Evolving Retail, its Employees, and Where We are Headed
On the first weekend in February, I got stuck in Dallas for “Snowpocalypse 2.0” when my connecting flight (along with 4,800 other flights) got cancelled due to the big snow/ice/freeze storm that shut the city down. It’s pretty nuts to see a city as big as Dallas get shut down – I mean stores, ground transportation, and anything that required a person to make it happen was virtually non-existent. This got me thinking.
We’ve all heard about and felt the result of The Great Resignation (1). While we can debate about exactly why people have left jobs in record numbers, to me, this quote best encapsulates what is going on:
I THINK THAT THERE IS A RISK FACTOR HERE. DURING THE PANDEMIC, GOING TO WORK IN PERSON MEANS TAKING ON A RISK THAT DIDN'T USED TO BE PART OF YOUR JOB. AND ECONOMICS SAYS THAT WHEN THERE'S HIGHER RISK, YOU MUST PAY PEOPLE HIGHER WAGES. WAGES HAVEN'T ADJUSTED YET TO GET PEOPLE TO RETURN TO WORK.
Christina DePasquale
Associate professor of practice, Carey Business School
The hardest labor forces that have been hit by this are retail and hospitality. According to the latest census, retail alone employs roughly 10% of the American workforce, but many of these folks have left their jobs and have no plans on coming back. Across all job sectors, the US Dept of Labor says 4.3M people quit their jobs in August 2021 while there were a reported 10.4M job openings that same month (2). Not much has changed since then, and many retail job openings have been left unfilled.
Fast forward back to being stranded in Dallas. While killing 6 hours in the airport the day after my flight was cancelled and hoping to get back to Las Vegas, I kept walking by Amazon’s kiosk sundry store with its new cashier-less technology (they plopped the 2-isle kiosk walk-through loop in the middle of the terminal at Love Field). It carries the airport basics - magazines, candy, gum, water, etc.- and decided to give it a go. The only employee involved was the one who helped me register into the system “hello Big Brother/Jeff Bezos” by scanning/reading my palm(3), entering my phone number, and inserting my credit card payment which magically connected directly to my Amazon account. You don’t have an Amazon account you say? Seriously? Ok, well, they’ll sign you up on the spot.
After the registration I just scanned my palm, an electronic gate opened for me, I walked in and grabbed a Smart Water (the skinny bottles make it easier to fit in my backpack. Come on Dasani, Fiji, and everyone else, step your game up!) and a pack of gum and walked out the other electronic exit gate and that was it. Pretty seamless and really quick.
AND – queue dramatic music here…no employee had to interact with me!
This could be a win-win for both retailers and employees. Being a retail employee (anything from a cashier to a server, and everything in between) requires long hours on your feet and puts you squarely in the firing line of the public, which isn’t always the nicest place to be. We’ve all seen ‘that guy’ mistreating the employee before and most times they just have to take the abuse. If you don’t know what I’m talking about, you may be ‘that guy’. Knock it off! :)
Anyhow, unless the pay makes it worth your while, the likelihood is that if there’s a chance to make better money without the hardship, those employees are exercising those options and us out of the retail workforce. This from a recent CoStar article (4).
“But wage gains have become far more widespread than affecting only those at the lower end of the" pay scale. The largest month-over-month increase in wages was the 1.3% increase for workers in the information sector, which include tech workers, media companies and software publishers — think Google, CNN and Zoom. Similarly, workers in the professional and business sector, as well as those in financial services, saw month-over-month wage gains of 0.8%, while pay for leisure and hospitality workers barely budged.
This recent acceleration in wage growth of high-skilled workers illustrates the spread of competition for labor at all pay ranges, as employees are now more in control than ever before of choosing work situations that suit their preferences. The potential spillover of wage increases into price hikes is on everyone’s mind, not the least of which is the Federal Reserve as it plans for rate hikes in future months. So far, it has given no indication of a faster timetable than four quarter-point increases this year, but the situation remains fluid as more data arrives”
This doesn’t mean that there won’t be anyone working in retail for years to come. What it does mean is that automation is on the rise and will continue to take over in the jobs that won’t pay enough to be worth a person’s while. Skilled and knowledgeable staff will need to be compensated accordingly by the business or business model. In order to do that, we the consumer, will have to agree that it’s worth it to pay more for goods and services that provides us with an elevated experience. This could mean having an amazing meal prepared by a talented chef and served by a highly trained server, to walking into a furniture store and having the sales staff educate you on the product and help you make the best selections for your new ‘she shed’.
As the saying goes, you get for what you pay for, and in the future, you are either going to be paying for a robot to do a person’s job, or for a person that does a great job and deserves to take home a few more $$ because of that.
1 https://hub.jhu.edu/magazine/2021/winter/christina-depasquale-great-resignation/
4 https://www.costar.com/article/424845654/the-end-of-the-great-resignation-appears-to-be-in-sight