Whats Causing the Great Retail Worker Shortage?
While Americans are rejoicing at the openness of everything and Gen Zers in particular relish the return of IRL shopping, retail workers are rethinking their employment in the industry, adding to a preexisting, pre-pandemic talent shortage. The problem is a macro one  airports, for example, have found themselves in their own bind with demand for travel resurging alongside a dearth of flight staff and TSA agents, which has led to delays, canceled flights and more chaos than retail could afford to stomach. Retail associates who havent yet jumped ship say retailers have been more focused on fixing the in-store shopping experience (which needed help well before COVID-19 reared its head) to secure demand than they have been on retaining the workforce they need to make it all happen. A recent survey of 500 retail associates commissioned by retail operations platform Zipline found that those associates dont feel their employers are putting enough energy into improving the workplace. In fact, 42 percent said theyre either considering or planning to leave retail after the pandemic. I think people are just worn down. Theyre worn down, they feel tired, the pace of retail hasnt slowed down, its continuing to speed up because they need to be more agile, said Melissa Wong, cofounder and chief executive officer of Zipline, which counts Allbirds, Sephora and AEO Inc. among its clients. It is so critical for organizations, especially [those] that are going through these huge critical change  which all of retail is now  if youre implementing new technology, trying different ways of working, the field has to do more with less and theres a labor shortage, which makes it even harder. So you need to align the organization on what the key initiatives are, why youre doing it and what success looks like.  View Gallery Related Gallery All the Looks at the 2021 Cannes Film Festival  Only 24 percent of the associates surveyed said retailers are doing enough to retain talent and build an ambitious workforce. And many arent holding on while companies try to figure that out. Theres a phrase Im starting to see more, were calling it The Great Resignation Era. Were seeing it across industries, Evan Armstrong, vice president of workforce for the Retail Industry Leaders Association, told WWD. I think the hiring challenges in retail are not that different than the hiring challenges across the economy right now and the reasons arent necessarily shocking.  One of those reasons, according to Armstrong, is the Unemployment Insurance government support stimulus, which has, in some cases, allowed part-time workers to choose not to go back to work for a period of time because the stimulus can be more than their wages, he said. Summertime may also be to blame. I do think were in the summer months and child care is probably another component holding folks back, Armstrong said. And then also theres lagging fears of COVID-19 and safety even though vaccination numbers are increasingSo I think all those factors combined have created an unemployment situation across the economy and retail is no different.  Quitting, it seems, is trending right now. According to data from the Bureau of Labor Statistics, the number of retail workers who have quit their jobs has more than doubled year-over-year. In April 2020, for example, 296 workers quit, or 2.2 percent of the total workforce. By April 2021, 649 people quit in the month, representing 4.3 percent of the total workforce. As it stands, there were 15.6 million retail jobs in June 2019 and, as of May 2021 (the most recent BLS data available), there are 15.2 million retail jobs. Thats nearly 400,000 fewer jobs and, still, it is difficult to fill them. In a word, Melissa Hassett, vice president of client delivery at talent solutions firm ManpowerGroup, calls the retail workforce situation dire.  It is still very tough. Most companies have not recovered from the pandemic, I dont think, and have not gotten back to 100 percent staffing levels. Theres not one client that I talk to that feels like theyve gotten back to 100 percenteveryone is behind in terms of staffing and that goes across logistics, distribution, retail, call centers, all of these onsite hourly roles, she said. It used to be that they all had very different challenges but today they all have the same challenge, which is, there are not enough people to fill the roles that are open.  And there will be more jobs opening up. A quarterly employment outlook survey from ManpowerGroup, which queried more than 17,000 employers across the Americas, found U.S. employers reporting their strongest hiring intentions in 21 years. In the wholesale and retail trade sector, the hiring outlook matches the strongest since the surveys start in 1982. In warehousing and storage, which are key to meeting COVID-19-conditioned consumers where most of them are  online  jobs are increasing. In June 2019, there were 1.2 million warehousing and storage jobs in the U.S. As of May, there are 1.4 million. But theres still a shortage of warehouse workers to fill the roles. And its a problem thats been piled on in the pandemic with more shoppers shifting to online buying and more workers needed to support that shift. Last season, during the holiday season, our statistics showed that we hired three times the prior year into distribution roles because you had to get that box to the house instead of into a large distribution center and then into a large store, Hassett said. So getting that box to the house meant three more hands to get there and that surge of needing three times as many people in distribution last year is whats really causing the shortage for all onsite hourly workers. Honestly, that, in my view, from where I can see all of the positions that are open and all of the strain on the workforce, thats where it began because so many more onsite hourly workers went into warehouse and distribution. We are still paying for that today when we try and hire retail store or call center or manufacturing even.  For now, warehouse and distribution roles are still most in-demand, though Hassett expects that to change in the coming months. I still think that the pain is on the warehouse and distribution side but that is shifting as we speak, said Hassett, whose firm handles all or partial recruiting for companies that seek them out. So as things are opening up for the summer and retailers are trying to hire more, that is shifting right now and I would expect that the pain is really going to be in stores by the time we get to back to school.  Retailers hoping to preempt that pain are going to have to pay up  both in terms of the higher cost of retail labor (as Hassett said, retail workers are making about 7.8 percent more than they were pre-pandemic, January 2020) and because its a retail workers market. Complete with signing bonuses and all. What a lot of the bigger box stores are doing is they just over-hire for back to school, August and September, and then they hold on to as much of that talent as they can through holiday and, of course, do more holiday hiring. That is going to be absolutely critical but [retailers are] not going to be able to do that in the same ways [theyve] done that in other years, Hassett explained. Thats largely because retail workers have grown overly weary of not being heard. As Hassett has seen, Candidates are saying to us they need their pay, theyre looking for sign-on bonuses because a lot of companies are offering sign-on bonuses now. The companies that are going to get this onsite hourly talent are the ones that are listening to them, Hassett said. It will also be the ones that take the learnings from that listening, and incorporate them to encourage workforce engagement. Empowerment and engagement is one of the pieces thats missing in retail and thats because the communication to each level isnt clear and isnt as actionable, Wong said. Companies overall will have to do better in the world and then the question is: how do you make sure your employees know?The company can be doing a lot but if associates dont have an understanding about what the company is doing then the perception makes them want to leave.  What Wong has seen work is companies surveying their staff to understand the sentiment among them and incorporating that staff in decisionmaking for the betterment of the business, both internally and beyond the brand. In the thick of COVID-19 [one of Ziplines retail clients] asked their store teams how do you want to develop the best practices to keep us and customers safe? And as a field team [how Wong refers to retail store associates], they actually created the best practices together with the operations team, Wong explained. Thats kind of more on the leading-edge side, but then all the field teams are bought in.  Beyond engagement, sign-on bonuses and greater consideration for worker well-being, retailers will also need to consider bending some of their own rules  particularly when it comes to their talent pool to manage the worker shortage. Can you open up your talent pool by hiring folks maybe that dont speak English in areas where most of your clientele dont speak English, that sort of thing.  However it shakes out, RILAs Armstrong believes there will be a pretty big uptick in job applications in the fall.  I think school being back is going to be a huge driver for that, he said. I think these are macro trends. Our companies are obviously always looking at unique and creative ways to offer the types of benefits, flexible schedules and wages that talent is seeking but I think theres going to be a switch back and I think theres going to be a move back into work toward the end of the year in the fall and the winter and certainly going into next year. So my sense is that companies are not overreacting to the situation, but there are macro factors that are just going to have to play out.