Adopting a new, better labor model

Co-authors: Alexandra Hallas Button, Julia Borchert, Tess Taylor, Cali Chussid, Caitlyn Quilty, Jodi Robbins, Katie Hollins

Adopting a new, better labor model?

The global pandemic challenged retailers to evolve their business models, but retailers are now facing new pressures: rising inflation, labor shortages, and evolving expectations from both customers and employees. One lever that retailers can pull to navigate through these challenges is developing a dynamic workforce strategy. Here are suggestions as to how.?

Historically, brick-and-mortar stores were the most efficient way for customers to find the largest assortment at fair prices, making the in-store experience primarily transactional. The proliferation of alternative fulfillment methods (e.g., buy online, pick up in store (BOPIS), same-day delivery, curbside pick-up) has upset the traditional role of the store. In response, the physical store is evolving from a transaction experience to a multidimensional one that offers:?

• Faster fulfillment: With the rise of alternative fulfillment methods such as BOPIS and curbside pick-up, retailers are repurposing store space to be used as fulfillment areas. In addition to redesigning the physical space, retailers have also had to rethink the labor model needed to support these new activities. For example, retailers are investing in new technology to semi-automate both selling and fulfillment activities, thereby reducing required labor.?
• A store that does more than sell: From digital touch screens that allow consumers to customize the latest sneaker drop to an in-store fitness class, stores have gone far beyond simply selling a product. These unique experiences require unique labor needs. For more specialized roles, retailers are addressing these knowledge gaps by establishing career advancement programs, which help employees work toward new roles.?
• Supreme service: Retailers are prioritizing services that are relevant to their customers. For example, department stores are offering more unique amenities through third-party relationships, such as processing returns for other retailers.? To successfully execute these new service offerings, retailers should confirm their staff has the right level of training, and many are revamping their training programs to both re-skill and upskill their existing workforce — either to operate in new roles or to? handle multiple roles.

Employees are changing their expectations?

Covid-19 was the impetus for employees to re-evaluate what they want from their career.? This mindset shift, combined with a tight labor market, gave rise to the “Great Resignation.” According to the latest PwC Pulse Survey focused around the future of work, 65% of employees reported that they were looking for a new job.?

While the labor market has started to stabilize, employees' work expectations have fundamentally shifted. The survey also found that the top reasons employees look for a new job are salary, benefits, career advancements and flexibility. While salary is the top motivator for employees, it is only one piece of the puzzle: employees are also looking for more flexibility, career mobility, wellness and up-skilling.?

Why should employer’s care?

With rising pressure around inflation, labor shortages and increased competition,? prioritizing employee experience is top of mind for most employers. In a recent PwC Pulse survey, when asked which areas are most important for company growth, 77% of executives agreed that hiring and retaining talent was extremely important. Furthermore, 60% of executives noted that their company would be dedicating significant investments in this area.

So, what does this look like for retailers???

Retailers should look beyond the monetary benefits and focus on the total employee experience. This includes enhancing benefit programs, offering more career advancement opportunities, providing greater flexibility and empowering employees in their evolving roles with training programs.?

For example, one big box retailer revamped its tuition reimbursement programs by covering 100% of college tuition and books for employees. Other retailers are offering more flexibility through new employee applications that allow employees to view their schedules, indicate shift preferences and request coverage directly on the app.?

As the labor market remains tight and workers look for more flexibility through contract work, retailers may look to the gig economy when revamping their labor model. In some instances, this means using temp workers and third-party services to supplement labor shortages during peak periods. Retailers can also leverage other gig economy principles including surge pricing for wages and activity-based shifts. To successfully implement these strategies, they may need to streamline onboarding processes for short-term workers and confirm that activity-based shifts are staffed with the appropriate skill-sets.?

While employee experience and staffing mix are key components to successful workforce strategies, these strategies will likely be dependent on technology advancement. Prioritizing investments in technologies that can reduce or eliminate manual activities will free up employee time for value-add activities like customer relationship management. This begins with point of sale (POS) modernization. Adopting or enhancing mobile POS and self-checkout options will allow employees to easily flex between selling and non-selling activities.?

In addition to automating the front of the house, it is also critical to automate inventory management activities. For smaller organizations, Radio Frequency Identification (RFID) and scanning technology can add significant value. For larger organizations, more advanced technology like inventory robots may be worth exploring. For example, a grocery retailer launched robotic aisle scanning technology to check inventory levels more efficiently, thereby redirecting their human labor to support customers and reducing stockouts.?

Here’s what to consider next?

As business models evolve and customer expectations shift, retailers should design and deploy the right workforce management strategies. Retailers should start by looking at their current strategy and asking these key questions:?

• What do my employees need to be successful and satisfied at work??

Understanding what your employees’ value at work and translating that knowledge into the employee experience can help improve retention and employee engagement.?

• What skills, competencies, and labor level do my store employees need to support in-store activities? Is there a skill gap in my workforce???

Retailers should confirm the new business model is supported by the right people and skill-sets. If there is a skill gap, retailers can address it by re-skilling their existing workforce through training programs or by supplementing with gig workers.?

• Where can I streamline and automate the in-store activities???

Retailers should evaluate where their staff is spending the most time on manual and unproductive tasks — and where those tasks can be streamlined with? technology. There should be a particular focus around selling and inventory management tasks.?