As a four trillion dollar slice of the economy, retail is one of the largest employment sectors in the U.S. Prior to the pandemic, it provided direct and indirect employment to some 52 million workers, second only to the healthcare sector. Many of these jobs – as many as 30 percent of them – are comprised of the workers who staff brick-and-mortar store locations yet filling these frontline positions has become increasingly challenging in the post-pandemic era.
Recruitment on the Rocks
The Society for Human Resource Management, better known by its clunky consonant-laden acronym, SHRM (pronounced SHERM), was among the first to recognize that recruiting – particularly in high-touch sectors like retail – was going to be turned on its heads as America emerged from the throes of the pandemic. Much has been written about how the U.S. work landscape – Zoom calls and untethered workers – has been permanently upended by Covid-19, but for the frontline retail jobs that still require on-site human beings, not much has changed so far, and retailers are now finding it very difficult to make the hires needed to fuel their much-anticipated post-pandemic rebound. Why exactly this is the case is still an open debate and there is still much that remains unknown.
Forget ‘help wanted;’ retail recruiting in a post-pandemic world should focus on career building.
Many conservative policy makers in Washington and state capitols around the country have tended to blame government stimulus checks for nagging recruiting shortages even though such claims have been roundly debunked in study after study. BestBuy CEO Corrie Barry has offered that a lack of adequate childcare options and other issues stemming from school closings and the dearth of vaccination options for younger children as among the main drivers that has made it much harder for retailers to ramp up their recruiting efforts. Others have pointed to yet another factor: an unlevel playing field in terms of wage competition. In the absence of Congress having passed legislation to raise the federal minimum wage across the board, some companies such as Under Armour, Amazon, and Walmart have taken matters into their own hands, raising their own wages, giving them a sizable edge over other retailers reluctant or economically unable to do so.
Whatever the reasons, this much is true: retail workers are quitting their jobs at record rates – in April of this year nearly 650,000 retail workers gave notice, the highest monthly total in the two decades since the Labor Department began tracking such data. Even 7-Eleven stores have expressed frustration that labor shortage issues are threatening their ability to reopen stores 24/7 as the pandemic subsides. The Washington Post, eager to peel back the onion and see what was behind this mass exodus of lower-income earners, canvassed scores of retail workers who had recently given notice and uncovered something that is far more squishy than the macro-economic arguments that have dominated headlines. “My life isn’t worth a dead-end job,” said one former retail worker who left a $11-an-hour retail job to focus on her own passions in the arts.
Some of the sector’s woes isn’t exactly breaking news; industry-wide recognition that frontline retail workers were at risk of leaving the sector was already brewing prior to the pandemic. In the fall of 2019, the revered Business Roundtable industry association updated its mission statement that for years had espoused the singular virtue of increasing shareholder value to take a more wind-angled lens of what it means to be in business. It states that “Americans deserve an economy that allows each person to succeed through hard work and creativity and lead a life of meaning and dignity…This starts with compensating (employees) fairly and providing important benefits. It also includes supporting them through training and education that help develop new skills for a rapidly changing world.”
Calcified Retail Culture
All of this seems to point towards the very real issue that at least some portion of the retail sector’s recruiting woes are cultural; one of the sector’s key challenges is how to make working in retail a career choice and not simply an entry-level means to a paycheck. Perhaps retail can rip a page from the Armed Forces recruiting handbook – another employer known for overcoming recruiting obstacles and low pay by focusing on the experience and skillsets young recruits can expect to gain by signing up.
With that in mind, retailers should be actively rethinking their recruiting and retention initiatives to shore up human resources and enabling them to get back on their feet in the short term while also positioning themselves for long-term stability and success in the retail labor markets. Effectively addressing this set of challenges means unraveling decades of built-up perception that jobs in retail are for entry-level, part-time, or low-skill employees only.
- Retailers should embark on initiatives that aim to address the long-term career potential of new hires in retail.
- Medium and large-scale brick-and-mortar stores should move away from talking about hourly wages – which enable workers to easily compare and contrast low-end job opportunities with one another and lead to high-cost employee churn – and instead segue into discussions about long-term employment contracts (complete with signing and performance bonuses) and other benefits typically associated with more white-collar jobs.
- Another key effort should focus on developing recruitment programs that focus on benefits that address retail employee pain points head-on. Providing on-site childcare support, offering stable and predictable work schedules for working parents, ensuring safe working conditions, as well as adding paid sick leave, vacation time, and other benefits like college tuition assistance could also go a long way to retaining frontline workers as well as recruiting new talent.
- Finally, despite the capex needed up front, retail stores – even those that might be considered SMBs – should find ways to embrace and leverage new technologies capable of replacing the more mundane tasks of retail so that they are less dependent on human beings for roles that can easily be automated (e.g., self-checkout). The move to more automated processes will enable retailers to focus on recruiting workers for higher value-add jobs that can be better trained and compensated.
Although the world of mid-2021 is starting to look and feel a lot more like 2019 than 2020, retailers need to realize that many of the shifts that occurred in the labor markets during the pandemic are more permanent in nature, and new strategies and approaches are desperately needed.
It’s time for retail to rethink the role of the frontline worker.