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Retailers Face Labor Challenges

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JD Software group just released a study of over 250 store managers where more than half felt unprepared to face the labor challenges of the omni-channel marketplace.

The factors that are causing this uncertainty are new and demanding customer needs, omni-channel operations, new labor legislation and the millennial workforce.

About 52% of respondents have not yet deployed a modern workforce management solution into their planning process. The consumer demands seamless methods of shopping on all channels and to accommodate this demand, 62% of retailers are offering some combination of buying online/pickup in-store; ship from store; buy online; return to store and buy in-store; and ship to home.

This has put a strain on retail labor services that employees had not previously been scheduled for or performed. Even so, managers still rely on primitive forms of scheduling, like pen and paper, a whiteboard or an Excel spreadsheet—in fact more than 50% still schedule store labor manually.

These omni-channel services are only going to increase in future months, according to respondents, and with that, additional staff will have to be trained and allocated to support growing customer demand.

All this is manifested in routine under- and over-staffing, which impacts service levels and labor costs. 40% of respondents admit they are too understaffed to meet store service requirements at least five times per quarter. And 47% have had to pay overtime to re-balance their workforce in those situations.

50% of respondents indicated that one way they have attempted to deal with scheduling problems is to use “on-call” scheduling, making associates work if needed. Of those respondents who do initiate on-call scheduling, only 20% use automated software, while 80% claim store management handles it directly.

While this practice minimizes labor costs, and is not technically illegal, the New York attorney general and other authorities have objected to this practice and several retailers face litigation, while others are abandoning this coercive method altogether to avoid negative consequences.

The San Francisco Retail Workers Bill of Rights and the District of Columbia’s Minimum Work Week Act are examples of addressing this practice. Also, as minimum wages increase, and as the Affordable Care Act proposed changes to the Fair Labor Standards Act go into effect, retailers are bound to see increased labor costs.

In fact, 61% of respondents said minimum wage laws will have a major effect on their labor costs and 53% indicated recent legislative changes will have a similar effect.

It’s predicted that Millennials will make up over 50% of the workforce by 2020, and since this demographic has different work habits and preferences than their predecessors, retailers need to adjust to these differences in their workforce management practices if they want to attract and keep this large, mobile-centric group of associates.

Demanding their work schedules be flexible to match their lifestyles requires scheduling options that are flexible and digitally automated. In fact, the study showed that 45% of respondents sought a new scheduling capability. The second most requested new scheduling capability (25%) was advance notice and visibility of schedules, something that digital automation would facilitate.

This new wave of employees accompanies the new wave of millennial shoppers, and store managers want their employees to be as digitally aware and knowledgeable as their shopping counterparts, which means equipping employees with mobile devices and store apps.

The answer seems to lie in providing advanced workforce management solutions. Many of the participants in this study (46%) tend to agree, saying they will replace their current systems within the next five years.

TAGS: retail, retail trends, retailers,
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