Laboring to find workers: How retailers can find, retain talent

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Laboring to find workers: How retailers can find, retain talent

By Barrie Dawson - 05/28/2019
While the current robust economy is good for most people, it has created a labor shortage for mass retailers and the pharmacy counter that stretches from the most menial job levels up to the corporate offices. The solution to filling vacant jobs with competent people involves everything from making some cost-free attitude adjustments to effectively implementing automation and artificial intelligence.

Let’s face it: Children dream of becoming astronauts and ballerinas, and teenagers aspire to become doctors and lawyers. Unfortunately, there is nothing innately attractive about working at a mass retail chain. These are few people’s top choice for a career, and when wages are low, hours are long and recognition is scarce, such low-end retail jobs can seem more like nightmares.

“Grocery and pharmacy have trouble attracting labor, and clearly it’s partly because of the very low level of unemployment at the moment,” said Hart Posen, an associate professor of management at the University of Wisconsin-Madison School of Business. “It’s also a result of what they’ve chosen — and this was a decision made many years ago — to be low-wage, low-benefit and, consequently, sort of a low-skill environment.”

Workers may tolerate low wages and unaccommodating schedules when jobs are scarce, but the tables have turned. In today’s climate, workers have options and retailers that want to retain their employees must accept that and adjust.

“Wegmans, the place people want to work, does not pay the highest salaries,” John Stanton, professor of food marketing at Saint Joseph’s University in Philadelphia, said of the supermarket chain. “As a matter of fact, the companies that pay the highest salaries are often the worst places to work. The reason why they have to pay higher salaries is that’s the only way they keep people.”

Stanton relayed the story of a young man who worked part-time in a supermarket while attending college. The store manager willingly worked around the young man’s class schedule each week, but then the store hired a new manager. He only cared about the store’s needs and refused to consider the student employee’s class schedule. Even though he enjoyed the supermarket job, the young man was forced to quit.

Retail managers who treat low-level workers like disposable diapers often are left with a mess to clean up. When workers quit nowadays, someone else usually is not waiting to fill the vacancy. Employee turnover, or churn, costs money because incoming workers have to be found, hired and trained.

“It’s hard enough to hire folks into the store,” said Marc Rousset, a partner at Boston-based global Oliver Wyman management consultancy. “There’s a ton of cost pressure, where you can’t just easily raise wages. That has a massive impact on the bottom lines of these companies — even the slightest changes in wages. You have to design around the talent you’re going to get.”

Posen cited Costco as an example of a big-box retailer that reaps benefits from having what he calls “a unique staffing model. They pay higher wages. They promote from within to managerial positions. They offer good benefits. And the quality of their workforce is higher. That’s a purposeful choice,” he said.

Retail managers also can make purposeful choices that will allow their stores to attract and retain employees. They can foster a sense of unity and teamwork by recognizing work that’s done well, reward extra effort, honor workers’ scheduling needs, and offer group and individual incentives. None of these things has to cost a dime.

“The issue is not so much getting labor as it is keeping labor,” said Stanton, who pointed out that younger workers — members of Generation Z and some of the younger millennials — are much more demanding of what they expect from a business. “If you have a manager today saying, ‘Here’s how we run the business, take it or leave it,’ they’ll leave it. In days of yore, people really wanted a job more than anything, and they put up with a lot of stuff.”

Rousset said that while the lower-end jobs seem to be hit the hardest by the labor shortage, there is a lot of competition for analytical talent at the corporate level, as well. “Banks and industries like health care are willing to pay a lot, so retailers in general have always had a harder time attracting that kind of talent,” he said. “You see some retailers who are opening hubs in very desirable areas, be they San Francisco, New York, Chicago, to try and improve the propositions to the younger, more technically savvy talent out there.”

Of course, the big question is: Can the mass retailer attract the best workers for its across-the-board job vacancies?

“You have to have a competitive wage to be considered,” Rousset said. “I think a lot of folks tend to be around the same amount as a starting point, but where I think a lot of emphasis has gone is on making it a more manageable lifestyle, so there’s a lot of movement on benefits, whether it’s health care, time off, retirement options and sick days. In-store labor, at the lower end, predictability on schedules and being able to get a good shift [are] also a big part of it.”

While pharmacy’s primary labor challenge is the shortage of technicians and a shortage of schools that will train them, the rest of mass retail faces a demand for more and better services from their customers. Patrons want to order groceries and healthcare items online and have them delivered. In the store, they want to buy precooked meals, fresh flowers and decadent baked goods. They want access to a store pharmacist, as well as attend an in-store cooking class, be advised by a nutritionist and consult a health clinician.

Skill is the common denominator among all of those services, and skilled labor costs money. The challenge for store management is to decide which services to offer and to be sure those services are profitable for the store.

“We are bringing new and more expensive human labor into the process,” said Bill Bishop, chief architect and co-founder of Barrington, Ill.-based retail advisory website Brick Meets Click. “So, the companies have to figure out two things, and neither is that easy. First of all, they have to figure out how to effectively do the new jobs. The other part of what companies need to do as a result of this is to get paid for the additional value added by these services.”

Some smaller chains and independent markets may opt not to offer precooked meals and fresh-baked treats because of the facility and labor costs. Instead, they might emphasize other forms of customer service. Some larger chains that feel compelled to offer all the extras because their competitors have them then must decide whether to ratchet up the cost of a store-prepared meal or depend on incremental sales to make the service worthwhile. The theory is if the pharmacist, baker or in-store chef brings customers into the store, those consumers are likely to fill their shopping baskets while they’re there.

“I think you’ll find it takes a fair amount of time for companies to learn the skills and to get paid for it,” Bishop said. “My guess is that there are some people moving up that learning curve quite a bit faster than others, but they’re still on the learning curve, so it’s not minting money for them.”

While additional services are changing the face of the supermarket workforce, so too is automation. Self-checkout stations have been around for years, but robots now are able to do some of those menial tasks stores cannot find workers to perform. Add in the emerging influence of artificial intelligence, which will revolutionize analytics at the corporate level, and it’s clear the retail labor picture is becoming more complex by the day.

While there is nothing new about automation, there is a danger in putting too many people out of work. If robots and other automated devices dehumanize the store experience, why wouldn’t consumers simply buy online? Ye