With the holiday shopping season about to enter full swing, many retailers are preparing to hire temporary staff to handle the extra demand – ensuring holiday orders make it from the warehouse to a stocking by the fireplace on time. But some retailers are finding that hiring seasonal workers isn’t as easy as it has been in past years, thanks in part to historically low unemployment numbers.
However, low unemployment only tells part of the story. The retail industry has been roiled by the rise of e-commerce giants like Amazon and shifting consumer expectations. Venerable brands like Sears are teetering on the edge. A chain that used to be mobbed during the holiday season, Toys-R-Us, is gone, at least for now. If the strife in the retail sector has been hard on companies, it’s been difficult for employees too — tens of thousands have lost their jobs.
Brand image and the search for retail workers
At the same time, the economy is roaring, and consumers are optimistic. Holiday sales are expected to rise more than 5 percent this year to top $1.1 trillion dollars and retail workers can expect to be working harder than ever to meet the demand for customer service with fewer hands on deck due to the tight labor market. Still retailers will want to provide a positive shopping experience for their customers.
The question this season: How can retailers squeezed by a changing economy attract workers capable of meeting the demand for expert customer service?
Brand image will be an important factor. The way retailers handled layoffs in the past created a positive or negative image in the minds of consumers and potential employees. Retailers need to optimize their image, if they are to attract strong employees. Retail workers, newly empowered by the tight labor market, will want to grab hold of this opportunity to design their career paths. They’ll have their own high expectations regarding compensation for their hard work.
While there are specific steps retailers can take to attract employees, it’s important to first understand how the industry reached this juncture.
How retailers are succeeding in a changing economy
It has been a painful lesson, but the most forward-thinking retailers are figuring out how to thrive in today’s economy. As a recent article in The New York Times noted, some of the retailers who have survived the e-commerce bloodbath are posting their best sales numbers in many years. They’re resilient because they embraced changing customer expectations and reinvented their value proposition.
Creative retailers know the old rules don’t apply anymore, so they’re coming up with new ways to compete and win in today’s economy. Some are using technology to anticipate shifts in consumer demand and be more agile and responsive to customer needs. Customers are ordering online and picking up in the store. Other stores are attracting consumers by putting a premium on delivering a great customer experience at their stores.
Whether by assigning “personal shoppers” to deliver products to customers in their cars or holding special events to increase foot traffic, the most innovative retailers are doing what they must to stay competitive. Their new strategies require additional talent and skill. And success also requires a shift in thinking about employees, who can no longer be viewed as just another commodity.
How economic shifts affect retail employees
Approximately one in 10 American workers are retail employees, so the fate of the overall economy is very much linked to the retail sector. With an unemployment rate currently well under 4 percent, there’s increasing competition for workers. Employers are more willing to provide training and benefits to attract employees, so it’s more of a challenge to find workers who are willing to take a seasonal job.
Just as retailers have had to rethink the way they deliver products to customers to survive in a changing economy, retail workers have had to adjust their career expectations. Layoffs have been a constant threat, and that has prompted some retail workers to move into other industries in a bid for greater job security — or to upgrade their skills to increase their value to retailers.
Employees who are familiar with retail technology and able to provide excellent customer service know they have a better chance of beating the odds. They realize they are in greater demand in a low-unemployment environment. This represents a shift in thinking on the part of motivated retail employees; they have a new sense of their worth in a market that rewards companies that provide an exceptional customer experience.
How brands can improve their image with workers
The pressures on both employers and employees in the retail sector are creating a paradox for brands. They have to remain agile, both in their customer-facing operations and behind-the-scenes talent management strategies. Holiday sales require more staffing in both sales and stocking. To remain competitive, staff need to be skilled and efficient. In the past, that meant hiring an army of seasonal workers, that could be released post holidays. That’s no longer possible or practical.
Retail companies typically spend a lot of time burnishing their brand image with customers, but as competition for talent increases, it’s a good idea to improve their image with workers too. Employees, surveyed in Fortune’s Best Places to Work in Retail, focused on caring, flexibility and creativity as well as standard employment issues of job security and advancement.
Retailers need to find ways to generate good-will and inspire loyalty in their workforce, even while contending with constant change. It starts with abandoning the idea that employees are a commodity and treating them as the valuable assets they are. That means cultivating relationships based on trust and transparency. In a sense, retailers are in a better position to cope with the rise of the employee relationship economy than companies in other industries since the retail workforce has always been highly mobile.
In the past, it was expected that retail workers would come and go. Students or even teachers might pick up work during summer or winter vacation, or parents might take on extra hours to provide extra cash for the holidays. The challenge now, is strengthening those bonds and skills so employees might seek to return and grow with the company.
One way to build those bonds and attract a loyal workforce is to offer traditional benefits, including hiring or referral bonuses, education support and retirement savings. However, retailers may want to explore additional ways to help their employees transition in a changing economy, such as offering outplacement benefits to laid-off workers to help them land their next job. This strategy would not only make the worker more likely to take a job with the employer again when needed, it would increase the likelihood that former employees who aren’t in the job market when new hires are needed would recommend friends.
Another strategy is to reduce the need for seasonal workers by redeploying current employees in a creative way. For example, a retail store that holds customer events throughout the year to increase foot traffic might consider redeploying the workers who staff and manage those events to help with the holiday rush. Most stores don’t stage events during the holidays anyway since foot traffic typically increases organically, so workers who fill those roles would be available.
A gift that keeps on giving
In the new retail paradigm, customers have higher expectations of brands, which translate into the need for a more highly skilled retail workforce. But it’s imperative for retailers to acknowledge that this also translates into higher expectations from employees. Retail workers who have better customer service and technical skills will demand more investment in employee development as a ticket to success in a changing industry.
It’s a best practice in this scenario for retail companies to invest in upgrading their management team’s coaching skills from the executive level to the shop floor. With the right expertise, companies can ensure their top executives have the coaching skills they need to engage employees and build the kind of trust that leads to loyalty and brand ambassadors. Knowing how to mentor and coach employees also helps to lessen the recruiting burden through the increased promotion of employees from within, another strategy for strengthening engagement and retention. These skills can then trickle down throughout the organization, shifting the culture to create a healthier employer-employee relationship — which in turn generates loyalty.
It’s tough to predict how the retail economy will evolve over the next decade. Automation will certainly be a factor, but there are likely new technologies and innovative concepts on the horizon that will be as disruptive as anything retailers have seen so far. However, the need to field a skilled workforce to serve customers will remain, not only during the holiday season but beyond. Employers who understand the nature of the employee relationship economy will be best positioned to succeed during the annual rush — and ring in profits all year long.