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In recent years, for a variety of reasons \u2014 operational changes, challenges in hiring and corporate expense cuts \u2014 some retail stores are noticeably light on staff.<\/p>\n
Since the height of the pandemic, store operations have grown more complex, as omnichannel services like online fulfillment, pickup and delivery have become entrenched. Hiring in many areas is tougher, as wages have risen and unemployment has fallen. And some retailers, facing threats to margins and profits, have slashed their expenses, including their workforces, often replacing humans with tech.<\/p>\n
\u201cA lot of stores run on much thinner staffing than they used to. Generally, there has been a reduction in headcount and labor hours,\u201d GlobalData Managing Director Neil Saunders said by email. \u201cMacy\u2019s is a good example of this, as there are around 18% fewer staff per store than in 2019.\u201d<\/p>\n
It\u2019s not just Macy\u2019s. Employment across the sector is down and expected to decline further, according to the <\/strong>U.S. Bureau of Labor Statistics: As of March, retail unemployment was 5.1%, compared to 3.8% overall. In the next decade or so, the industry is set to lose nearly 77,000 workers, a 2% decline, compared to an expectation for 3% growth across all industries.<\/p>\nBut running a store with a leaner store staff is usually a mistake, and many retailers should beef up instead, even as they embrace new technologies for tasks previously done by humans, experts warn. For example, more than 40% of respondents to a survey by Theatro, which supplies communication tech for frontline workers, said that shopping in stores is \u201cless enjoyable\u201d than before the pandemic, and 60% of them blamed inadequate staffing levels.\u00a0\u00a0<\/p>\n
Store staffing \u201cis an easy area to cut as it has a very visible positive impact on the bottom line \u2014 the problem is that it causes a lot of invisible issues which negatively impact things like staff morale and customer satisfaction,\u201d Saunders said. \u201cUltimately, this can harm the top line.\u201d<\/p>\n
The tech vs humans fallacy<\/h3>\n
As the world anticipates the implications of artificial intelligence\u00a0across society, retail executives are already making plans to invest in AI. Machine learning, AI-enabled technologies and older tech like RFID are helping retailers speed up and refine tasks like inventory management, pricing and theft-detection that are slower and less accurate when left to humans alone.<\/p>\n
Then there is self-checkout, probably the most visible example of how stores have expanded their use of technology \u2014 the machines have become the dominant checkout format in grocery and have shown up at discounters, mass retailers and apparel retailers. But they\u2019re also a good example of how humans aren\u2019t easily replaced by technology, a lesson some companies, including Five Below and Target, have learned the hard way.<\/p>\n
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“There\u2019s a major misalignment in terms of what customer expectations are when it comes to the self-service experience and what brands and organizations are actually delivering.”<\/p>\n
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Mario Matulich<\/p>\n
President, Customer Management Practice<\/p>\n<\/div>\n<\/div>\n\n<\/div>\n
Consumers do appreciate self-service options, but have higher expectations around customer service since the pandemic, according to research from Theatro and Customer Management Practice, a research and advisory firm specializing in customer experience. Retailers that invest in those options without regard to how it affects their customers\u00a0<\/strong>\u201cwill in fact see short-term gains, but end up with a pretty massive problem on their hands,\u201d Customer Management Practice President Mario Matulich said by video conference.<\/p>\n\u201cOur research has shown us that there\u2019s a major misalignment in terms of what customer expectations are when it comes to the self-service experience and what brands and organizations are actually delivering,\u201d he said.<\/p>\n
There are often complications in deploying any technology, but especially when it\u2019s designed for use by customers, according to Nikki Baird, vice president of strategy at Aptos Retail.<\/p>\n
\u201cIf something goes wrong with the technology that’s oriented for the consumer, then who do they turn to for help?\u201d she said by video conference. \u201cThey turn to the store employee, so it becomes the employee\u2019s problem anyway. Have you really made anybody’s life better in those situations?\u201d<\/p>\n\nStill, many store workers embrace technology, she also said, citing a Scandit study that found 40% of retail staff say their employers neglect their tech needs\u00a0and about a quarter include tedious tasks and frustrating technology as a reason to leave their jobs. Bottom line, though, it\u2019s a misunderstanding that AI and other tech means that stores can hire fewer workers, according to Jason Souloglou, CEO at SeeChange Technologies, which helps retailers improve efficiency and combat shrink.<\/p>\n
Tractor Supply is one example of a retailer that has embraced AI to foster customer service,\u00a0using it to alert store associates when lines are too long or help customers get information, CEO Hal Lawton said at the National Retail Federation\u2019s Big Show earlier this year.<\/p>\n
\u201cAI frees up employees to conduct higher-value tasks and explore new growth opportunities by utilizing their creative, critical thinking and problem-solving skills,\u201d Souloglou said by email.<\/p>\n
Fewer workers, more problems<\/h3>\n
In 2022, unit labor costs (the total labor costs required to produce a unit of output), rose in retail overall, with annual productivity down for the first time since 2008, according to the most recent data from the Bureau of Labor Statistics. Most segments covered by Retail Dive, however, saw productivity gains, according to that report.<\/p>\n
Meanwhile, retail work is now more elaborate, notes GlobalData\u2019s Saunders.<\/p>\n
\u201cActivities like picking online orders, delivering curbside, and manning collection desks have absorbed many more hours,\u201d he said. \u201cIn the case of stores like Walgreens and Target, having more items locked away is another burden on store staff. In a lot of cases this has created a labor crunch.\u201d<\/p>\n\nStore labor costs loom large on the bottom line, and therefore are a perennial target for cuts, according to Lee Peterson, executive vice president of thought leadership and marketing at WD Partners, who has had a long career in retail, starting with working at and managing stores.<\/p>\n
\u201cSince my inception in retail, the first number that gets cut, no matter what everybody says, is the payroll number,\u201d he said by phone. \u201cIt\u2019s like \u2018Do we really need 100 people stocking the stores? Let\u2019s make it 75 and see what happens.\u2019 You can cut that number today, it’s just easy to do, effective immediately. And it\u2019s a huge, huge mistake.\u201d<\/p>\n
Years ago, as a store manager running one retailer\u2019s most productive location, Peterson got the call.<\/p>\n
\u201cI remember running the No. 1 store in the company and having them call me and say I had to cut my payroll by X amount,\u201d he said. \u201cI’m like, \u2018You\u2019ve got to be kidding me, I can\u2019t cover the floor now. I can’t keep the store straight. I can’t wait on the customers.\u00a0You’re telling me I have to cut the number?\u2019\u201d<\/p>\n
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“The first number that gets cut, no matter what everybody says, is the payroll number … it’s just easy to do, effective immediately. And it\u2019s a huge, huge mistake.\u201d<\/p>\n
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Lee Peterson<\/p>\n
Executive Vice President of Thought Leadership and Marketing, WD Partners<\/p>\n<\/div>\n<\/div>\n\n<\/div>\n
A store that lacks staff is vulnerable to theft\u00a0and misses a key opportunity for customer engagement, experts say.<\/p>\n
\u201cSelling costs go up a little bit, but maybe shrink is going to go down to compensate for it,\u201d Peterson said. \u201cPeople are going to steal, so you need to think about that and work towards preventing it. One of the best ways, an unspoken advantage, is just having people on the floor. People will steal less if there’s people on the floor because if not, what do you think’s going to happen? It’s a free-for-all. It’s a bunch of shelves with stuff for thieves on them.\u201d<\/p>\n
Labor productivity is a major factor in cost containment, but retailers and brands should take into account the value of customer interactions in stores, Baird said.<\/p>\n
\u201cIf you think about engagement \u2014 time spent, either at an employee level or even at a brand level \u2014 you can use that to understand cross-channel engagement,\u201d she said. \u201cJust how much time is this consumer spending with the brand? If they’re browsing my social media feed, great, that is a level of engagement. But if they’re standing in a store, and talking to a store associate, you can’t get more engagement than that. That should be the top level.\u201d<\/p>\n
What it takes to hire and keep store workers<\/h3>\n
A year ago, hiring platform Checkr found that 74% of retail workers were either looking for another job or thinking about it.\u00a0<\/p>\n
There are several possible reasons for this. Late last year, David Johnston, NRF vice president of asset protection and retail operations, told the House Homeland Security Committee\u2019s Subcommittee on Counterterrorism, Law Enforcement and Intelligence that organized retail crime and fear of injury or death\u00a0were major factors in the industry\u2019s struggles to hire store workers. In written testimony to the committee, the group said there were 543,000 job openings in retail and \u201ca clear shortage of workers,\u201d characterizing retail jobs as \u201cgood-paying\u201d\u00a0and a \u201cfoundation for successful careers.\u201d<\/p>\n
But other research finds pay to be a major sticking point for store employees, while safety doesn\u2019t show up as a top concern. In recent years, several major retailers, including Walmart and Target, have beefed up their starting pay to $15 per hour or so, and some jurisdictions are mandating even higher rates. Costco has made a point of being a leader in this area. Yet even those wages in many areas are still below a living wage.<\/p>\n
In 2022, the real median earnings of retail salespeople was not statistically different from 2010, according to a December report from the U.S. Census Bureau. Cashiers were among the lowest paid, with median earnings of $27,174, nearly half of the median earnings for all full-time, year-round workers. Overall, the worker shortage in retail is due in part to low wages, according to staff placement firm Adecco\u2019s Adia unit.\u00a0<\/p>\n
\u201cI have two words for every retailer about associates: pay them,\u201d WD\u2019s Peterson told an NRF audience in January. \u201cPay them, pay them! The more you pay them, the better they will be, that\u2019s just the bottom line.\u201d<\/p>\n
Peterson cites Costco as a retailer with well-compensated employees who like working there, and Ace Hardware as another with plenty of helpful staff in its stores.<\/p>\n
But some retailers that have boosted their wages subsequently hired fewer people or shortened shifts in order to keep labor costs in check, undermining the appeal of those jobs and compromising store operations, experts say. Good pay is important in enticing and keeping retail workers, but they have other considerations as well. Understaffing itself is a reason why many leave retail jobs, according to the Scandit research. Otherwise, work-life balance, competitive salaries and access to easy-to-use tech are the top three drivers of employee loyalty in retail, per that report.<\/p>\n
According to research from Customer Management Practice, compensation comes in fourth, behind, in order, a good manager, flexibility and career development opportunities. Peterson also believes that brand matters most to many prospective retail workers, giving cool brands a hiring advantage over uncool ones,\u00a0he said by phone.<\/p>\n
Retailers are aware that stores should be well staffed, according to Aptos\u2019 Baird.<\/p>\n
\u201cI think it’s more a question of, \u2018Where is this money going to come from?\u2019\u201d she said. \u201cPart of how we got into where we are today, in terms of theft and self-checkout and all that fun stuff, is that wages went up, but labor budgets didn’t. The natural result of that is many retailers are staffing less, and something has got to give.\u201d<\/p>\n<\/p><\/div>\n
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