The trend: Amid a labor shortage that shows no sign of receding, retailers are adopting a number of tactics, from boosting wages to adopting automation, to attract talent and maintain productivity.
- At the same time, companies with a more tech-focused approach to retail, like Amazon, Reef Technology, Thrasio, and Uber, are either slowing their hiring or cutting workers in an effort to save money.
Walmart outmuscles competitors: For some retailers, lacking workers is not an option. Walmart, the US’ largest private employer, has used its market position—and significant resources—to its advantage, raising pay for more than a half-million workers and building a new corporate headquarters complete with amenities.
- Walmart is struggling to find enough store managers, despite average pay for the role reaching $210,000 in 2021.
- That’s led the retailer to launch a recruitment and training program aimed at enticing recent college graduates to join the company. Those accepted will receive a starting salary of at least $65,000 and be put on an accelerated two-year management track.
- The retailer also recently boosted starting pay for long-haul truck drivers to up to $110,000 to juice recruitment efforts amid a nationwide driver shortage.
Restaurants slim down: With restaurants still struggling to attract employees despite higher pay and sign-on bonuses, they’ve had to revamp their operations to accommodate leaner teams.
Domino’s CFO Sandeep Reddy noted on the company’s Q1 earnings call that labor constraints forced store locations to reduce operating hours, restrict online orders, and not answer phones, leading to a decline in orders and same-store sales.
- Employment in the food services sector is down 6.4% compared with pre-pandemic levels, per the National Restaurant Association, even as consumer spending in restaurants is rising.
- That’s led restaurants to ramp up use of robots and automation and expand the use of takeout-only ghost kitchens to streamline service and meet demand.
On the flip side: But even as more restaurant chains embrace ghost kitchens, Reef Technology, which operates dark locations for Wendy’s and TGI Fridays, among other fast-food brands, is cutting 5% of its workforce.
- Food delivery platform Gopuff laid off 3% of its global workforce in March in a bid to cut costs.
- Thrasio, an Amazon aggregator, announced layoffs and leadership changes as it recalibrates to focus on more sustainable growth amid a broader slowdown in ecommerce.
- Even Amazon, which like Walmart boosted pay and benefits aggressively to woo jobseekers, is now experiencing overstaffing in its warehouses, CFO Brian Olsavsky said.
The big takeaway: The labor market is a tale of two halves: With consumers rushing back to stores, retailers with a heavy brick-and-mortar presence have no choice but to raise wages and offer incentives to keep their stores staffed.
- On the other hand, unprofitable tech startups that previously relied on a virtually unchecked flow of venture capital are now having to tighten their belts—and workforce—and show investors they have a path toward profitability.