Consumers often decry the early appearance of holiday shopping commercials and decorations. For retailers, however, preparing for the holiday shopping season has become a year-round effort, especially when it comes to fulfillment center staffing.
With e-commerce continuing to grow in popularity, much of today’s labor demand has shifted from brick-and-mortar stores to fulfillment centers. As a retailer, your thought process about hiring needs must shift to grant more consideration to delivery expectations and customer support. Holiday peak season especially casts a spotlight upon the shift from shopping malls to shipping centers as demand for seasonal labor grows exponentially. According to the U.S. Bureau of Labor Statistics, in May 2007, there were 663,500 warehouse workers. In May 2017, there were 946,400, an increase of about 43 percent. During the holiday season the increase is even more pronounced.
Compare this against the rate of decline among brick-and-mortar retailers. In April, Business Insider reported that U.S. corporations had already announced the closing of more than 3,200 stores in 2017 following years of declining sales. The outlook for the remainder of 2017 is even more draconian as economists at the brokerage firm Credit Suisse predicted that more than 8,600 brick-and-mortar stores will close their doors in 2017. For comparison, the previous worst year on record was 2008, when 6,163 stores shut down. 2017 stands to beat that figure by 40 percent.
With demand for fulfillment center staffing increasing rapidly, and the number of e-commerce and omnichannel orders (e.g., buy online, pick up in-store) skyrocketing, you can't afford to wait until the holiday decorations come out before you begin addressing your peak season staffing needs.
Game-Plan for a Seasonal Workforce
Entering the 2016 peak season, outplacement firm Challenger, Gray & Christmas, Inc., predicted U.S. retailers would hire 750,000 seasonal employees in the months leading up to the beginning of peak season. The logistics for getting these temporary employees onboard and integrating them within the system, however, starts long before the hiring begins.
A strong seasonal workforce is paramount to success. It enables retailers to scale adequately to handle the surge in holiday order volume, fulfill orders faster, and shrink the time between order placement and order receipt.
Although seasonal employees work only during the peak weeks, preparation for them begins right after the previous year’s peak season ends. As you hire employees over the course of the year, you’ll be training them not only to do their jobs, but also eventually to serve as leaders, trainers and top performers during peak season. Many retailers also have mini peaks throughout the year, including summer sales, holiday sales and new product rollouts. While these are all excellent preparation and experience for the holiday peak season, they fall well short of the intensity of the holiday season. Nevertheless, they're integral to the operation of your labor force at peak.
Assembling the Team
Increasing your staff size up to 400 percent for peak season is no easy task. Not only can it be challenging to find that many seasonal workers, it also requires “stress tests” throughout the year to ensure facilities, teams, systems and processes can handle the scale-up at peak. Trend analysis on the market is also key to understanding how changes with new fulfillment centers entering a market and government subsidies might affect labor. On top of that, you'll need to do everything you can to ensure that candidates will work well under peak conditions; not everyone is cut out for the challenge.
As a retailer, you'll need to ask yourself the following important questions:
- Based on e-commerce and omnichannel volume forecasts, what's the right level of staffing for warehouse personnel and retail sales associates in your stores?
- Should you hire utility players who can work a variety of jobs, filling in wherever they’re needed to meet emerging contingencies?
- Do you have the depth to undertake the latter approach, rapidly scale and train a large staff and then manage the workforce in real time?
Imagine if you could consolidate these abilities, not only attracting the labor you need — both specialists and utility players — but also scaling it up for peak, capturing all potential revenue and delivering a great customer experience during the holidays. Outsourcing such as this may be the key to the flexibility, scale and depth you need, while at the same time keeping your costs low. Leading third-party logistics (3PLs) companies have developed these labor planning and execution core competencies.
Working with a partner that can supply workers and manage human resources for optimal cost efficiency can mean the labor you need at any moment is available when and where it’s needed most. Amazon.com, for example, hired 120,000 seasonal employees to fill its roster needs in its warehouses and sort centers, many of whom were hired through area temp agencies. Meanwhile, what’s good for the giant retailer may be even better for small to midsized businesses. Optimizing labor at scale is a capability small to midsized retailers typically don’t have, but it’s one that delivers measurable benefit in terms of efficient and cost-effective scaling on-demand.
You don’t have to be a labor expert to realize the positive impacts of outsourcing peak labor requirements. Working with partners that are experts in scaling for peak and which employ a flexible and multiskilled labor force that’s able to meet any needs that arise can make all the difference between meeting peak labor demands and playing a failing game of catch-up.
Staff, Sell, Repeat
After his team’s stunning come-from-behind win in Super Bowl LI, New England Patriots’ Head Coach Bill Belichick was asked for his impressions of the season. He took many by surprise when, rather than exult in his team’s fifth championship, Belichick pointed to the team’s personnel needs and said, “we're five weeks behind 30 teams in the league in preparing for the 2017 season."
As a retailer, you must embrace that same attitude when it comes to your peak season labor needs. Waiting until a few months before peak season is too late. By now, you must already have kicked off preparations to bring in the enormous labor increase needed to handle the deluge of holiday orders. If the holiday decorations go up before your preparations begin, you’ll likely come out of the holiday season in the red.
Sean McCartney is executive vice president of operation services for Radial, an omnichannel commerce technology and operations provider.