Overcoming Costs Associated with Labor Issues in the Retail Industry

What are the true costs of labor issues for the retail industry? 

The real cost of dealing with labor issues for the retail industry goes way beyond the wages associated with staffing the store. 

While employee wages are one of the highest expenses for most companies, these positions are vital to the success of the business. Especially for retailers. 

As of early 2022, the retail industry in the U.S. reported over 1 million unfilled jobs, according to Cision.

These unfulfilled jobs lead to millions in lost revenue. Why? Because without employees, shelves don’t get stocked, stores don’t get cleaned and tidied, and customers go without service. 

Each one of these issues is directly linked to customer loyalty and more spending. Without employees to fill these roles and provide exceptional service, today’s shoppers are likely to go elsewhere. 

Beyond labor shortages, absenteeism, and turnover cost retailers thousands of dollars as well. Training and hiring new staff alone are costly expenses. 

At the associate level alone “employers can expect to pay 16% of an annual salary to replace a worker. For an associate who makes $10 an hour, it would cost around $3,328 to replace them,” according to Daily Pay.

What are the main causes of labor issues in the retail industry? 

As noted above, labor shortages and turnover continue to be major issues for retailers. 

In the U.S. there are 16 million people working in the retail industry and 65% are hourly employees according to Daily Pay.

The retail industry faces turnover rates above 60%--that is a lot of money spent and lost on hiring and training new associates only to have them leave. 

Beyond the initial costs of turnover, retailers must then handle the disruption to the store due to the lack of employees to do the work, time spent training new employees, and the resulting impact on customer service. 

Some of the reasons for these issues: 

• Wages 
• Unpredictable hours 
• Lack of development or ability to move up 
• Poor treatment from customers and management 

All of these are issues long faced across the customer service sectors.

Why It's Important for Retailers to Address Labor Issues 

According to a Chain Store Age survey, “Seventy-percent of executives surveyed believe that employee shortages will hamper growth and 68% believe that supply chain disruption will do the same.” 

Basically, not having enough employees on hand is detrimental to the business. The impact on operational store processes like keeping shelves stocked as well as the negative impact on customer service all lead to lost revenue. 

Keeping your store stocked, clean, and ready to meet customer needs is essential to success, and these things all take skilled, happy, and knowledgeable employees. 

7 Ways to Overcome Costs Associated with Labor Issues 

Focus on Employee Retention and Reducing Turnover 

Not having enough employees on staff combined with high turnover rates is costly. So, it is in the best interest of retailers to create programs that focus on retaining employees. 

This often comes from focusing on what makes staff happy. This can be anything from higher wages to better treatment to offering perks to making sure that employees are in roles suited to their unique skills and qualifications. 

Surveying your staff and finding out what makes them tick can go a long way toward helping them enjoy the work and continue to invest their time with the company. 

It costs a lot more to replace an employee than it does to retain them—so finding ways to make them feel valued, heard, and appreciated can go a long way for your store.

Utilize Autonomous Solutions 

Learning more about why autonomous solutions are beneficial to retailers should be a top priority for today’s retail leaders. 

This is because automation can help with many current issues, such as labor shortages and providing exceptional customer service. 

One way in which this works is that automating repetitive tasks helps employers focus on staff happiness—as many employees note repetitive work as boring and related to job dissatisfaction. 

In addition, autonomous solutions like Cobi 18, an autonomous floor scrubber, free up staff to focus on tasks that require human dexterity and effort. This gives staff opportunities to use their true skills rather than be focused on repetitive work. 

While Cobi cleans the floors, staff can spend their time keeping the store straightened, stocked, and focused on customers. These things alone can help increase revenue. 

Additionally, since the public looks to the retail industry to be a trendsetter, embracing innovative technology can help elevate your store experience and position you ahead of the competition. 

Provide Detailed & On-Going Training 

Onboarding new employees can be a critical time and opportunity for retailers. 

First, company training is typically an employee's first real interaction with the company after interviewing. Making sure the training is organized and well-executed is critical. 

This is an important time to set the stage, set clear job expectations, and establish how roles and departments work together in the store. 

Retail stores can be incredibly busy, so setting the tone for how to handle busy hours of the day, who is responsible for what tasks, and who is the leader during these times can help reduce stress and confusion for staff, especially new staff. 

Training is critical to helping an employee feel prepared for the job and knowledgeable once in their role. 

Additionally, ongoing training is a great way to show employees you value their work, time, and commitment by keeping them up to date on anything new or up-and-coming. 

Being caught off guard or feeling out of the loop can cause frustration for an employee who is trying to uphold company standards and policies. 

Cross-Train Employees 

Cross-training employees is another way to help lower costs associated with labor issues. By cross-training staff, employers build flexibility and agility into the current workforce. 

According to Insperity, a human resources company, “cross-training helps ensure stability and provides valuable flexibility across teams.” 

At the same time, employees continue to learn skills that can help them become leaders in the store. 

Empowering employees with additional skills and knowledge makes them an asset to the organization and it helps them to feel they have value to add. In addition, they can take on more responsibility and eventually work their way into more senior roles. 

Beyond that, if a store does experience absenteeism, or a more senior employee leaves, cross-trained employees can easily step in to help fulfill these roles. This is especially impactful when the employee missing is one who understands how the entire operation runs and has years of knowledge. 

It is another way for retailers to keep their store operations efficient even with a lower headcount so that sales are not impacted. 

Implement Predictable Work Schedules 

Providing a predictable work schedule for your staff is another way to save money in the long run and build a happy staff—which is important to retaining quality workers. 

By providing staff with a schedule well ahead of their shifts they can plan ahead in their own lives. This can help reduce stress and complications that lead to calling in sick or no-shows—both of which negatively impact store operations, ultimately costing you money. 

According to Deputy a scheduling platform provider, there are three important things to do for your employees: 

• Give advance notice. Post employee schedules at least two weeks in advance and publish them to each employee electronically. 
• Provide ample rest time. Don't schedule employees back-to-back closing and opening shifts without at least 10 hours off between shifts. 
• Reduce schedule changes. Limit schedule changes after the schedule is posted to emergency situations only. Employees should be able to rely on their posted schedule (Deputy).

Optimize Employee Schedules 

Scheduling accurately in the retail industry can be difficult. You are at the mercy of your customers, who let’s face it are unpredictable. 

This is why so many retailers track the number of people in the store at any given time. It helps them get a sense of the busiest and slowest times of day and over time this data can be used to optimize scheduling. 

It is critical to have the appropriate number of people on staff during busy times of the day. Without an ample number of staff members during peak hours you could face angry customers that do not want to wait around. 

So, using scheduling tools based on the flow of store traffic is one way to optimize the schedule. These platforms can help you track the peak hours of the day and the appropriate number of employees to have on staff during these times. 

Another tip relates back to cross-trained employees. It can be highly beneficial to schedule versatile staff during peak hours. This way, should they need to jump into a variety of situations they can do so seamlessly. 

These tactics help save money in multiple ways: 

1. If it’s slow, you don’t want staff hanging around with nothing to do 
2. Having the appropriate number of employees during peak hours means as many customers as possible are helped and this can lead to increased sales 
3. Customers are happy that they were serviced by knowledgeable and efficient workers—this can turn them into loyal clients. 

Find Ways to Increase Productivity and Efficiency 

There are a variety of ways to increase productivity and efficiency and taking these tips into consideration can help streamline processes and procedures in your store. 

Here are a few tips: 

• Create a clear plan for how each task is done and make sure to train your staff accordingly. This way, when they get to that task, they are not left to figure out how to get the job done on their own. If left with no directions, time and resources can be wasted. This is another example of why training is so important. People interpret things differently, and training your staff to do tasks the same way each time ensures that the work is done efficiently. 

• Make sure to provide quality equipment and proper supplies. Nothing is worse than trying to fix broken equipment or being left without the proper supplies when there is a specific task to be done. Not only does this waste company time, but it can also lead to frustrated employees who may not stick around if it happens too often. 

• Work to keep employees happy. According to Xendoo, a bookkeeping company, a “benefit of keeping employees happy is that it also keeps them more productive and efficient — up to 20% more, according to some studies.” 

Training, proper equipment and supplies, and happy employees all help to increase productivity and efficiency and eliminate wasted time. 

What it comes down to is that retail employees are essential to a successful business. Taking time to figure out ways to support and elevate them will have a direct impact on your business's success. 

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