Adjusting to a New Retail Employment Reality

by | Jun 1, 2020

In February 2020, the U.S. added 273,000 jobs dropping the unemployment rate to 3.5% and the economy was in its best shape in the past half–century. From the middle of March to the end of April, more than 30.3 million Americans – approximately 18% of the workforce – filed for unemployment insurance and the stock market had posted its worst first quarter ever. As much as the health and economic crisis has taught societies about the inadequacies of their sanitation and health services, it has also delivered a harsh lesson about the fragility of economies and how much they rely on human interaction. Food and beverage, hospitality, gig workers, and retail employment have taken the brunt of the economic hit.

Data from LinkedIn shows that 23.8% of workers who filed for unemployment benefits in March were employees in the retail, restaurants, hospitality, and food and beverage industries. In mid-March, JP Morgan was predicting unemployment rates as high as 20%. Unemployment reached its peak in the U.S. at nearly 25% during the Great Depression.

No one knows where the staggering unemployment figures will top out, how much the economy will plunge, or when it will recover, but there are some strategies businesses can employ to weather the storm. And there could be a bit of a silver lining once the new normal is revealed.

“My view is that unemployment will spike, come back, but then take some time to heal,” Simona Mocuta, senior economist at State Street Global Advisors, tells CNN. “If we make a full recovery, it’s more likely next year than this year.”

New world order

Many experts believe the health and economic crisis merely served to hasten business trends that were already in motion.

The closure of “nonessential” retail stores pushed people to shop more online, which has been trending for the past 20 years. Retailers who hadn’t already adopted digital technology and tools will most likely struggle to come back or will become casualties of the shutdown.

The societal shutdowns have also pounded another nail in the coffin of many department stores, which have been failing at an alarming rate over the past few years. CB Insights reports that since 2015 81 retail firms have gone bankrupt.

“For quite a while, we have seen department stores that anchor malls struggling, which has hurt a lot of specialty apparel and shoe retailers that fill malls,” David Berliner, of the international business and accounting advisory firm BDO, tells Forbes. “Then there is the trend of more shopping going online and retailers having way too many physical stores. Now with COVID-19 in the mix, it is really going to accelerate the trends with more store closures and ultimate failures.”

Additionally, many independent businesses are not expected to survive the retail shutdown. Neil Saunders, managing director of GlobalData Retail, told Associated Press that estimates show more than 190,000 stores have been closed, accounting for nearly 50% of U.S. retail square footage.

Independent retailers will have the toughest time rebounding because of their lack of resources. Of the approximately 1.1 million U.S. businesses, small retailers, most with less than 20 employees, comprise about 60% of that total and 98% are single-store operations.

Employment flip-flop

The economic shutdown has flipped the labor market. What was once a tight retail employment market with businesses desperately seeking quality workers, was flooded with millions seeking jobs. Add to that nearly 4 million college graduates expected to join the workforce this summer and it’s a perfect storm for a flooded job market.

There’s not a single segment of the workforce that hasn’t been affected by the virus and shutdown, either. The impact on working-age employees and new graduates is obvious. However, retailers for years have been using previously retired seniors who are struggling to make ends meet to fill hard-to-hire positions. The result is that nearly one-quarter of retail workers are 55 or older, and 7 percent are over 65. That means that most of the retail industries frontline workers are those most vulnerable to the novel coronavirus.

It also means employers are going to have their pick of workers when the economy starts up.

Now hiring

Retail employment hasn’t been all gloom and doom during the economic shutdown. Many grocery companies, pharmacy and department stores have been hiring workers. And most have been offering incentives to frontline workers.

Who’s hiring:

  • Albertsons Companies, which owns Safeway, Randall’s, United Supermarkets and others, announced the hiring of 30,000 store associates, managers and other in-store related employees.
  • CVS announced it was hiring 50,000 workers.
  • Discount retailer Dollar General expected to hire 50,000 new workers by the end of April.
  • Dollar Tree worked to hire 25,000 full-time and part-time employees across its retail stores and distribution centers.
  • Kroger sought to hire 20,000.
  • 7-11 wanted 20,000 new associates.
  • Walgreens was looking for 9,500 new retail employees.
  • And Walmart, the world’s largest retailer, aimed to hire 150,000 employees though May to meet a spike in demand.

Walmart said its positions would be temporary but could transition to permanent roles. And it was offering $150 and $300 bonuses to its part-time and full-time employees working to keep the grocery chain stocked. CVS was offering bonuses up to $500.

Ways to keep working

Many smaller businesses have used some creative means to keep employees working during the drastic cutbacks and economic closures. Among them were adopting employee-friendly policies such as allowing work-from-home options, flexible shifts, and more paid time off recommended by federal and state governments.

Some retailers that have been able to keep their doors open have re-assigned staff to other duties. The temporary closures have allowed some businesses to do renovation and repairs which has allowed them to keep some staff busy with reorganizing and construction.

Since cleanliness has been a focus of stopping the spread of the disease, many stores have boosted janitorial efforts by cleaning both store equipment and products and shifted employees into those positions.

Others have shifted staff to order fulfillment for curbside pickup or deliveries. Workers can work both computers taking orders or in the aisles and outside to fill orders and handle curbside pickup.

Many businesses that have remained open have curtailed store hours and trimmed back shifts to keep everybody on staff. Both this and social distancing practices for employees and shoppers in stores have helped limit the spread of the disease and kept stores operating.

Using tech to keep working

Forbes reports that some retailers have upgraded their in-store technology to help them ride out the restrictions and prepare for retail employment of the future. One company which was strictly brick-and-mortar sales, updated its point of sale platform because its old system couldn’t handle online orders. The upgrade allowed the store to develop a rudimentary curbside pickup system that kept the cash registers and employees working.

Digital platforms also allow for touchless payments at the checkout stand and the use of mobile applications which allow in-aisle customer checkout, remote order sales and fulfillment, low-contact deliveries, and remote business management.

Even though many big-box stores were deemed essential and remained open during the outbreak, those that were already heavily invested in retail technology and featured omnichannel shopping, curbside pickup and delivery options all tied together through their digital platforms have survived.

“The retailers that were already doing it successfully are the ones that are going to recover much more quickly,” Kimberly Becker, senior research director with Gartner, tells Fortune.

After the storm

About the only certainty in the world following the global pandemic is uncertainty. There is no model for restarting the world economy, however at least one thing seems certain for retail businesses: restarting will be slow and not all jobs will return.

New survey results from McKinsey and Company show that approximately half of retailers expect to reopen with reduced hours and about 22% less staff. However, there will be a surplus of job seekers to fill those positions.

Job applications for “essential retail” positions increased 88% nationally in March as laid-off service industry works such as hairdressers, manicurists, and other professionals sought employment. Experts believe that many manufacturing jobs may never return, leaving the job market flooded for an uncertain period.

The National Retail Federation offers a checklist for reopening a business that includes everything from logistics and operations to employment. The organization also features members-only resources and downloads.

Retailers who are ready, willing and able should be able to fill positions quickly with quality employees.

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