Forget Robots, Retailers Need People Power

(Bloomberg Opinion) -- The ongoing fight for talent in the retail industry appears to be kicking into higher gear.

Bloomberg News's Matthew Boyle wrote Friday that Walmart Inc. has surveyed workers about whether perks such as child-care services or gym memberships would be "meaningful" to new hires. 

It’s just the latest example of a growing focus on the workforce. J.C. Penney Co. is reportedly wooing part-time hourly workers ahead of this holiday season with the promise of one week of paid time off. And Eugene Lee, the CEO of Olive Garden's corporate parent Darden Restaurants Inc., told investors on Thursday "the biggest challenge in the industry is going to be the war for talent." No wonder he expects his company to see 5 percent wage inflation this fiscal year.  

We know the primary driver of this move toward better pay and more alluring perks: The labor market is tight right now, and stores have no choice but to make their job offerings more competitive.

The retail industry should be careful not to think of these overtures to workers as temporary salves to lure and retain staff when the economy is hot. The reality is, the pressure to offer more enticing benefits and fatter paychecks will remain even if activity cools off.

As more of America's shopping dollars go into Amazon.com Inc.'s war chest, it is only becoming more important for traditional retailers to make the in-store shopping experience compelling and worthwhile. That can take various different forms. At Best Buy Co., for example, that means having a workforce of highly trained experts who can explain newfangled gadgets to you. At Target Corp., that means having smart merchants as store managers who can choose what goods to feature at the front entryway.  

For all old-school retailers, the relevance of their stores will rest heavily on how good their workforce is.

And don't forget: In many cases now, store workers are essential to the success of a traditional retailer's online business, too. Walmart now employs more than 25,000 "personal shoppers" whose job it is to fulfill click-and-collect grocery orders, forming the backbone of a program I've argued is perhaps its best weapon in its online grocery showdown with Amazon. In the latest quarter, Kohl's Corp. said nearly 40 percent of its digital units were fulfilled in stores.

In other words, having top-notch store workers is often an integral part of getting the online piece of the business right.  

The restaurant business, too, should be thinking about wages and benefits in a similar way. This segment of retail is in a much earlier phase of its digital transformation, but the dynamics are becoming clear: The likes of Uber Eats and GrubHub Inc. are marching into more and more markets to deliver food to diners' doorsteps.

Given that those third-party delivery orders aren’t as profitable for restaurants, these chains need to keep giving customers good reason to set foot in their eateries. So Olive Garden needs more than ever to have a friendly, helpful wait staff. Chipotle Mexican Grill Inc. needs to have ultra-efficient burrito assemblers so patrons don't get turned off by long lines.

If the economy sours, retailers will no doubt be able to get away with closing the spigot on raises and perks. But that doesn't mean they should.  To emerge as a winner, not just a survivor, of the great retail shakeout, they’re going to need an army of motivated, loyal workers.

To contact the editor responsible for this story: Beth Williams at bewilliams@bloomberg.net

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Sarah Halzack is a Bloomberg Opinion columnist covering the consumer and retail industries. She was previously a national retail reporter for the Washington Post.

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