How Flex Economy Workers Help Retailers Improve Margins

At the start of the COVID-19 pandemic, grocery store employees overnight became “frontline workers,” contending with everything from empty shelves caused by supply chain disruptions to enforcing purchase limits and in-store social distancing mandates. At this current stage in the crisis, with vaccination numbers increasing and stores returning mostly to business as usual, retailers are facing an emerging labor shortage that threatens to upend store operations at a key moment of the national recovery.

According to Business Insider, a Korn Ferry survey in April found that among more than 50 major U.S. retailers, 94 percent reported having difficulty filling vacant roles. As a result, retailers are trying new tactics to attract employees, such as increasing wages, offering education perks, and even hefty signing bonuses. These perks come at a cost, however, chipping away at grocers’ already razor-thin profit margins.

Faced with increased overhead costs associated with finding and attracting qualified workers, many retailers are exploring alternative staffing solutions. One is in-store, flex labor, which helps stores use their limited resources more efficiently. For decades, retailers from regional to national have relied on flex labor for various in-store tasks, such as inventory counting or resets. Those workers are traditionally part- or full-time employees tied to a set schedule company.

Now, the trend line is moving more toward the Uber, DoorDash or Instacart model. It’s also moving upwards. According to Workmarket, retail is one of the eight primary industries poised for disruption by an influx of on-demand workers.

It’s no surprise. According to OTHRSource’s research, there’s a direct line between revenue and a store’s shelf health. We estimate over $50,000 per day is lost due to poorly executed shelf health and other merchandising-related tasks. Thus, those tasks are prime targets for flex support.

This flex economy model has other benefits. It provides retailers a more effective way to size up and down to accommodate seasonal or holiday spikes, other major shopping moments like natural disasters, or staff up new stores. Workers can be sourced locally, often within just a few miles of the store, where they’ll be supporting to fill any gaps. Also, flex support is significantly more cost effective when factoring in costs to recruit, onboard, train and manage. Outsourcing flex workers creates an opportunity for retailers to bring in vetted, qualified workers to ensure critical store operations — like customer service — aren’t neglected.

Similar to Uber, the best retailer flex economy operations are supported by a technology platform. However, the right platform shouldn’t stop working for you once the passenger is dropped off or, in this case, the work is assigned. It should use the assignment as a moment to help retailers grow their businesses.

In conjunction with field teams, a technology platform can help retailers make predictions and recommendations to optimize in-store operations. The right technology can not only provide near-time insights into retailers’ own stores, but also better visibility into what the competition is doing. And it can offer detailed aisle reviews and data-based recommendations about how to manage shelf health, inventory restocking, and in-store projects — without sacrificing the quality of customer service and other critical operations.

Much of what goes into running a store is seemingly invisible, but it's no less important to a business’s success than what happens in the front of the store. With the current labor constraints stores are facing, retailers are getting clever with how they divvy up limited resources. By leveraging flex workers, retailers can ensure uninterrupted store operations, healthy shelves, improved business intelligence, and the ability to reduce overhead while maximizing revenue.

Mark Feinberg is CEO of OTHRSource, a platform designed for the CPG industry to help retailers, brands, and the overall industry increase sales velocity through tailored in-store support/merchandising (leveraging an on-demand workforce), digital influencer, and data/analytics solutions.