jobs per month over 2022, less than half of 2021’s figure of 35,000 per month. December’s retail numbers, while an improvement, also provide insight into the evolution of the retail industry. Though some significant retailers are slashing jobs, related segments are opening up positions. In addition, while some more discretionary retail areas have been hit hard, other elements are making progress.
“The last few years have placed a significant amount of pressure and demand on frontline workers, yet organizations continue to face challenges in supporting and retaining this critical segment of the workforce,” said Mariana Santiago, an executive at workforce consultants firm Workday.
A recent survey by Workday uncovered that “experience” is at the core of frontline worker engagement and retention. Santiago said organizations that listen to the evolving needs and preferences of frontline workers, empower them with the tools to do their jobs and support them when it matters most would flip the script and dramatically increase their ability to recruit and retain this workforce.
Workday also reports that the top three factors frontline retail workers said they want include having a sense of belonging with a supportive manager, flexible scheduling options and communication transparency with corporate leadership.
A recent survey by Forrester with workforce placement firm WorkJam looked at the other side of the labor equation from the retailer’s perspective. Forrester found that 63% of retailers operate with a frontline employee deficit in early 2023. And, 80% of respondents in the survey said they plan to leverage technology to improve the front-of-store experience for shoppers and employees.
“Retailers need to provide the right digital tools to their frontline associates – not just to corporate and HQ staff – to ensure workers are empowered, engaged and happy and to improve operational efficiency and revenues,” Forrester noted.
The report also found that 74% of decision-makers in retail, travel and restaurant industries say frontline employees are rejecting work conditions that went unchallenged just two years ago, and 80% say frontline turnover has increased, challenging companies to maintain standards and deliver a positive customer experience.
Retailers continue introducing more self-checkouts to help with the labor shortage and provide a speedier experience. Walmart introduced its corral checkouts at the front of Supercenters and neighborhood market locations more than five years ago. Dollar General, a much smaller format, has also added a self-check option at most stores. Home Depot and Lowe’s have used self-checkout options for the past five years. Old Navy and other apparel stores are testing self-checkouts in specific locations, such as Galleria Dallas.
Self-checkout technology continues to improve to help retailers curb loss from theft. Walmart recently staffed more checkout lanes in some stores, such as Walmart Store No. 144 in south Fayetteville. A store employee said the action was to crack down on theft and to provide shoppers with another checkout option. Walmart has positioned employees at the doors to check receipts and help control unintended and intentional shoplifting. Walmart contends that the receipt checking policy is not new.
“We remain focused on meeting our customers’ needs and providing the best shopping experience. We’re constantly exploring ways to better control inventory; performing receipt checks is one of those methods,” said Charles Crowson, a corporate spokesman at Walmart.
Forrester found that 92% of survey respondents wanted to improve front-of-the-store experiences for employees and shoppers. The biggest concerns of front-end retail workers include better communication, salary and more flexible scheduling. Forrester found that 87% said they expect more flexibility in scheduling than they did two years ago.
“Focusing on the frontline employee experience is key to achieving business goals, including growing revenue, engaging and retaining associates, increasing efficiency and ultimately delivering an excellent customer experience,” said WorkJam CEO Steven Kramer.
Retailers have begun using mobile technology to help employees and shoppers perform their tasks more efficiently. Walmart started a few years ago using mobile technology to help employees better track inventory. The retail giant also reactivated Scan & Go for its Walmart+ subscribers, which allows shoppers to scan items with their phone as they place them in the cart and then use mobile checkout by scanning a code at the store checkout station.
Walmart has yet to say how many subscribers are using Scan & Go. Still, it has repeatedly said that the tools it has provided employees to track inventory better and get quick answers via their smartphones are helping employees better serve customers.
Amazon pioneered a technology that allows shoppers to scan their phones when entering an AmazonGo store. As shoppers take an item from the shelf, it’s automatically put in a virtual cart. The shopper then confirms the purchase on their phone, and they are out the door.
IKEA also uses Scan & Go in its stores which shoppers access via a mobile app. Shoppers scan the items as they shop and keep track of their purchases in real-time. The shopper does have to go to a mobile checkout station to complete the purchase. Sam’s Club has a similar technology it has used for several years. At Sam’s Club, the member pays with a mobile payment option and does not have to go through a checkout station like at Walmart and IKEA.
“Businesses will actively seek out innovative solutions that enable mobility and empower them to do more with less,” said Ravi Panjwani, vice president of Brother Mobile Solutions. “Long-term sales success depends on fast-paced inventory and customer satisfaction. Solutions that let employees address those challenges while staying on the go will significantly influence the retail and restaurant industries.”
Editor’s note: The Supply Side section of Talk Business & Politics focuses on the companies, organizations, issues and individuals engaged in providing products and services to retailers. The Supply Side is managed by Talk Business & Politics and sponsored by Propak Logistics.