Retailers: Way Short of Santa’s Helpers

Retailers are feeling the national labor shortage at the worst time. But are there some solutions for both the short and long term? 

The retail executive furrowed his brow: shoppers were streaming into his stores to scratch their holiday shopping itch, only he didn’t have enough floor staff. The lines of customers were growing by the minute, the patrons thumbing their frustration into their phones.

At malls across the country, such scenes have started becoming all too common since the holiday rush kicked off. It’s not surprising, given the national labor shortage that has barely eased in the past year, and experts say efforts to show compassion by letting workers stay at home over holiday surges has affected the bottom line. Staff shortages are particularly problematic during the holidays, as this period traditionally represents about 25% of most retailers’ annual sales. Mother’s Day and Memorial Day are the next two major opportunities, “and those pale in comparison to the strength of the holiday season,” says John Long, North America retail sector leader in Korn Ferry’s Retail and Consumer practices.

In the short term, experts are suggesting that since 60% to 70% of retail-store employees work part-time, managers should ask staff members if they’re willing to extend their hours to meet holiday demand. That can add overtime and other costs, but if managed appropriately, experts say, the additional peak season sales could offset that and prove a vital balm to the staffing blister. “You can’t get the product out on the shelf by itself, and you can’t sell it if it’s not on the shelf,” says retail expert Craig Rowley, senior client partner at Korn Ferry specializing in retail.  

Longer-term, Long suggests that upping investments in technology and increasing the level of automation for customers is key. Amazon is leading the way, with its Go store format being a prime example of an entirely self-service, contactless experience where the customer simply chooses items, puts them in a shopping bag, and walks out. “Sophisticated technology does the rest,” says Long. To be sure, this fancy tech comes with a fancy price tag: Amazon now sells this cashierless “go” technology and last year reportedly estimated a $159,000 operating cost for a 1,000-square-foot store, with further price drops projected into 2023. What’s more, this new wave of robo-retail can increase the risk of retail theft.

As e-commerce continues to trend upwards, a longer-term labor-saving measure is brick-and-mortar stores functioning more like showrooms where customers browse items that they then order online, says Rowley: “If I have half the inventory in the store, I only require half the square footage, and then half the employees are needed.” However, a notable exception to the machine-learning mania would be high-value items that will still likely demand a personal touch. As Long notes, “If I’m going into a jewelry store, I probably actually need to talk to somebody.”