To better understand what’s going on with retail staffing right now, we have to look at some bigger factors. I’ve written before about how unprecedented the current retailing trends are because of the pandemic and post-pandemic behaviors. We’ve seen so many curve balls and false flags in the last three years!
For instance, initially, we were all certain that a recession was imminent. Turns out it’s not, at least not yet. Then, it appeared every retail employee was getting laid off, but unemployment actually went down. Lots of conflicting information is being bantered around, so it’s difficult to know what to think—and even harder to know what to do and what steps to take next. I would be lying if I said that I understood it all and could tell you exactly what to think and how to act. What I can do is share and reflect on a bit of what some experts are saying. Hopefully, from that, you can derive ideas as to how all this is going to affect the retail industry and your store or brand and guide you through adjustments you might need to make to your retail staffing strategies.
After all, you do have to act. Because even inaction is a decision, and doing nothing is sure to affect your future.
First of all, let’s address the overall economy. I have a LinkedIn connection who is a respected expert on topics related to the economy and labor markets. He is Ron Hetrick, a former Allegis Group colleague and now a senior economist at Lightcast, a data analytics firm. Ron makes some great points that I’ll summarize for you here.
Consumer spending represents the lion’s share of the GDP at 70%. We can compare that number to payroll survey data, which reveals that 311,000 new people just went to work in early March. The average annual pay for that group was $60K. If we do the math, 311,000 more people working at $60,000 each means $18.66 billion dollars is being added to potential consumer spending. Then, Ron breaks out what that has looked like for the most recent six-month period, which adds up to a total of 1.4 million workers, representing an $80-billion personal income gain.
This doesn’t necessarily mean we aren’t eventually heading to a recession, but it does show that as more money comes into the market, combined with historically low inventory levels in many verticals (auto, housing, and some electronics), there is lot of positive data illustrating that we may just skate past one.
Retailers are facing some other big factors, like the Fed raising interest rates. This can definitely swing the economy for better or worse. If wages catch up and pass inflation, and the Fed continues to increase interest rates, we could see a negative impact in the market—which could push us toward a recession.
But how does this impact retail? And what does it mean for retail workers?
The Retail Outlook for 2023
In a recent National Retail Federation article on the state of retail and the consumer, NRF Chief Economist Jack Kleinhenz states, “A recession is unlikely, and the economy is expected to see slight growth in 2023 as consumers continue to cope with inflation and high interest rates.”
He goes on to say that we still have a lot of headwinds, but that inflation is starting to come down. Although we will still see more challenges, he doesn’t expect the situation to be “severe”. He also states that corporate and household balance sheets are looking good, which will make any negative financial trends easier to weather.
While consumer spending grew 2.8% for the year, it slowed in late 2022, dropping 0.2% month over month in November and another 0.3% in December. Overall retail sales dropped 1.1% monthly in December as gasoline prices and automobile sales fell sharply and holiday sales proved to be choppy. Retail sales, as defined by the NRF, (excluding auto dealers, gas stations, and restaurants to focus on core retail) were down 0.5% month over month in December. Combined November-December holiday sales were up 5.3% over 2021 but were slower than expected.
The NRF is projecting retail growth between 4% and 6% in 2023, taking retail sales to “somewhere between $5.13T and $5.23T”.
Workers, Workers, Everywhere: Busting the Retail Recruitment Myth
Retail represents 52 million jobs in the U.S. alone. That equates to $3.9 trillion of our nation’s annual GDP.
You may be wondering about how many retail workers are actively employed. The actual number may surprise you. In December 2019, just before the pandemic started, there were 15.51 million total retail workers. Before seeing this number, thanks to the rampant narrative that retailers can’t recruit enough good labor, I would have guessed that there are fewer retail staff employed today. It turns out the real retail recruitment story is very different.
In October 2022, we were at 15.82 billion retail workers. Before you wonder if that was a fluke for a single month, we were up to 15.5 million workers in October 2021 and stayed north of that, averaging over 15.8 million workers, through all of 2022. Furthermore, according to a recent GfK study, 78% of current retail employees are satisfied with their jobs, and 79% describe themselves as happy working in retail.
Regardless of all this data—and despite how optimistic it appears to be—it’s disconcerting that retailers are experiencing (or at least perceiving) a palpable gap in staffing levels and quality of staff. I still feel it when I shop, so the actual statistics fly in the face of my personal anecdotal experience—which isn’t that of an average consumer. I work in this business and visit many retail locations in multiple states and speak to our employees who work in these stores day in and day out.
With thousands of employees performing millions of hours of work in retail, we’ve observed turnover rates easing downward and retention improving. In our view, the overall shopping experience appears to be on the upswing. In fact, according to the Bureau of Labor Statistics, total U.S. job separations in January and February 2023 were at 3.75%, compared to 3.96% in 2022. From our perspective, this supports the retail employment staffing totals I cited earlier, but other data suggests that my anecdotal experience of seeing stores that still feel understaffed is also true.
This is partly because retailers are still being challenged to fill all the roles they have. According to an article on lightspeedhq.com, the retail industry’s labor issues will persist during 2023. The reality is that many jobs will remain unfilled until at least early 2024. If hiring is a top priority or concern for you, it’s worth revisiting your retail recruitment strategy, including salary and benefits packages—among other aspects of the employee experience—to make sure they’re competitive.
As an aside, it’s interesting to note what was revealed in PwC’s Global Workforce Hopes and Fears Survey 2022. There are five main reasons workers were looking for new jobs.
They wanted to:
- Be more fulfilled
- Be themselves
- Be fairly rewarded financially
- Have a team that cares about them
- Work for a manager who listens to them
This should give pause to retail recruiters.
P.S. Since MarketSource’s singular mission is to accelerate sales—inclusive of our knowledge of best practices in how retailers can source, manage, measure, and compensate retail workers—it’s certainly an area where we are positioned to provide strong, substantial expertise. We can help retailers and brands create an approach designed to effectively penetrate a market, launch a new product line within a retailer’s location, or drive sales of new or existing products and services. Retailers can benefit from our ability to provide additional training in key areas, to upskill their people, as well as to strategize workforce planning and retail recruitment strategies.
We also recommend and implement tools and methodologies that help optimize solutions in many ways, whether the goal is to improve efficiency in managing a category or a department in a store, enhance the overall customer experience, increase customer retention rates, assist associates’ ability to serve customers, or help our clients reach other goals.
Let me know if you think we can help you.
Solving the Retail Recruitment Dilemma
Prior to the pandemic, it was evident even that the retail workforce situation wasn’t uniformly positive. I was conducting research and consulting around that time, and we were recommending things like upskilling, outsourcing real sales talent, leveraging staffing firms, outsourcing sales training, adjusting policies and approaches for Gen Z, improving technology and systems, focusing on the consumer experience, leveraging and making seamless online and in-person shopping, etc. Problems in these areas persist, and the solutions are equally pertinent today; the pandemic simply heightened these issues for some retailers.
For 2023, retailers and big brands need to sharpen their swords in how they approach retail. For instance, it’s obvious by now that omnichannel—actually all-channel—retailing requires combining otherwise disparate departments to consolidate customer feedback and tracked data about their browsing and buying behaviors. This data can guide retailers in their development of more engaging, more personalized customer experiences at both online and offline touchpoints.
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