3 Labor Issues for Retailers to Follow in 2018
With unemployment at just over 4 percent — the lowest rate in nearly 17 years — there’s never been a more pressing time for supermarket operators to think about how to attract and retain good talent. While some naysayers would have the world believe that robots and online ordering will soon deplete the retail industry of any “people” jobs, grocers in the trenches know better. For now at least, retail jobs aren’t disappearing so much as changing.
As retailers get ready to start business with a clean slate in 2018, they would be wise to keep several key labor issues on their radar. First on the list is the pressure to increase wages. Walmart and Target, two of the largest mass merchandisers that staunchly continue to compete on grocery turf, started the trend in the past few years by offering more attractive pay to lure new workers. Will smaller chains and mom-and-pop grocers be able to follow suit?
At the same time companies are raising wages, several are boosting their internal training efforts to help with retention. Also in the works is a retail industry-wide training initiative from the National Retail Federation’s NRF Foundation that’s poised to grow in the next several years. Companies such as Walmart, Kroger and BJ’s Wholesale Club have already signed on, and industry-specific training may be on the horizon.
Last but not least, technology will continue to play a huge role in all things labor-related, whether its function is to make employees’ mundane tasks easier, help with scheduling, or shift more jobs to warehouses and pickup stations as a result of more online shopping.
One thing is for certain: This is a critical time for the retail industry and its workforce. “There are a tremendous number of government agencies and nonprofit and philanthropic groups, think tanks, and businesses trying to solve today’s problems and forecast tomorrow’s challenges,” observes Ellen Davis, executive director of the NRF Foundation and SVP of research and strategic initiatives for the Washington, D.C.-based National Retail Federation. “It’s really rewarding to be in the middle of this work, because we see the power it has. We’re at a really interesting period for both the retail industry and its workforce, due to changes in technology and changes in consumer behavior. From our perspective, building a program that can be used for the future workforce is coming at a really good time.”
Issue 1: Wages on Stage
The federal minimum wage is still $7.25, but some states and companies are becoming more aggressive by boosting that rate instead of waiting for the federal government to make any moves. Minneapolis-based Target Corp. said in September that it would raise its starting wage to $11 an hour, with plans to increase that to $15 an hour by 2020. Its announcement followed that of Bentonville, Ark.-based Wal-Mart Stores Inc., which said in 2015 that it would raise the baseline wage of current store employees to $10 an hour.
Other retailers that have increased their entry-level wages in recent years include Issaquah, Wash.-based Costco Wholesale Corp. (its lowest hourly wages are now between $13 and $13.50) and Austin, Texas-based Whole Foods Market (its starting pay is now $11 an hour).
But will smaller retailers follow suit? They may have no choice if their competitors are doing so, unless they can attract new workers by espousing other benefits such as more flexible scheduling or fast-track career growth.
“Grocery is a low-margin business, so as wages rise, this has a significant impact,” notes JoAnn Martin, VP of retail industry strategy, North America for Scottsdale, Ariz.-based JDA Software. “This will be increasingly important going into 2018.”
“Some of this is just general supply and demand,” adds NRF’s Davis. “The challenge with mandated minimum wage is that in some cases, people aren’t taking a first job for the money. They’re taking it for what they can learn. It’s important to have a balance between making sure that you don’t price certain people out of the market with regulations.”
Issue 2: Training on the ‘RISE’
If raising wages isn’t enough to attract new talent, more companies are taking a closer look at their training initiatives to make sure they not only bring in, but also keep, good workers. When Walmart announced its pay increases a few years ago, the company also noted that it would offer additional instruction to new hires and reward them with a $1-an-hour raise upon competition. The retailer also said it was launching a leadership academy to prepare staff for more advanced jobs.
It’s no surprise then that Walmart is one of the supporters of NRF’s new RISE Up initiative, which officially launched in January 2017. The RISE in RISE Up stands for Retail Industry Skills and Education, and the program has three goals, according to Davis: to help people become more prepared for retail jobs and excel more quickly once they get in, to help retailers address their talent challenges at all levels, and to demonstrate retail as an industry of opportunity and mobility.
“None of the three goals can stand alone and still be effective,” explains Davis. “All these things needed to come together in one program.”
The program grew out of conversations that NRF had with the heads of talent at leading retail companies, she says. “We recognized a disconnect between millions of people in this country who are trying to find jobs and an industry that has between 500,000 and 600,000 open positions at a time.”
A capacity-building grant from the Walmart Foundation allowed the idea to blossom into a full-fledged program with more than 30 retail supporters, including Walmart and Target, as well as Westborough, Mass.-based BJ’s Wholesale Club and Cincinnati-based Kroger.
In its inaugural year, RISE Up has helped roughly 30,000 people earn credentials in the areas of Retail Industry Fundamentals, Customer Service and Sales, and Advanced Customer Service and Sales. Its pupils ranged from high school students to people who are switching careers or have been out of the workforce for many years, including recovering drug addicts looking for a second chance. Classes were taught in traditional classroom settings, but also through special programs sponsored by workforce boards and other nonprofit groups.
In many cases, job candidates need very basic workforce readiness skills that they would normally acquire in a first job, notes Davis. “Teenage unemployment is the highest it has been in decades, so you have teens that haven’t learned a lot of those skills.”
Over the summer in Baltimore, NRF held a hiring fair to help some of its newly certified students apply for jobs.
Now, as NRF looks to the future, Davis says that the program might branch out and offer more specific training and credentials, which could conceivably include food preparation or specifics in grocery management, for example. “One of the things we want to do to demonstrate mobility is to have a bunch of different training and credentials under the RISE Up portfolio,” she notes.
For BJ’s part, the warehouse club operator aims to “help people build skills and confidence to launch a meaningful career in retail,” according to Gina Iacovone, BJ’s SVP of field operations. “Through RISE Up, we hope to help families in our communities thrive through new career opportunities.”
Issue 3: Technology’s Impact
When Walmart announced a few months ago that it was testing a robot that scans shelves for out-of-stocks, incorrect prices, and wrong or missing labels, some of the mega-retailer’s critics were quick to assume that “people” jobs would soon disappear at the company. Walmart explained, however, that the new technology is intended to free up floor-level associates’ time so that they could “focus more on doing what machines typically can’t do as well as humans: better serve customers and sell merchandise.”
At least one labor and technology expert agrees that Walmart is merely using the robots as an enabler for its associates. JDA’s Martin notes, “The career path in supermarkets is transforming a little, and technology is playing a part in that. But human interaction with customers is essential in the grocery industry, and really in any customer service industry at this point in time.”
In fact, Martin foresees a future where technology will help add value to supermarket jobs. “Technology can take some of the repetitive nature out of the job and allow more human intervention, potentially elevating the position,” she says. “When you think about it, with unemployment being so low, when you tie these two together, technology is actually helping.”
At JDA, technology is also an important tool for employers that want to tie their supply chain visibility all the way from inventory to the store level, she continues. “Our latest workforce management solutions allow retailers to schedule their associates when they need them, and help to enable specific tasks to be executed as well — making sure the product is in the right place, and making sure you have the right fulfillment.”
As technology continues to influence the way people shop, workforce management will help with specific tasks and training tied to omnichannel operations, she adds: “With the announcement of Amazon and Whole Foods, there’s an intensification there. So the labor and training associated with buy online and delivery, or buy online and pick up in the store, or whether it be a kiosk or a drive-thru … it’s definitely adding complexity to the labor force within the grocery arena.”
This article also appears in the December 2017 issue of Progressive Grocer.