Analysis: Forget robots - retailers need people power
The ongoing fight for talent in the retail industry appears to be kicking into higher gear.
Bloomberg's Matthew Boyle wrote Friday that Walmart Inc. has surveyed workers about whether perks such as child-care services or gym memberships would be "meaningful" to new hires.
It's just the latest example of a growing focus on the workforce. J.C. Penney Co. is reportedly wooing part-time hourly workers ahead of this holiday season with the promise of a paid week off. And Eugene Lee - CEO of Olive Garden's corporate parent, Darden Restaurants Inc. - told investors on Thursday that "the biggest challenge in the industry is going to be the war for talent." No wonder Lee expects his company to see 5 percent wage inflation this fiscal year.
We know the primary driver of this move toward better pay and more alluring perks: The labor market is tight right now, and stores have no choice but to make their job offerings more competitive.
The retail industry should be careful not to think of these overtures to workers as temporary salves to lure and retain staff when the economy is hot. The reality is that the pressure to offer more enticing benefits and fatter paychecks will remain even if activity cools off.
As more of America's shopping dollars flow into Amazon.com's war chest, it is becoming only more important for traditional retailers to make the in-store shopping experience compelling and worthwhile. That can take various different forms: At Best Buy Co., for example, it means having a workforce of highly trained experts who can explain newfangled gadgets to you. At Target Corp., it means having smart merchants as store managers who can choose which goods to feature at the front entryway.
For all old-school retailers, the relevance of their stores will rest heavily on how good their workforce is.
And don't forget: In many cases now, store workers are essential to the success of a traditional retailer's online business, too. Walmart now employs more than 25,000 "personal shoppers" whose job it is to fulfill click-and-collect grocery orders, forming the backbone of a program that I've argued is perhaps its best weapon in its online grocery showdown with Amazon. In the latest quarter, Kohl's Corp. said nearly 40 percent of its digital units were fulfilled in stores.
In other words, having top-notch store workers is often an integral part of getting the online piece of the business right.
The restaurant business, too, should be thinking about wages and benefits in a similar way. This segment of retail is in a much earlier phase of its digital transformation, but the dynamics are becoming clear: The likes of Uber Eats and GrubHub Inc. are marching into more and more markets to deliver food to diners' doorsteps.
Given that those third-party delivery orders aren't as profitable for restaurants, these chains need to keep giving customers good reason to set foot in their eateries. So Olive Garden needs more than ever to have a friendly, helpful wait staff. Chipotle Mexican Grill Inc. needs to have ultraefficient burrito assemblers so long lines won't turn off patrons.
If the economy sours, retailers will no doubt be able to get away with closing the spigot on raises and perks. But that doesn't mean they should. To emerge as a winner - not just a survivor - of the great retail shakeout, they're going to need an army of motivated, loyal workers.
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Halzack is a Bloomberg Opinion columnist covering the consumer and retail industries. She was previously a national retail reporter for The Washington Post.