Toys ‘R’ Us Hiring Fewer Seasonal Workers, Target And Walmart Holding Steady. Will Service Suffer?

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The all-important holiday season is bearing down upon us. In just 10 short weeks, people all around the United States will be sitting around their Thanksgiving tables, in their living rooms watching football, scrolling through their tablets for bargains or waiting on lines at physical stores to buy the deals of the day.

In preparation for that holiday season, retailers traditionally staff up. They bring in seasonal workers to accommodate the rush, help with customers and re-stock shelves. This tends to happen over the month of October, so retailers have support to receive new merchandise, prepare signage and shelves, and be ready to help customers.

This morning, RetailWire published a piece on planned temporary staffing levels (Full disclosure: I am a RetailWire “brain trust” panelist, which means I contribute to its commentary often).

In the piece, we learned that Target is keeping temporary staffing levels consistent with last year – hiring 70,000 seasonal employees. For its part, Toys ‘R’ Us is actually reducing temporary staff from last year’s level, from 45,000 in 2014 to 40,000 this year.

Separately, it was reported that Walmart will keep seasonal hiring consistent with last year’s numbers as well – staying constant at 60,000 temporary workers.

All the companies mentioned in the piece said they were going to give their permanent workers more hours to take up the slack as well as giving more hours to the workers they do hire.

So this begs the question: will service levels remain the same, improve, or decline? I believe we’ll see a mixed bag. There are some real plusses to managing the workforce this way, and a couple of definite minuses.

First let’s look at the plusses.

Retailers are more willing to increase base pay of their existing workers than ever before. In fact, my company has data (free registration required) that indicates those whose year-over-year comparable sales – a key retail metric – outperform their peers have increased the ratio of payroll to sales in their companies. That means their payroll is growing at a faster rate than their sales are, and it drives even larger increases in sales.

What they’re not so willing to do is train them. In the same report I cited above, we found that 42% of retailers spend less than 10 hours PER YEAR training new in-store employees. The figure is even sadder for existing in-store employees – 59% of retailers spend less than 10 hours per year training them.

In that context, it makes sense to hire fewer new associates, especially if they’re not going to stay around. Better to save those few hours of payroll for other things.

Theoretically, service levels should remain the same. Knowledgeable store employees can provide far better service than those we’ve come to think of as “warm bodies” on the selling floor.

If those are the plusses, what are the minuses? Quite simply, it’s all about burnout.

Not all tasks in stores are about helping customers. Especially around the holiday season, there’s a tremendous amount of work that can only be called “thankless.” The commonly used term for the task is “recovery.” That’s what happens at the end of the selling day, after the doors have closed. At that time all the items that have been moved hither and yon around the store, onto floors and into dressing rooms and who knows where else have to be returned to their rightful locations. Customers expect to see clean, orderly stores when they arrive. The only time to make that happen is after hours.

Smart retailers will give the majority of these tasks to their seasonal workforce, but people are also needed to direct and supervise them. If those same workers have been working hard all day taking care of customers and doing cursory clean-up on the floor, they’re going to be tired. And that’s the risk retailers are running.

Tired workers are cranky workers. And cranky workers generally don’t provide the kind of service shoppers expect.

I don’t agree with the retail observer in RetailWire who said “Changes to the way consumers shop are making it possible for stores to meet increased demand with fewer extra workers.” In fact, I think just the opposite is true: changes to the education level of consumers make it impossible for retailers to meet demand without a strong staff of educated workers.

Retailers are taking the gamble that a well-trained workforce is better than a poorly trained one. They hope that just like workers are willing to take Thanksgiving Day shifts, staff might appreciate the extra money from longer hours in the run-up to the Christmas holiday. Will they succeed? A season is not the same as a day.

It’s a strategy that’s not without risk…and the sheer volume of consumer shopping choices raises the stakes. We’ll have to wait and see what we hear from exit interviews and how chain sales results pan out.

http://www.forbes.com/sites/paularosenblum/2015/09/17/toys-r-us-hiring-fewer-seasonal-workers-target-and-walmart-holding-steady-will-service-suffer/?utm_source=followingimmediate&utm_medium=email&utm_campaign=20150917

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