Top HR Challenges in Retail

The loss of key staff lured away by the promise of more pay from a competitor seems like a quaint problem now as HR leaders must develop policies (on cleaning and customer capacity, for example) to keep workers and customers safe from a highly infectious and deadly disease. They also must get staffing levels right in the face of suddenly lower customer demand and the rising dominance of online retailers.

“We shifted from a full-employment economy to an unprecedented level of unemployment,” says Mark Cohen, director of retail studies and an adjunct professor at Columbia Business School in New York City. “Most retailers are in a world of hurt.”

Significantly, the shift to e-commerce, which was well underway before the virus appeared, accelerated due to the monthslong shuttering of nonessential brick-and-mortar stores. Even after the reopening of many establishments, the lack of a COVID-19 vaccine has left many customers too concerned about their health to venture out of their homes as often as they did before the coronavirus outbreak.

Retail experts expect the increase in online shopping to outlast the pandemic: In a June poll by New York City-based Coresight Research, a consulting and data company that focuses on retail, 45 percent of consumers said they would shop in stores less often over the long term.

Before the pandemic, retail already was in turmoil, with experts predicting a significant number of store closures in 2020. As the virus took hold, Coresight Research increased its estimate of the number of U.S. shops that will close this year to as many as 25,000, up from 15,000. Malls have been particularly hard-hit, and major retailers such as J.C. Penney, J.Crew and Neiman Marcus have filed for bankruptcy. Brands like Pier 1 Imports and Victoria’s Secret have closed hundreds of stores. By comparison, 9,800 stores closed in the U.S. last year.

“There’s been a dramatic shift,” says Matthew Katz, a managing partner at SSA & Co., a New York City-based global management consulting firm, who specializes in retail. It’s not that customers will never again walk into a liquor store or try on clothes at a department store, “but we’re not going entirely back to pre-COVID,” Katz says.

Yet some constants remain. Talent acquisition is still a key issue as companies decide which staffers to bring back, and when, amid an uncertain revenue flow. Culture and engagement are still key to a happy and productive workforce. Training is still important, but now it includes directions for staff working remotely and for front-line workers dealing with trepidation over infection. The path forward will require empathy and flexibility from HR as retailers adapt to the new ways people are working and shopping.

Talent Puzzles

Because Sunnyland Outdoor Living, a family-owned business in Dallas, traditionally has enjoyed low turnover, hiring hasn’t been top of mind. But when the company recently opened a second patio-furniture store, hiring was a challenge—even during record unemployment.

“We don’t want bottom-of-the-barrel people,” says Brad Schweig, vice president of operations. He looks carefully at resumes to try to find some indication that workers will stick around. 

“We’re a high-end store,” he says. “We want people who are going to be here a long time. If I look at a resume, I’d like to find someone who stayed somewhere 10 years. I’m lucky to find someone who stayed two years.”

One of Schweig’s biggest hassles is interview no-shows. One day, he had five applicants lined up for interviews, and one called to say he wasn’t coming; the other four just failed to appear. “I hate to pick people off the street, but I’m almost at the point of taking those horrible resumes,” he says.

Decreased sales amid an economic recession have left many companies with too many employees instead of too few, but retailers still feel pressure to find and keep the right talent and make smart decisions about whom to recall as business improves.

Many stores are filling new roles now, with some serving as pickup locations for customers who buy items online. So now companies need to consider which workers connect best with shoppers and who would be better at packing items in the back of the store, says Marie Driscoll, managing director for luxury and fashion at Coresight Research.

And with so many online choices, customers want a store to provide a carefully curated lineup of merchandise so it’s worth it to venture inside, says Greg Portell, lead partner in the global consumer practice of Kearney, a management consulting firm. Retailers have not put enough effort over the past 10 years into developing that merchandising talent, says Portell, who’s based in St. Louis. Meanwhile, stores have been slashing their labor costs, paying sales staff less and putting fewer people on shifts.

“If you’re taking the time to go into a store, the service better be good—an educated person, not just someone who runs my credit card,” Portell says. “That’s a pivotal shift for retailers who have traditionally underinvested in store labor.”

OF CONSUMERS SAID THEY WOULD BE MORE LIKELY TO SHOP ONLINE AND LESS LIKELY TO SHOP IN STORES OVER THE LONG TERM, ACCORDING TO A JUNE 17 SURVEY FROM CORESIGHT RESEARCH.

Retailers of all sizes will also need to beef up their tech staffs and capabilities as they move more of their business online, Katz says.

Pre-COVID-19, stores were in danger of losing workers to Amazon distribution centers and other online retailers that were willing to pay more. The coronavirus exacerbated that threat, with large e-commerce retailers, including Walmart and Target, adding even more business from customers stuck at home.

In the past, brick-and-mortar retailers could at least offer short commutes and flexible hours to many workers. But now, with stores closing, many of those jobs will disappear. For retailers that do survive, Cohen advises, offering flexible hours will be an important way to retain low-wage workers.

A flexible digital system for scheduling can help build employee loyalty if it allows workers to arrange their hours around family commitments, says Paco Underhill, author of Why We Buy: The Science of Shopping (Simon & Schuster, 2008) and CEO of Envirosell, a New York City-based consulting firm.

And, of course, treating and paying employees well will also help attract and retain capable workers. Costco, for instance, pays premium wages and provides generous benefits, including health care and retirement plans, resulting in lower turnover and happier workers, Cohen says.

Pandemic Policies

In the coronavirus era, employers are writing whole new chapters in employee handbooks.

Attracting and retaining workers was a largely economic issue before the pandemic. Now workers are weighing whether they will feel safe on the job. “It’s not as simple as it used to be,” Katz says.

Bealls Inc., a Bradenton, Fla.-based department store in the heart of hurricane country, got a head start reacting to the coronavirus because of a robust disaster plan that was already in place, says Daniel Doyle, chief HR officer. The plan helped Bealls quickly stock up on masks for workers before supplies ran short across the nation. But the full impact of the pandemic was too inconceivable to have planned for. 

“There was no playbook for this kind of thing really. We had a disaster-recovery program that had a pandemic plan. We just didn’t take it to the level of what if we shut down completely,” says Doyle, part of a four-person leadership team that continued to work at company headquarters while 500 stores, warehouses and other locations were closed for months and all other employees were furloughed or working from home. The company’s leaders scrambled to buy protective shields for clerks, arranged for ramped-up cleaning procedures and updated policies, such as having workers report their health status and potential viral infection.

Matthew Katz

The pandemic created an unprecedented set of challenges for HR departments like Doyle’s as they sought to balance their company’s need to reopen with the safety of employees and customers. Some businesses instituted rules requiring employee temperature checks. Most established new deep-cleaning procedures. Some changed leave policies to encourage sick workers to stay home. 

Upon reopening, others allowed increased flexibility for employees who weren’t yet comfortable returning to work, especially if they had underlying health conditions. And some retailers developed policies to inform and reassure colleagues who had worked near someone who was potentially infected with the coronavirus.

Schweig ended up asking employees to take their own temperature daily and made it clear that no one should come in if he or she didn’t feel well. By chance, the company had changed sick-leave policies last November, adopting a more generous and flexible paid-time-off system that combined sick and vacation days. “We told people, ‘Don’t be afraid to call in [sick],’ ” he says. 

Even if that leaves the company with too few workers, he maintains, it’s better than having multiple employees in quarantine because of possible exposure to someone with COVID-19. “We’re better off being short-handed one day than 14 days,” Schweig says.

Sunnyland’s delivery teams were driving in separate vehicles to take furniture to customers. But after about two weeks, the drivers decided for themselves that they’d rather take the risk of traveling together to make deliveries.

The company required staff to wear masks and offered them to shoppers who didn’t have one, but it didn’t bar customers without masks from its stores. On the sales floor one day, an older couple with masks got angry at a maskless younger pair. “Things I never thought would happen: customers yelling at each other over masks,” Schweig says.

The coronavirus has also highlighted an employee concern that has long been important to morale: hygiene. Underhill’s research shows that the issue is particularly important to women. So when he visits a company he’s consulting for, he stops in the break room and employee bathroom. If senior managers make a point of doing that, he says, cleanliness will become a priority. HR’s role is to make sure cleaning is scheduled regularly, hand wipes and other cleaning supplies are available, and employees have the ability to voice issues and concerns, he says. 

“Employee and customer safety will be paramount,” Katz says. “We’ve got to create that feeling of safety.”

Cultural Issues

Employees are concerned about more than getting sick on the job. They also worry about catching the virus on public transportation as they commute. They’re concerned about bringing the disease home to vulnerable family members. They’re apprehensive about wearing a mask and gloves for hours at work. And in an economic recession when many have been without work, they worry about their finances.

“HR departments really have to support [workers] and understand what people are going through—it’s [about] leading with empathy and compassion,” Driscoll says.

And hiring empathetic and compassionate sales staff can allay customers’ health fears as they venture out to shop. “You want to hire people who can communicate empathy and trust and ‘you’re in a safe place,’ ” Driscoll says.

25K

NUMBER OF SHOPS THAT COULD CLOSE IN THE U.S. IN 2020, UP FROM THE 2019 RECORD OF 9,800, ACCORDING TO CORESIGHT RESEARCH.

The pandemic also makes some tenets of good management even more important. At a time when employees are fearful, leadership from their managers is especially important.

“Historically, the desk farthest from the front door is where the person in charge sits—both physically and metaphorically,” Underhill says. “One of the ongoing challenges in the HR world is senior management spending time on the floor—[to be] visible and to have a conversation. The role of HR managers is to get a better connection to the morale on the floor.”

Senior executives should visit sales floors once a week, Driscoll says. Nordstrom, for instance, is famous for customer service that begins with managers and executives training on the sales floor, she notes. It helps executives understand their customers. It also boosts morale among the clerks they meet. “Everyone wants to feel what they do matters. When a senior executive asks you questions ... you feel your role is important.”

Training Essentials

To improve morale, Bealls has been focusing on soft-skills training for managers and executives. The retailer found success in using in-house staff members to teach the skills they’re particularly good at.

The teachers have gained confidence and new presentation skills. One logistics leader did such a great job teaching public speaking that he’s in hot demand now for one-on-one coaching, Doyle says.

“It helps develop the people teaching the class, and it gives the other people the education,” he explains. “It sounds ridiculously simple, but it’s worked really well for us.”

Retail, even more so than other industries, tends to reflect societal changes and requires adjustments to meet those disruptions. Training is an important ingredient in successfully responding to change.

The coronavirus necessitated many adjustments, Underhill says. He cites his favorite fish restaurant, which switched to curbside pickup when it was forced to close its dining room during the pandemic. 

“Retail is often a reflection of the evolution of us,” says Underhill, whose company is a leader in testing prototype stores. “Retail needs to be proactive in understanding ... retail trends and what that means to the relationship between the physical space and the operating culture.”

Marie Driscoll

One change Underhill has seen is how items are now often sold “hip to hip” instead of “nose to nose.” A department store cosmetics counter is an example of the old nose-to-nose construct, in which a customer stood across a counter from a salesclerk. Sephora stores, for example, now highlight the new hip-to-hip model, in which the clerk stands beside the customer in a more collegial way, with the focus on the product. Another example is Apple stores, which have no checkout counters.

But Portell says the move toward such experiences will have to take a back seat for now to training that focuses on safety and hygiene.

Retraining is also important as furloughed workers return to a changed work environment. If half a team was furloughed while the other half learned to work from home, the returning staff might not be trained on new digital tools and etiquette (mute those screaming kids, please). “Bringing folks back means you’ve got to figure out how to get them caught up,” Katz says.

Retail HR leaders need to think differently now about how to equip staff for success so they can help their companies thrive in a difficult environment.

“Challenge all the traditional mindsets of ‘this is how HR works in a retail environment,’ ” Portell says. “Remember what makes you win,” and marry talent and labor levels to that strength. “Creativity is going to be where HR professionals define their success.”

The coronavirus and other disruptions will continue to change the retail HR landscape. So, Portell advises, strategies need to be “built for purpose, not built to last.”  

Tamara Lytle is a freelance writer in the Washington, D.C., area.