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07/14/2021

Retailers Face a Reckoning in Tight Labor Market

Coming out of the COVID-19 pandemic, retailers are facing one of the biggest labor crunches to date.
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The retail industry has had at least two major adjustments as a result of the uncertainty in the COVID-19 pandemic--when stores temporarily closed their doors during pandemic lockdown measures and when they reopened again. Both times, the labor market was dealt the biggest blow and resulting impact, and retailers were left laying off staff and then asking them to come back, virtually overnight.

However, getting workers to come back after experiencing the pandemic is easier said than done. And it’s causing retailers to boost wages and offer more perks than ever, as well as rethink their values.

Re-evaluating Employment

 

When workers were laid off, even temporarily, from their roles in 2020, many took time to reflect on their goals and priorities. Instead of spending more hours at work, with potential risks and higher exposure to the virus, many people shifted how they viewed employment. As companies adapted to working from home, workers did too. And as states reopen, more workers want to continue working from home.

For retail workers, the same might be true--and they may have moved on to other industries or made lasting lifestyle changes during the pandemic that mean they aren’t coming back to the same pre-pandemic job. With so many jobs open, retailers are also competing against each other, and workers have options to ask for higher wages, better scheduling policies and other benefits.

“What we’ve seen over the past years is a change in how people relate to their employer and employment in general,” Margot Bloomstein, brand and content strategist, and author of Trustworthy: How the Smartest Brands Beat Cynicism and Bridge the Trust Gap, told Retail Leader. “[There’s a] repositioning in the market where more and more employees are realizing they own their skills and talent and have more ability to bring it to the highest bidder.”

While this re-evaluation of employment is hard to quantify, there are some figures that show the reality of the retail labor market. Here’s the environment by the numbers:

The number of open positions has also climbed. Earlier this year, as states reopened amid the rollout of the national COVID-19 vaccination program, a number of retailers opted to launch hiring blitzes. Companies including Dollar General, Circle K and Kroger all announced hiring pushes that aimed to bring on tens of thousands of new workers. And some retailers used new methods to recruit, such as a digital-forward approach from Kroger and on-the-spot interviews with women’s clothing boutique francesca’s.

"We had our first National Hiring Day, where on-the-spot application and interviews took place across our Boutiques recently with a mixed-bag of results," Chris Kaighn, senior vice president of boutiques, real estate and strategic partnerships for francesca’s, told Retail Leader. "We did a hindsight and documented our learnings, and as we head towards the peak ‘Back-to-Campus/school' time frame, we are scheduling a National Hiring Weekend to take place across a weekend in July. This will offer more potential associates the opportunity based on their schedules to be able to come to francesca's to apply for a variety of roles. We plan to continue learning and optimizing this approach leveraging social media and the engagement of our field associates to attract awesome people to francesca’s."

As some retailers shore up their hiring efforts, some of the pitfalls of filling open positions may lie in the application process. When it comes to filling hourly roles, engaging applicants quickly enough, competing with other employers or job postings and filling roles quickly enough are the top challenges for retailers, according to a recent survey from Hourly by AMS, a global workforce solutions firm. Job applicants are also expecting more than ever, with efficient communication and technology-driven experiences that are easy to navigate.

“Retailers need to recognize that while there are challenges throughout the entire hiring process, they are losing a large and qualified talent pool at the beginning if candidates aren’t able to apply quickly and efficiently,” Quincy Valencia, vice president of product innovation at Hourly by AMS, told Retail Leader. “Today, job seekers have higher expectations on timeline and engagement than ever before, and retailers have to step up. Adding more communication and transparency and improving efficiency in the hiring process are essential for retailers.”

At the same time, the retail industry is adding jobs--of the 850,000 jobs added to the U.S. economy in June, 67,000 were in retail. That’s an improvement, but the industry was still missing more than 300,000 positions from February 2020 levels, before the pandemic hit the U.S. 

Rising Wages and Added Bonuses

 

With so many openings, the tight labor market and lack of workers is pushing retailers and brands to hike wages and offer signing bonuses and other incentives. 

Mass retailers like Target have offered bonuses to their workers that stuck with them through the pandemic. For example, at the start of 2021, frontline team members were given a $500 bonus, with higher bonuses for store directors, executive team leaders and salaried distribution center leaders. Target also upped its starting wage to $15 per hour in July 2020, as well as added free virtual health care services and other related COVID-19 benefits.

In the past year, jobs offering hiring bonuses have doubled, according to Indeed, with 4.1% of Indeed job posting advertising hiring bonuses in June compared to 1.9% in the week ending July 1, 2020. 

“Recruitment gambits like these underscore how some employers are throwing everything at the wall to see what sticks,” wrote Indeed Hiring Lab Economist AnnElizabeth Konkel in an Indeed blog post.

However, the changes aren’t just about money--for some workers, it’s also about being with a company that shares in their values.

"The pandemic caused the world to take stock in their lives and happiness, and retail workers, in what is typically labeled as having no growth, are leaving in favor of roles that offer greater personal reward and value," Kaighn told Retail Leader. "It is critical that companies invest in their teams through leadership development, opportunities to learn and grow, and to realize their long-term goals. This generation also places great value on being provided a place where they can feel a part of something that is 'doing good' for the community or even the world. It’s also critical to understand what motivates teams and that leaders find creative ways to deliver value to their everyday work experience."

Retailers are faced with not only improving their employment packages on face value, but also proving they are working to be a better company as they relate to the communities they serve.

“In some cases, it's not the employer that offers them more money but a better opportunity to align their time and talent with their values,” Bloomstein said. “More people seek out employers that share their values. In order to do that, more employers, retailers and more companies have had to make their values visible and do so in a way that doesn't look like they're just trying to check a box or jump on the latest trend. [They’ve had to do it] in a way that feels consistent and sustainable and shows their commitment in the long run.”