More than Half of Retailers are not Prepared to Meet Today’s Omni-Channel Labor Challenges. Are You?

In-store fulfillment of ecommerce orders; a more knowledgeable and demanding consumer; new labor legislation; rising minimum wages; emergence of the millennial workforce; there are so many recent developments impacting retail store labor. It’s no surprise that over half of retailers feel they are not prepared to meet the labor challenges in today’s omni-channel marketplace. That is one of the findings in a just-released study of over 250 store managers by JDA Software Group, Inc. – A perfect labor storm is brewing for retailers.

The study found that three key factors are hitting retailers at the same time to cause a perfect storm of labor issues for retailers—omni-channel operations, labor legislation and the millennial workforce.

Omni-channel operations

The consumer is now in charge of the omni-channel path to purchase and they demand seamless shopping experiences regardless of channel. To accommodate this, the study found that 62 percent of retailers are offering some combination of buy online – pickup in-store, buy online – ship from store, buy online – return to store and buy in-store – ship to home. This is putting tremendous pressure on retail labor for services they had not previously scheduled for or performed. In the study, 52 percent of respondents say they do not feel prepared to schedule associates for these new tasks. Probably not coincidentally, 52 percent say they are scheduling store labor manually.

The impact of the scheduling difficulties can be seen in routine under- and over-staffing. Forty percent of respondents say they are too understaffed to meet store service requirements at least five times per quarter. And 47 percent say they have had to pay overtime to rebalance their workforce for these situations. In addition, 75 percent say they are overstaffed one to five times per quarter. Thus, scheduling difficulties are impacting both service levels and labor costs.

Labor legislation

One way many retailers (50 percent of survey respondents) have attempted to deal with scheduling difficulties is to use “on-call” scheduling, putting associates on the hook to work if needed.  This practice has long been a tool for retailers to minimize labor costs.  Although not technically illegal, we’ve seen the New York’s attorney general and other authorities objecting to the practice, several retailers face litigation and others abandoning the practice to avoid negative consequences. Further, some municipalities have passed or have pending legislation directed at improving the lives of retail workers. San Francisco’s Retail Workers Bill of Rights and the District of Columbia’s Minimum Work Week Act are prime examples. Add in the minimum wage increases, the Affordable Care Act and proposed changes to the Fair Labor Standards Act (FLSA) and there is no doubt retailers will see increased labor costs. In the study, 61 percent of respondents say minimum wage laws will have a major effect on their labor costs and 53 percent said recent legislative changes will have a similar effect.

Millennials

Millennials are projected to make up over 50 percent of the retail workforce by 2020. This new majority exhibit different work habits and preferences than their predecessors and retailers must account for these differences in their workforce management practices if they want to attract, hire and retain these 21st century, digital-native associates.

Millennials want work/life balance and they prefer work schedules with the flexibility to match their personal lifestyles. This requires workforce scheduling practices that are flexible and digitally automated to enable the constant communication millennials have come to expect. In fact, in the study, greater flexibility was, at 45 percent, the new scheduling capability most requested by a wide margin. The second most requested new scheduling capability (25 percent) was advanced visibility to schedules, something that digital automation will help provide.

The good news is that digitally-native millennials are uniquely qualified to service the new demographic that is rapidly replacing baby boomers as the largest shopping block—other millennials. They want store associates to be as knowledgeable and digitally empowered as they are. This means retailers must equip associates with mobile devices and apps so they can provide this level of service.

Weathering the storm

With the convergence of omni-channel fulfillment in-store, new labor legislation and the growing dominance of millennials, it’s no wonder store managers are feeling uncertain about their ability to adequately schedule their workforces to meet today’s more exacting requirements. The only way to weather these perfect storm forces is through advanced workforce management solutions. The study participants showed their agreement by the fact 46 percent say they will replace their current systems within the next five years.

How about you? Are you ready to weather the labor perfect storm?

You can read the full report here.

You can access an informative Infographic here.

You can read the press release here.

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