Labor shortages in industries that had previously relied on multiple job seekers — even for low-paying jobs — have been one of retail’s biggest challenges in 2021. It’s not just a seasonal issue: several industry experts believe the dearth of employees could extend into 2022, forcing retailers to rethink not just recruitment but their entire approach to hiring, training and employee retention.
Some of the nation’s largest retailers responded to the labor shortage with wage increases, with Walmart, Amazon, Costco and CVS raising their minimum wages. Target and Walmart are getting creative with offers to pay for college tuition and textbooks, while McDonald’s has thrown in child care.
Longer-term solutions, however, will require retailers to create credible career paths for their workers, along with increasing their investments in training, particularly tech training. Retailers also will need to make use of advanced AI-powered solutions that can determine optimal pay and benefits packages and identify those employees most likely to be “flight risks.”
Turning Retail Jobs into a Career in Retail
As it did with so many things, COVID-19 accelerated long-term trends in retail work. The pandemic-fueled ecommerce boom and the rapid growth of convenience-oriented offerings like BOPIS and curbside pickup have changed job requirements throughout the retail enterprise. In combination with changes in worker attitudes and consumer behavior, these shifts have weakened the industry’s long-standing low-wage model.
“For a very long period, the last 20 to 30 years, real wages in retail were flat,” said Dr. Michael Mandel, Chief Economic Strategist at the Progressive Policy Institute in an interview with Retail TouchPoints. “One of the beauties of the big box model was that it enabled retailers to get away with relatively low-priced labor. But whatever kept this multi-decade equilibrium going has shifted, and that shift shows up in needing a different type of worker; paying more for this worker; and [employers needing to] figure out what they are going to do with this worker.
“Now you need sales workers who know more about the merchandise,” Mandel added. “That means you have to pay them more, give them more hours to work and in general treat them better. That’s part of what’s behind higher wages, but it also means retailers face more difficulty finding and training people. And if these people don’t exist, retailers have to commit themselves to training them. You could just as easily call what’s happening now a ‘training shortage’ rather than a ‘labor shortage’.”
Why Tech Training is Becoming a Must-Have
Some retailers already have implemented training designed to upskill their workers. Levi’s used an eight-week “boot camp” to train 43 workers with no previous background in data and technology about AI. The brand also created a class for people with basic or outdated data and analytics skills to update their experience, according to reporting in VentureBeat.
According to data from BDO, 51% of retailers are planning to implement training to upskill employees’ technology capabilities, said Natalie Kotlyar, BDO’s National Leader for the Retail and Consumer Products Industry Group in an interview with Retail TouchPoints. “Tech training can create a more attractive job for some employees, because it’s a marketable skill,” said Kotlyar.
Greater technical knowledge among employees is moving from an attractive benefit to an on-the-job necessity as the nature of retail work continues to shift. “I do think the nature of retail jobs will change, whether it’s [staffing] microfulfillment centers or just ship-from-store and BOPIS,” said David Ritter, Managing Director of the Alvarez & Marsal Consumer and Retail Group in an interview with Retail TouchPoints. Many of these changes are recent: “Ship-from-store wasn’t economically viable [as recently as] two years ago,” said Ritter.
Tech knowledge also will be increasingly essential as retailers learn whether remote solutions deployed during the pandemic might have “legs.” Kotlyar predicted that remote consultations with associates will expand beyond apparel into the electronics and home furnishings verticals. “FaceTime and texting are becoming the way that retail employees will provide customer service to customers,” she noted. “That will go to the expertise and additional capabilities that these employees will need to have, or learn, and become skilled at.”
Phone/text chats connecting associates with customers was the top COVID-era innovation that retailers plan to continue using, selected by 56% of respondents to the 2021 Retail TouchPoints Omnichannel and Fulfillment Benchmark Survey. The second-highest selection was virtual appointments with salespeople/stylists, at 34%.
Retailers themselves can, and should, use the latest solutions to help themselves and their employees. “There’s AI-powered tech that’s predictive around talent acquisition, helping identify who are the most successful candidates,” said A&M’s Ritter. “The predictive analytics also can flag which are the ‘high flight risk’ employees, allowing the retailer to get their arms around their issues and make them feel good if they’re looking elsewhere.”
Broader, end-to-end analytics powered by AI “can enable retailers through the full [workforce] spectrum — from talent acquisition, retention/churn prevention and even to compensation, by revealing which types of compensation models are most attractive and likely to increase retention,” Ritter added.
Learn more by downloading the Recruiting the New Retail Workforce: Higher Wages are Just the Beginning Special Report.