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How retailers are using automation platforms to increase labor retention

Issues with labor and staffing have plagued grocery for the last several years: here’s how retailers are using technology to troubleshoot

Ongoing challenges in a tight labor market have been forcing supermarket retailers to rethink their strategies around recruiting and retention, as well as their overall standard operating procedures, in an effort to keep rising labor costs in check.

Increasingly, they’ve turned to technology to help them in these efforts, including recruiting platforms like Indeed and LinkedIn, as well as onboarding and training technologies that can help in retention and automated solutions that can make their labor more productive.

Skills pivot

In a recent report on the grocery labor market called “Crisis or opportunity? How grocers can win the talent war,” consulting firm McKinsey & Co. said the labor model in the food retailing industry is evolving, particularly as consumer demands for ecommerce remain strong and cost pressures remain high.

“It’s forcing employees to learn new skills as roles evolve and pushing companies to adapt their operating model,” McKinsey said in the report.

The report found that the demand for physical and manual skills at retail — for tasks such as scanning items at checkout and restocking shelves — will decline by 17% between 2016 and 2030, in terms of hours worked. Meanwhile, higher-level cognitive skills will increase 8% in that time frame, while social and emotional skills will increase a hefty 32%, and technological skills will increase even more, by 64%.

These changes come as automated technologies increasingly begin take over part, but not all, of the day-to-day responsibilities of workers, the report found, creating more opportunities for employees to interact with customers.

In the meantime, grocery retailers have increased pay rates and awarded bonuses to attract and retain workers in a tight labor market since the start of the pandemic, as they continue to wrestle with staffing challenges.

‘Hustle culture—that’s history’

Cleveland-based Heinen’s Grocery Store, for example, has about 200 positions open at the 23-unit chain, said Tom Rudar, talent manager at the family-owned retailer.

“The challenge with store positions is that the front-line worker has a lot of options now,” he said, citing gig-worker employers such as DoorDash that offer competitive wages and extremely flexible schedules.

While college students have historically made up a significant chunk of Heinen’s workforce, that number — currently about 120 of the chain’s 3,300 workers — is about as low as it has ever been, Rudar said.

He said workers now tend to consider a range of employment options before they accept a job offer, and sometimes don’t even show up for their first day of work after they’ve been hired, especially if another offer comes through.

“People are just really evaluating what they want to do,” Rudar said. “They are not quick to rush into a job.

“Things are extremely fluid, and people have a lot of options, he added. “We are seeing a lot of either high school student or retirees at store level, and we’re not seeing the same number of college students or part-time adults that we have over the years.”

Jose Tamez, managing partner at executive search and recruiting firm Austin-Michael, said today’s generation of store-level workers are much more concerned about their work-life balance and the need to spend time with their families than previous generations have been.

“That doesn’t mean the quality of work being done by today’s workforce is any less,” he said. “To the contrary, much of that work is being done and supplemented by technology.

“However, the ‘hustle culture’ of just putting your head down and not being concerned about anything outside of work and making your family deal with whatever your job demands — that’s history.”

All about the retention

Seeking to remain attractive as employers, many retailers have analyzed the labor situation in each market where they operate and adjusted wages accordingly, Jose Tamez said.

“They have also become more proactive with both private and company-wide forms of recognition for achievements, milestones, and other things worth noting,” he said.

In addition, some retailers have added more paid holidays, such as Memorial Day, and even taken to making Mother’s Day a holiday for workers who are mothers, he said.

“It can be a form of recruitment, and also retention,” said Tamez. “That helps with the work-life balance that employees are seeking, and it shows that the company understands them.”

He pointed out that food retailing can be a challenging environment to work in — even more so than other types of retailing.

“It’s not the same as working at Nordstrom’s or Macy’s,” he said. “The appeal of the industry is still a hurdle to get over.”

Propelled in part by the pandemic, grocers are also embracing technologies such as self-checkout and inventory management systems that reduce the demand for labor and free up workers to engage in other customer-service functions, such as fulfilling orders for delivery or pick-up.

Workforce management systems have also been adopted by some companies for more efficient operations, especially at smaller companies, Tamez said.

John Clear, director in the consumer retail group at global professional services firm Alvarez & Marsal, who previously worked for hard-discount grocery retailer Lidl both in Europe and in the U.S., cautioned that retailers need to ensure they have good operating systems in place before they attempt to implement labor-saving technologies.

“What we always say is that technology won't cure your system or fix your system,” he said. “If you have a system that's not working right now, technology will probably just break it faster.

“You need to focus on having a standardized, consistent process across your network first, so that everyone is on the same page,” Clear said. “Once that's in place, then there are several options where you can incorporate technology to make linear, day-to-day, standard tasks a lot more efficient.”

Recruiting in ‘just a few clicks’

Technology is also helping retailers in their recruiting efforts, Tamez said, with online job-posting platform Indeed proving to be an effective means for recruiting hourly workers and LinkedIn acting as a recruitment tool for higher-level positions.

LinkedIn and other websites, like Glassdoor, have also helped prospective employees conduct research on companies before they accept a job offer.

“On LinkedIn, job-seekers can find out a lot about the companies that are hiring, with just a few clicks,” said Tamez. “They can also look for other people they might know who work at the company. Overall, it makes it easier for them to do a little research.”

At Heinen’s, the company has found that conducting virtual job fairs using Indeed to recruit potential hired has yielded strong results, Rudar said.

For example, the company recently conducted a virtual event to fill eight job openings at its three manufacturing and distribution facilities. About 220 people registered for the event, and about 80 ended up attending. Of those, around 50 ended up getting called back for second-day interviews.

“Doing that virtually was huge for us,” said Rudar.

Heinen’s also conducted a series of job fairs over the summer to recruit store-level workers, he said, resulting in the filling of some 50 positions.

Typically, only 20-30% of the people who RSVP for the events actually show up, Rudar said, but in working with Indeed, Heinen’s is able to screen jobseekers more effectively.

“We had a lot of candidates that came through that were really good fits for us,” he said.

Conducting the virtual job fairs helps take some of the burden off store managers, Rudar explained, allowing them to spend time focused on other responsibilities.

Aaron Sorensen, partner at Lotis Blue Consulting and head of the firm’s business transformation practice, said tech-based hiring platforms can play a role in screening and hiring potential employees, but it is even more important for retailers to focus on making sure their job ads are well-crafted and are getting in front of the right people.

“That’s really where the opportunity is,” he said.

Many retailers also continue to find it useful to conduct in-person job fairs at their stores and distribution centers.

During the past year, Wakefern Food Corp., the retailer-owned cooperative that serves the ShopRite and other banners in the Northeast and Mid-Atlantic, held a series of successful on-site job fairs in its stores and distribution centers, Karen O'Shea, a spokeswoman for Wakefern Food Corp. and ShopRite, told SN.

“Each walk-in job fair is designed to make it easy for potential candidates to talk to a hiring representative on the spot, and the events have helped fill open positions across the cooperative, with a 32% increase in new hires from last year,” she said.

In addition to a game-based training app, which O’Shea said has been well-received, ShopRite also offers workers other incentives such as entertainment discounts and scholarship opportunities, she said.

No one path to advancement

John Clear of Alvarez & Marsal said it’s important for grocery retailers to outline a career path for new hires.

Although entry-level jobs can be challenging, the industry does offer a lot of opportunities for advancement, he said, noting that store managers are generally well-compensated, and that many corporate-level managers got their start as entry-level workers in stores and warehouses.

Some of the industry’s top employers like Wegmans Food Markets and Publix Super Markets, which have both landed on the annual Fortune 100 Best Companies to Work For list, tend to carefully outline potential career paths for their workers, Clear said.

“When you join, they lay it out very clearly in terms of what your career could look like, and what your progression could look like,” he said. “They put a lot of focus into training and development, and they support you through the whole process.”

Heinen’s is seeking to take a similar approach with using its LEAP onboarding and training tool, which is its internal name for the Axonify technology that is also used by companies such as Kroger and Walmart (see sidebar).

Clear said one of the keys to retention in the grocery industry is ensuring that store-level managers are paying attention to the development of their workers. He cited the expression, “People don’t leave jobs. They leave managers.”

“Managers that are focused on their people and put time and effort into the growth of their employees, generally have much higher retention rates,” Clear said. “Their staff see that their manager cares about them on a human level and wants them to grow and develop.”

Research conducted earlier this year by Lotis Blue for the National Retail Federation found that the number-one reason that retail employees quit their jobs is that they disliked their manager. Other popular reasons included a lack of education benefits and career development, and challenges finding childcare.

Sorensen predicted that the trends may be shifting in the retailer-employer relationship, however.

“We had seen in last 12-24 months a workforce that was very transient,” he said. “People were going from job to job to job, trying things out.”

More recently, however, Sorensen said workers may be getting concerned about the economy and the job market. His prediction? They will opt for more job stability in the coming months.

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