Labour shortage hits home for retail

Austalia’s job market has performed magnificently again over the past 12 months with more than 280,000 net new jobs being created, of which 188,000 were full-time.

The unemployment rate has sunk to 4.1%, a depth it hasn’t plumbed since ABBA won the Eurovision song contest. The workforce participation rate is also at an historic high.

It’s been an outstanding run but there is a dark side to it that’s really making our retail industry squirm.

What it means is that new employees being hired and the ones still pounding the pavement looking for a job are the least skilled, the longest out of work, and the most difficult to train.

Moreover, retention of skilled employees is increasingly difficult because a tight labour market means greater competition for the limited pool of skilled workers.

Nowhere is evidence of the skills shortage more abundant than in retailing.

The problem is not simply manifested through indifferent service in the aisle and at the register. The top level of management is stretched perilously thin as well.

Think about it. You have Myer, an ailing department store company being run by ex-supermarket guys after its previous head, Dawn Robertson, a US import, couldn’t turn the place around.

(Postscript: Robertson moved from Melbourne to San Francisco to try to turn around the Old Navy division of the apparel retailer Gap. That went pear-shaped as well and
she was recently replaced.)

If the Myer example isn’t enough, you only have to look at Coles being taken over by Wesfarmers, which itself has no supermarket management experience and was forced to head-hunt all the way to Scotland to get its new supermarket MD, Ian McLeod.

The risks of the skills situation in the retail industry becoming ever more acute over time are increasing as the population ages, as baby boomers retire and as competition for the limited pool of skills intensifies.

Professions with a poor image in terms of career path, compensation and personal/professional development will be increasingly disadvantaged, and unfortunately retail is one such profession with its name up there in lights.

According to recent research by the Australian Centre for Retail Studies (ACRS) at Monash University, retail is not viewed favourably by young people or the broader public as a career alternative.

It’s often really just a school holiday job or a temporary stop-gap until something better comes along.

This is partly because retailers don’t show employees an opening onto an exciting career beyond the shop floor. Instead, the only door that beckons is the exit.

Another reason for leaving a retail job, according to the ACRS research, is ”poor treatment by the employer” (read: feeling undervalued, overworked, stressed out and unrewarded).

So employees come and go and many retail managers don’t get the hint. Instead of coming up with a strategy for solving the longer-term problem they go about it piecemeal- taking care of one vacancy at a time.

Clearly something has to be done, but in a world where our population is ageing and competition for a limited skills supply is growing, how does a retailer get there?

The ACRS report, entitled ”Attracting and Retaining a Cross-Generational Workforce” has a number of useful suggestions. It emphasises the need for retail businesses to broaden employment policies to encompass multiple generations.

On top of that you need to manage the diversity properly because if it is introduced without special management strategies it will only create tensions and conflicts that crush productivity.

Such strategies should include an appreciation of the viewpoints of the different generations, which will differ based on worldview and values.

In a word: empathise. ACRS also recommends a more consensus-based approach to decision-making within the business so that all views are heard.

Retail managers will also need to adapt human resource policies to the new situation because a one-size-fits-all approach won’t cut it when you’re dealing with people who have different motivations to work, different career trajectories ahead and behind, and different perspectives on work-life balance.

Another smart idea is to develop tailored training programs. And, of course, make sure that the career path is clearly articulated.

The attention to intergenerational employment policies as a way of expanding the pool of job candidates and retaining skilled workers is timely because the skills shortage in Australia’s retail industry is bad and getting worse.

Our education system doesn’t help. Retailing is routinely ignored by our tertiary institutions, consigned to the same status as basket-weaving and culinary arts.

There is nothing wrong with getting a supermarket executive from Scotland or a department store CEO from New York.

However, when this reflects a chronic and ongoing failure by Australian retailers to attract and retain good employees at the beginning of their careers, then the industry is clearly in a spot of bother.

Article by: Michael Baker
Michael Baker is a global retail and property analyst, and International Retail Advisor at Urbis.

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