So far in this so-called “Great Resignation” economy, grocery retailers have responded to worker shortages by offering “Great Raises,” “Great Bonuses” and “Great Benefits.” None of those seem to be sufficient to attract and keep enough of the right workers in food retail jobs, however.
According to the federal government, 600,000 people joined the workforce in November 2021, resulting in a labor force participation rate of 61.8%, the highest level since March 2020, but still depressed compared with the pre-pandemic period. According to the Bureau of Labor Statistics, there were 67 unemployed workers for every 100 job openings in November 2021.
Many of the people who have left the workforce are mostly lower-wage workers seeking jobs that are raising wages and offering flexibility. Many of the other quits are seniors worried about getting sick in a pandemic. While reasons for the labor crunch run the gamut, the numbers are what they are, and seem to indicate that food retailers might not see their hiring struggles structurally improve anytime soon in 2022.
According to a poll of unemployed people conducted by the U.S. Chamber of Commerce in November 2021, fewer than half of U.S. workers who lost their jobs during the pandemic and remain unemployed are actively and consistently looking for work. A December 2021 Glassdoor labor market survey showed that what made hiring difficult this past year is unlikely to disappear in 2022, namely a lingering pandemic, reduced availability of retirees and parents, and massive consumer demand. Meanwhile, Axonify’s annual “Global State of Frontline Work Experience Study” showed in October 2021 that retail workers reported burnout (63%) as being a more important motivating factor for resigning versus compensation (50%), with grocery workers citing 56% burnout.
“We already know that the labor pool is at least 5 million people less than before the pandemic,” says Dave Dempsey, CEO of Hyer, an on-demand labor app powering the gig economy, “and it’s going to continue to shrink. The quit rates are the highest in retail, restaurants and hospitality. At the same time, you’ve got inflation. There’s concern with what’s going to happen with wage rates as they bubble up; it’s going to put more pressure on retailers, who will need to have the corresponding revenue growth, and they probably won’t. They’ve had great revenue growth lately, but that’s going to moderate.”
At a time when the grocery workforce is experiencing transformative change, there are four key strategies that retailers should be leveraging in 2022 not only to survive the labor crisis, but also to thrive during it.
1. Redefining ‘Compensation’
Grocery retailers from The Kroger Co. to Raley’s have been increasing wages across all positions in an effort to attract and retain talent. Inflation has erased at least part of these wage gains, however. According to a study from the Brookings Institution, inflation has risen nearly 8% through November 2021. Over nearly two years, as workers faced a global pandemic, the average wage increase, in real terms, was only 3% through October 2021. Without inflation, as measured by the Consumer Price Index, the average pay increase would have been 10%.
“Grocers can no longer increase starting rates by 25 cents in order to attract more people,” asserts Carol Leaman, CEO of Axonify, a training and communications solution partner for such retailers as Kroger, Southeastern Grocers, Dollar General and Wakefern. “With so many businesses in the U.S. raising their wages to $15 per hour or more, along with hiring bonuses and low-/no-cost degrees, employers must compete for talent with more than just compensation. You need a competitive wage and benefits package to get them through the door, but it’s the work experience that will keep them for more than a few months.”
Employers need to think long term and offer the career and skill development opportunities that employees crave. They also need to ensure that wage bumps are on par with competitors and that those same wage increases are offered to current workers, which is critical to reducing churn.
How the U.S. labor pool is shrinking based on age ranges. (Source: Bureau of Labor Statistics, labor force participation rates 1977 through November 2021)
2. How Flexible Can You Be?
Grocery retailers have an opportunity to rethink how work is done, replacing unpredictable schedules, income and work environments with something more attractive. In 2019, Hyer teamed up with Meijer to bring a flexible labor model to the beloved Michigan-based retailer. “They gave us five stores to pilot,” Dempsey says, and were thrilled with the results — which led the rollout of Hyer across Meijer’s 255-store footprint.
Giving customers such as Meijer the ability to ramp up labor as needed to satisfy the customer demand and ramp down through slow times, has paid off in big ways. “Using Hyer allows us to provide a better customer experience, a better stocked store — at the lowest price,” says Todd Weer, SVP of stores at Meijer. Today, Hyer has partnered with thousands of outlets across 17 states, including national, regional and local grocers.
“Increased wages are going to put more pressure on the structural changes going on right now,” Dempsey says. “It may force companies to rethink their workforce model. They're going to have to look at the labor, a typical job, redefine it and identify what we would call ‘1099 task capabilities’ that you can peel out. And then use labor on demand, use the gig workforce, and you can flex up and down as needed.”
Dempsey says that he’s seeing demand for gig work from a wide variety of generations. “It cuts across really the entire population base,” he adds. “The majority is middle Millennials, but it’s also people that are older, in retirement, looking at a couple hours. And it skews a little bit higher on the female side.”
3. ‘Does the Job Deserve the Employee?’
In its most recent fiscal quarter, FedEx said that it’s getting a good response from a hiring strategy that includes offering employees an app that provides flexible schedule options (the ability to pick up extra shifts when convenient, or swap shifts with other workers). All companies, and grocers especially, should take these kinds of steps beyond wages and benefits to assess the job experience itself and make the work more attractive to potential employees, Leaman says.
“This begins with removing friction that often creates frustration and disengagement,” she adds. “On-demand pay is a great example, as it’s giving employees who often struggle with monthly bills immediate access to their wages.”
Other steps include leveraging technology, specifically in the areas of mobile learning and engagement, to make sure that employees can access the training and information they need to solve problems in the flow of work, regardless of how long they’ve been on the job.
In the Axonify study, burnout is the No. 1 reason that front-line employees are leaving, reinforcing the idea that employees want a better work experience.
“But No. 2 was appreciation,” Leaman notes. “This shows just how important managers are in front-line work. To many employees, the store or department manager are the company, and they rely on these managers to help them through challenging times. Grocers must take care of their managers and make sure they have the tools needed to properly support their team members, instead of always focusing on administrative tasks. Many managers are promoted into their roles because they were great at front-line execution, but this doesn’t mean they have the skills to lead their people. Companies must ensure managers have the training needed to create great work experiences.”
Overall, Leaman says, front-line employers must adopt a new mindset if they hope to attract and retain motivated, talented employees.
As Leaman puts it: “The question is no longer ‘Does the employee deserve this job?’ Instead, it must become ‘Does the job deserve the employee?’”
Food retailers like Aldi are actively recruiting workers through appeals to diverse candidates.
4. Prioritize DEI
Many of the people who have left the workforce during the pandemic are women. According to the U.S. Census Bureau, roughly 3.5 million mothers with school-age children either lost jobs, took leaves of absence or left the labor market altogether in spring 2020, and most haven’t returned. A new report, “Women in the Workplace,” by the consulting firm McKinsey & Co., finds that one in three women over the past year had thought about leaving their jobs or “downshifting” their careers. Early in the pandemic, by contrast, the study’s authors say, just one in four women had considered leaving.
“Many women were forced to leave their jobs to take care of their families, and remain out of work not by choice, but because schools and day care are not yet reliable enough to make the decision to go back,” Leaman points out.
Women are overwhelmingly looking for increased flexibility, career progression opportunities and accountability when it comes to companies’ diversity, equity and inclusion (DEI) efforts. During the social unrest in 2020, many companies pledged to improve their processes and work toward a more inclusive workplace, but now, in 2022, women and other groups are expecting to see progress on those pledges.
Grocery retailers trying to stay ahead of all of these workforce challenges in the new year should invest in realistic compensation packages, flexible scheduling, a better workplace experience, and expanding career development opportunities for diverse groups. These strategies will help empower grocers to master the 2022 labor crisis.
“The current trends are going to continue,” Leaman predicts. “Grocers will be facing cost crunches due to supply chain challenges, inflation and staffing limitations. In a world where customers have ever-increasing options for putting food on the table, companies need to empower their front-line teams to execute next-level customer experiences that bring people back. This means investing in people, from wages and benefits to training and recognition. This also means strategically applying technology to make sure the employee experience keeps pace with the customer experience.”