By Christine Kern, contributing writer
As customers demand better experiences, retailers must rethink the creation of their workforce.
The tightening labor market has been presenting challenges for retailers for several years, causing high turnover among employees and demands for higher wages. Yet, C-suite executives are demonstrating less concern over the tightening labor market than they have in the past, according to a new report from research firm Jefferies. The report found that labor tightness was most evident in the hotel, restaurant, and leisure industries, though it found increased turnover and entire states that experience “labor markets so tight that businesses’ ability to expand has been impaired,” according to The Nation’s Restaurant News.
Yet, while the labor market is showing greater challenges, the analysis also saw that such tightness mentions were actually down year over year. For example, Jefferies analysts found 109 of the companies they cover cited wages as an issue in Q3 2016 compared to just 79 in the same period this year.
As a result of the shifting retail landscape and the growing labor market pressures, the retail industry is overdue for an examination of the role of the employee that goes beyond the store, to all aspects of customer engagement. In response, RSR conducted its inaugural study on building a better workforce.
The study revealed that retailers now recognize that although consumers make it appear that they want more self-service, what they really want is better service — and in-person service in an in-person context is the best way to deliver that. However, when it comes to how to enable employees to deliver superior customer service, retailers struggle.
In fact, the research revealed a host of contradictions regarding how retailers view the roles and abilities of their employees. For example:
- Retailers say store employees are what will differentiate the store, but no one wants to train them.
- Call center employees are often cited as retailers’ best sales people, but retailers don’t believe that giving store employees access to the same level of information would help them catch up.
- Retailers acknowledge that customer engagement is getting more complex, and spread across many more touchpoints than ever before, but persist in focusing on advertising promotions – and certainly don’t trust or value elevating the role of the front-line employee in creating customer engagement.
Research reveals that even as retailers understand they reframe their approaches to customer engagement, the role of the store, and the employee, few retailers trust those same employees to have access to customer information, let alone use it.
The research found:
- When asked to prioritize business challenges affecting the workforce, retailers cite finding good, loyal employees as a top challenge. But they also worry that consumers have lost patience with store employees, and are using their always-connected mobile devices to serve themselves. And under-performing retailers complain that consumers continue to show an unwillingness to pay for superior service.
- To address these business challenges, retailers agree on three top Opportunities: investing more of their budget into labor, providing more training, and providing more technology. But there are vast differences by performance, particularly in how under-performing laggards now see the opportunity to empower their employees.
- Retailers are inhibited by the long-held belief that the industry must remain a low-wage, high-turnover affair. But they think that employees are too needy and that customers have unrealistic expectations. In the worst case, some retailers even worry a store-centric model simply doesn’t work well anymore. But there are important differences in the root causes that retailers identify, based on which retail vertical they operate in.
- Employee technology enablement is a Winners’ strategy, according to our study. But Retail Winners understand that technology is a tool, and that the real task is to develop employees who are trained and skilled, know how to engage and assist shoppers in a meaningful way - and have the tools at their disposal to help solve customer’s problems, one by one. But even for over-performers, there’s still a long way to go before the technologies available are in place and delivering value.
Based on the data, the report also offers several Bootstrap Recommendations for retailers to move forward. These include:
- Accept the new reality. The report concludes, “It’s time to let go of the notion that a low-wage, high turnover model leaves no room for skilled workers. Truth is, with unique products and lowest prices becoming increasingly difficult models on which to compete, a skilled workforce is one of the best chances a retailer has these days. We mean it when we say that those who can’t define and empower their front-line workers to be more valuable than a vending machine will soon be rendered irrelevant.”
- Invest seriously in your workforce. Retailers should not just be remodeling their physical stores, but also their workforces as well to meet the new reality with both technology and training.
- Recognize that technology is not training and that you need both. Retailers must simplify all work sent down to stores so that associates can quickly get work done and get back to serving the customer, but that means more than just giving them technology. RSR states, “Yes – empower your employees with mobile devices! Give them a fighting chance to be relevant to consumers! But recognize that it’s not just about the devices. A trained, skilled workforce that knows how to engage and assist shoppers in a meaningful way needs training just as much as it needs tech.”
- Know where your retail segment fits in. The report explains, “The important thing to remember is that retail is not dying. But it is changing. And the best way to survive these changes is to understand exactly where you are weak, because if you don’t, you are not likely to survive the culling. And chances are your current workforce is one of your weakest points: improving it also happens to be one of your best chances to pull through.”
- Assess whether to revise or replace your existing workforce for the future. The big question for retailers is to assess the level and potential of their current workforce and decide whether they can train and assist this force to fill the necessary role, or whether they need to cut their losses and begin again with a reformulated vision of what the required workforce must be as retail continues to evolve.