Investing in Associates is Good for Business

The tide is turning in retail. Despite staff and supply shortages that may burden shoppers and encumber stores during the holiday season, signs of growing optimism for the future abound.

While last year the industry underwent a scourge of bankruptcies and closures, mid-year predictions suggest store openings could surpass store closings for the first time in years, and Forrester estimates physical stores will capture 71 percent of all U.S. retail sales by 2024. Even digitally native brands, like Warby Parker and Allbirds, are making direct investments in their brick-and-mortar businesses. This speaks volumes.

Yet, just as retail appears to be turning a corner financially, hiring competition continues to heat up. The retail and hospitality sector shed about 44 percent of hourly shifts in the early months of the pandemic, according to UKG’s workforce activity tracker, and has only recovered about half of those as of September. As holiday-induced urgency to hire workers drives corporate retailers to raise the bar on benefits and incentives offered to frontline employees, it’s difficult to brand these new employee-centric recruitment strategies as anything but positive.

New Benefits Offered to Frontline Retail Associates Take the Industry in a New Direction

Good intentions have always been present, but until now, many at the corporate level didn’t necessarily have to act on those intentions. However, with no end to the labor squeeze in sight — and with holiday sales and customer satisfaction riding on retailers’ ability to staff the floor — it’s no wonder we’ve seen a dramatic shift in thinking among corporate retailers catering to frontline associates.

New research from UKG finds 70 percent of retailers this year either raised wages or starting pay, introduced at least one new benefit, or expanded healthcare or leave benefits for store employees. Unlike one-off bonuses, these investments represent a tangible, long-term commitment to frontline workers.

Even benefits like paid time off, healthcare and tuition reimbursement that were once reserved for full-time employees are being offered more readily to part-time staff. Retailers are listening now: They know store employees have endured a grueling experience on the frontlines during the pandemic; 35 percent believe it’s one of the main reasons they’re having a hard time attracting talent. However, retailers are taking steps to make work more attractive, more worker friendly.

We’re witnessing the beginnings of a powerful sea change for the industry as this kind of investment has the potential to help build and strengthen workplace culture, drive retention, and — with any luck — entice people to work in retail.

Expect Competition for Talent to Force Even Deeper Employee-Centric Innovation in 2022

Analyzing top priorities for the year ahead, the UKG survey found store safety is a leading concern for 52 percent of retailers, followed by prioritizing customer demand (46 percent). No surprises there. But then we see workplace flexibility at No. 3 on the list (35 percent), followed by pay equity at No. 4 (33 percent). This is an interesting change in thinking for retail leaders. Flexibility is a staple in corporate retail settings and pay equity has gotten its share of attention in recent years, but traditionally less so in the context of frontline work.

But as we’ve seen, job-seekers today have personal priorities that extend far beyond a paycheck. They want to set their own scheduling preferences. They want on-demand pay. Mobile technology that simplifies daily work tasks is in demand, as are professional development opportunities that offer clear career paths outside the sales floor.

As the 2021 holiday shopping season progresses amid year two of a global pandemic, understaffing is a guarantee and customer frustrations will likely peak. However, retailers that prioritize employee empowerment and workforce well-being can bank on business being good in the long run.

Rob Klitsch is director of the retail, hospitality, and food service practice at UKG, a global provider of HCM, payroll, HR service delivery and workforce management cloud software solutions.