As I have been reviewing many retail predictions for this year, one prediction I keep hearing is that 2023 would be the year of the retail frontline employee. Several reasons were shared on the “why,” including the labor shortages, increasing wage rates, tough to hire, and – most importantly! – the need to retain.
Having spent over 30 years in retail in either a frontline role or one that supported the frontline employee, this prediction struck me as odd. Not to say that retailers shouldn’t care about their frontline workers, instead…what has taken the prognosticators so long to recognize the critical role a frontline worker plays in the success (service, sales and profitability) of any retailer. All the retailers I have worked for over my 30-plus years have wanted to be the “employer of choice” – 2023 and beyond will be no different.
Was This Revelation Pandemic Driven?
The COVID-19 pandemic was challenging for both retailers and employees. The number of employees that were furloughed was enormous with many stores having to close their doors or at a minimum move to curbside only, reducing the need for fully-staffed stores. This gave employees time to reflect on their career choices and decide whether they wanted to rejoin the retail workforce as stores started to open and rehire.
However, the frontline employee has ALWAYS been the key to any retailer’s success; without them, customers aren’t serviced, sales aren’t rung, and margin dollars aren’t taken to the bank. I learned this at the wide-eyed age of 17 working on commission selling shoes. I love a recent quote from Trend Micro COO: “Make your employees feel like Superhero’s” – afterall, they are the one’s doing the heavy lifting. And the proliferation of online sales and self-service options hasn’t changed the need. In fact, the buy online pickup in store (BOPIS) and delivery options have added to the frontline workers list of tasks to be completed.
We all know that one of the Top 2 expenses on a company’s P&L is labor (inventory being the other) and retailers have typically experienced 100%+ annual turnover in hourly workers in non-pandemic times. So what really makes 2023 different?
- Labor shortages will continue and turnover will happen as the Great Resignation continues. We also know that it costs more to hire and train someone versus retaining and perhaps paying more to a seasoned employee to keep them. By some account, it will cost $3,500 to replace an $8/hour worker, more as the hourly wage increases.
- Companies will cut costs in the wrong place – and it will impact the customer. I’ve seen this in my career several times where store labor gets cuts and tech investment slows. No retailer can cut their way to success and profitability.
- Customers are smarter and expectations for service have increased. As a result, a more personalized experience is expected. The basic service expectations continue to rise.
- Customers expect the same seamless experience regardless of the channel they are buying from. According to the recent Incisiv Retail Omnichannel Experience Index report, which was launched in collaboration with Blue Yonder and Microsoft, 93% of all shopping journeys now start online, up from 81% in 2020. However, despite this, over 80% of all transactions happen through the store, according to the National Retail Federation (NRF).
- Customers want to do business with brands that they trust. And the retail store is at the forefront of building that trust.
What Is a Retailer To Do in 2023…and Beyond?
The government stimulus is gone, so now retailers need to improve sales and grow margin by out-executing their competition through technology investments to automate what they can and optimize what they can’t.
- Automation can pick up the mundane tasks and allows employees to focus on the customer. Tasks such as store ordering, price execution, planogram compliance, inventory counts (and more) can all be automated without reducing labor. Employees with the right tools can operate more productively, intelligently, and efficiently.
- The next-gen worker expects a digital workplace. That is why it is important to empower employees with better tools. Per IHL Services research, the best-performing retailers (15%+ sales growth) are investing in technology 5.4 times more than the below-average performing retailer.
- Refresh your infrastructure to support the stores and the customer experience. Per IHL Services, the best-performing retailers are investing in their store IT infrastructure 43 times more than the poor performer.
What Tech Gives the Best ROI?
- Workforce Management systems (WFM). Time to move schedules off paper and Excel to give visibility across the company.
- Handheld devices. These allow associates to easily execute tasks such as inventory adjustments and cycle counts, picking orders, etc., which are major time suck for employees who do this on paper today.
- Shelf edge technology. This includes electronic shelf labels (ESLs) and planogram compliance/out of stock vision systems; ESLs delivers pricing execution that delivers margin dollars. OOSs = lost sales.
- Note on ESLs: Per IHL Services, the best-performing retailers are investing 12 times higher than their competitors in ESLs. European retailers are farther ahead with ESLs than North American retailers – and no retailer wants to be last.
- Execution Management systems (commonly referred to as task management). The ability to consistently get tasks completed in every store, at the same time has always been a challenge through email and weekly mail packs.
Why Blue Yonder?
If you would like help delighting your employees and customers, as well as controlling labor or boosting profitability with technology, Blue Yonder’s Industry Strategy leads are available to help you reach your goals. Reach out today.
Dave Hamilton is a Senior Director Retail Industry Strategy at Blue Yonder and loves helping retailers align their go-to-market plans. Connect to him on LinkedIn.