Labour is the go-to area for efforts to control costs in retail – leading to high levels of low pay and insecurity. But there is increasing concern about the sustainability of this strategy.
Retail and other lower paid service sectors are already associated with high levels of absenteeism, shrinkage, and problems with staff recruitment, retention and skills. Further downward pressure on workforce investment risks exacerbating the vicious cycle of operational inefficiencies and poor customer service, damaging prospects for long-term company success.
The Living Wage Foundation has launched a report that seeks to disprove the common assumption that jobs in retail are inevitably ‘bad,’ with new evidence showing how some firms are challenging the traditional view that minimising staff costs is the key to success.
This ‘Good Jobs Toolkit’ sets out case studies of leading employers such as IKEA and the brewery and bar chain BrewDog UK, which have gone further than statutory requirements to pay the voluntary Living Wage, independently-calculated based on what people need to meet their basic needs, and tackle wider issues of underemployment and low skills.
For these businesses, a modern workforce, well-paid, trained and motivated to deliver high standards of customer service, is essential if they are to give people a reason to visit bricks and mortar stores, and to drive high ‘conversion rates’ by helping them to find the best product to suit their needs.
Rejecting the idea that staffing strategies have to chase consumer traffic, they are instead choosing to ‘operate with slack,' offering more full-time and fixed shift contracts to ensure employees have time to complete all operational tasks, engage with customers, and contribute to efforts to solve problems and continuously improve service. Investment in training ensures staff have the skills to use their discretion and can be deployed flexibly according to store needs.
The report provides a practical how-to guide for other employers interested in following this approach – based on a year long project testing operational models that support better jobs and a stronger bottom line with major retailers.
One of the Foundation’s project partners, the telecommunications giant EE, offered all staff that wanted it an uplift in hours, in an effort to reduce 60% staff turnover in stores. Overall 650 employees from 330 stores chose to increase their working week by an average of 9.2 hours – translating to about £4,500 more take home pay a year. After just five months, the rate of employee attrition among this group was 25% lower than the rest of the retail population.
These models are clearly better for employees. Flatter, more collaborative team structures support a higher entry rate of pay, more stable shift patterns, and more interesting jobs.
But they are also good for employers. EE expects to see improvements in customer service and store performance as its workforce becomes more stable and experienced. In just a year BrewDog saw a 40% reduction in staff turnover on their retail sites and an increase in the proportion of management roles filled by internal promotions from less than 50% to 80%. Recruitment costs have fallen substantially as a result. IKEA is aiming for a staff turnover rate of less than 10% and an absence rate of less than 2%.
The key question for policymakers, business and employee representatives, and all of us who care about low pay, is how to encourage more businesses to take the ‘high road’ to growth. The Living Wage Foundation’s new toolkit aims to contribute to this debate by demonstrating how those best placed to succeed in the 21st century put the customer-staff relationship at the heart of their business model.
Tess Lanning is head of business development at the Living Wage Foundation, which supports, accredits and celebrates employers that pay a wage that meets the basic cost of living, currently set at £8.25 and £9.40 in London
