As lease signs begin to disappear from storefront windows in Manhattan, retailers across the U.S. are preparing for the industry’s big return. Although the harshest COVID-driven restrictions were lifted months ago, businesses have been hesitant to open or expand their physical locations after suffering devastating revenue losses over the last two years. Increasing interest rates and high inflation haven’t helped the situation either. However, recent reports from commercial real estate giant CBRE suggest that retailers and employers are gaining confidence and are starting to make major moves back to in-person commerce.
According to CBRE, the Manhattan commercial real estate market experienced a 23 percent year-over-year increase in leasing during the first quarter of 2022. And direct ground floor availability across Manhattan’s 16 premier shopping corridors decreased for the third consecutive quarter, with a 7 percent quarter-over-quarter decline. This means demand for space is now outpacing incoming supply. The company also reported that U.S. commercial real estate investment volume increased by 45 percent year-over-year in Q1 2022 to $150 billion.
A New Dilemma
These are all extremely positive signs, indicating that retailers feel better about what the future might hold. However, there are still some troubled waters ahead. Retailers are also facing a new kind of dilemma — staffing shortages. Many are worried that there won’t be enough job candidates to fill open positions that are in the queue.
According to payments company Square, via its Future of Commerce report, 73 percent of restaurants say they're experiencing labor shortages, with 21 percent of open positions going unfilled. And among retailers, 31 percent say they're worried about being able to attract and retain staff. Being short-staffed not only puts more strain on existing workers, it also impacts the customer experience. In its report, Square disclosed that 41 percent of consumers won't return to a business that doesn’t provide good service.
Therein lies the big dilemma. Without a motivated, properly trained workforce, the customer experience will suffer. And if customers are unsatisfied, they won’t return. That will inevitably stunt any forward progress retailers have made.
Workers Are Demanding More
Retailers must come to terms with the fact that the labor market has changed significantly. As an after-effect of the pandemic and subsequent Great Resignation, workers’ demands have shifted significantly. Workers now expect higher pay, better benefits, flexibility, and more opportunity for advancement. Retailers need to be prepared to meet those expectations.
A sign of things to come, Target has announced that it will soon adopt minimum wages that range from $15 to $24 an hour, with the highest pay going to hires in the most competitive markets. It currently pays a universal starting wage of $15 an hour. And those that don’t follow Target's example face resistance. Some of the top names in the industry, like Apple and Starbucks, aren't meeting employee expectations and unhappy workers are now looking to unionize.
What Can Retailers Do?
One of the most crucial factors in employee retention is pay. However, not all retailers can afford to dramatically increase wages. After all, the industry is still in flux and many are still working to recover from significant pandemic-related losses. Fortunately, wage increases aren’t the only way companies can improve employee retention and satisfaction. Improving the onboarding process, day-to-day job experience, and team communication are powerful ways to keep employees on the job.
The retail industry moves fast, especially for newly hired staff. It’s often a sink-or-swim situation as new employees struggle to learn while on the job. Quick communication and training automation can help employees feel more confident as they tackle their new roles. Tools that enable streamlined communication can also benefit the entire organization.
For example, a frontline operating system built for retail environments can help employees and managers send messages in real time, enabling quick troubleshooting and fewer customer complaints. Streamlined, instant communication is the foundation for a better employee (and customer) experience. Retail workers have a tough job and retaining employees can be a challenge in even the best of times. Equipping your teams with the right tools and resources can make all the difference.
Daniel Sztutwojner is the chief customer officer and co-founder at Beekeeper, an employee communications app for mobile workplace collaboration.