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In October, retail sales grew by 1.7 percent. As consumers began filling up brick-and-mortar stores, restaurants and more, the United States began feeling hopeful that the economy – still bruised by the pandemic’s effects – was on the up and up.
But a growing retail industry doesn’t equate to less pain felt by business leaders. There is still a giant worker shortage and no real solution to fix it.
For retailers, the challenge is simultaneously trying to recover the 649,000 jobs lost in April while also making up ongoing losses – like the 28,500 positions the industry lost in August. Human resources leaders just don’t have the ability to sustain hiring and day-to-day management with that sort of turnover.
Luckily, the October jobs report found there is workforce growth, with unemployment falling another 0.2 percent to 4.6 percent overall. For comparison, the rate in April 2020 – one month after COVID-19 broke out in the United States – was 14.8 percent.
This is good news, however, we are still not out of the woods. Employers – especially those in the retail and service industries – still have a long way to go to reach pre-COVID participation rates.
“The unemployment rate dropped, but the labor force participation rate is holding steady,” the U.S. Department of Labor Blog reports. “October’s rate (61.6%) was around the same as what we’ve seen in the last year. We want to see it go up to its pre-pandemic level of approximately 63%. That means bringing people back off the sidelines.”
With increased holiday demands added in, America’s retailers have been pushed to their brink.
Supply-and-demand basics tell us where this is headed: a retail apocalypse.
Why are retailers struggling so hard?
Retail and service-industry workers were struggling long before we learned what “COVID-19” was. Surveys from 2015 and 2016 found more than half of retail workers had nontraditional shifts or worked more than 48 hours a week. Out of those respondents, 42 percent of retail workers said their job negatively affected their stress levels.
The problem has been in front of our eyes for years, yet many business leaders didn’t have the tools to manage it, didn’t fully understand the issue or just didn’t care about a solution. Now there is no option but to manage, understand and care.
“We’re seeing a wider understanding that these were never good jobs and they were never livable jobs,” Rebecca Givan, a professor of labor studies and employment relations at Rutgers University told The Washington Post in June. “In many cases, the pay is below a living wage and the hours are inconsistent and insufficient. If anything, the pandemic has made retail jobs even less sustainable than they already were.”
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And we’re currently learning how unsustainable these jobs are, with The Great Resignation fueled in part by employee burnout. The industries most at risk for employee burnout in 2021? Retail and fast-food workers.
These workers are balancing the pros and cons of the job and finding there aren’t nearly enough pros for them to risk their health coming to work – especially on a $10-an-hour wage. Instead, these workers are seeking employers that recognize employee value, offer remote options and pay more competitively.
What can retailers do to tackle these challenges?
The first thing retail leaders need to do is be honest and transparent with themselves. The Retail Apocalypse is happening because the current model is broken, and has been for some time. Brick and mortar stores have charm but COVID taught us they are either largely unnecessary or overabundant.
It’s something CVS is currently learning, as the retail chain announced 900 store closures – or, 10 percent of its physical presence – over the next three years. The efforts will cost CVS $1 billion in its fourth quarter but for the brand, that’s not an entirely bad thing.
What CVS is doing is reevaluating its brand strategy by evolving to meet customer needs and focus on digital growth. The 900 stores will be selected based on store overlap and employees of those stores will be offered positions at nearby stores.
“The retail side of CVS’s business is shabby,” Neil Saunders, retail industry analyst and managing director of GlobalData, said in a statement. “Too many stores are stuck in the past with bad lighting, depressing interiors, messy merchandising, and a weak assortment of products. They are not destinations or places where people go out of anything other than necessity.”
By investing in digital, CVS may be losing money but the strategy is an investment that will be felt long term, especially in our increasingly digital world. It’s a facelift that is long overdue in the United States. Prior to the pandemic, America had 40 percent more shopping space per capita than Canada. Again, both unnecessary and overabundant.
This doesn’t mean we need mass retail closures, though. What CVS did was evolve to meet the world around it, and there is data to prove we are more and more digital. A Gartner survey recently found that digital-collaboration tool usage has gone up 44 percent since 2019, proving digital’s massive growth.
The simplest thing retailers and fast-food chains can do now is embrace how digital tools can streamline all areas of the organization. Even the hiring process is more efficient because of technology’s capabilities. Applicants are now being reviewed by software before HR managers, turning the hiring process into an episode of Matchmaker and not Survivor.
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