If you take a walk through Home Depot, you won’t get far without seeing someone in an orange apron. At Target, it’s a red t-shirt. Step into just about any retail establishment, and you’ll find people whose jobs include a key core competency: customer service. With over 14 million people working in the sector, it is a field that represents a substantial component of the US economy.
The retail industry has experienced both increasing growth and increasing competition over the last decade as big box stores have grown strong national brands, and online retailers have pushed the boundaries of how people purchase goods. That has resulted in a strong uptick in hiring to fill positions on the front lines, where the company meets the customer.
One of the challenges for employers is that these roles typically have high turnover. This happens for a variety of reasons, from student employees who return to school, to workers juggling more than one job in order to make ends meet. Frontline workers often struggle with financial security, and issues such as child care or transportation can impact their ability to consistently get to work and focus on the job.
This turnover incurs a high cost to the business, with typical metrics pegging the cost at replacing an employee at 25–50% of salary, or approximately $5,000–$10,000 per worker. This cost is reflected in both the time and effort to recruit a new employee, as well as training and onboarding time.
And beyond the pure cost of rehiring, there is the value of engagement. The role of these associates is critical. They are the brand ambassadors, and they can make or break the customer experience in the store, at the table, or in the home of customers who buy products and services from these organizations.
The restaurant industry has responded by leveraging programs such as tuition reimbursement to attract and retain talent. Target has focused on a different metric—hourly pay. In 2017, they committed to hiking entry level positions to $15 per hour by 2020.
In recent years, the competitive landscape for retailers has become far more intense, first because online retailers entered the marketplace, and then because one specific online retailer, Amazon, began to take direct aim at big box stores like Best Buy and Target. As these organizations work to stay competitive, one of their key differentiators has become the in-store staff.
As Amazon pushes initiatives including same-day delivery and other more rapid mechanisms for servicing customers, stores like Walmart and Lowes have pushed back with a strong commitment to customer service, and a push to improve flexibility of their own delivery service. This, in turn, has further highlighted the ways in which team members represent a competitive advantage.
With unemployment at historic lows, retailers no longer have their pick of employees. The marketplace is competitive, and organizations are looking for team members who will do more than run a register or stock shelves. As automation emerges that allows buyers to self-checkout, or even to pre-order and pickup in stores, the experience that a customer has, both in-store and online, is the main differentiator. To this end, retailers are focusing on attracting, retaining and training their frontline workers to maximize the value of these associates as the face of the brand.