Much of the commentary about retail’s Q1 financial results focused on the underperformance of brick-and-mortar stores, particularly department stores, and their struggle to match consumer demands. But recent events at two leading retailers spotlight the vital roles played by store employees in affecting a brand’s performance.
With Walmart shifting back-office employees into store positions and Macy’s narrowly avoiding an employee strike in New York, industry players must recognize their employees’ value to the organization and identify ways that they can improve the retailer’s experiences, and vice versa.
In the case of Walmart, the retailer is cutting as many as 1,500 back-office accounting and invoicing positions across 500 stores on the West Coast, according to Walmart spokesperson Kory Lundberg. While the positions will be eliminated, employees working these jobs have been offered customer-facing positions within the stores. Accounting and bookkeeping functions for the affected stores will be handled at Walmart’s headquarters in Bentonville, Ark.
“What we are doing is taking the complexities out of old cumbersome jobs and simplifying things in the store,” Lundberg said in an interview with the Associated Press. “How can we get the focus less on the backroom jobs?”
A test of the cost-cutting plan at 50 Walmart stores earlier in 2016 revealed that only 1% of reassigned workers actually left the company, despite some employees cutting their hourly pay to $17.55 upon entering customer service.
Given the need for cost-cutting among traditional retail players, it will be interesting to see if other national brands that want to up their customer service game will attempt to follow Walmart’s “kill two birds with one stone” approach. If the 1% employee turnover rate holds up or at least stays within an acceptable range, the idea of moving more employees into customer-facing positions could gain currency. Such plans would be especially appealing to department stores, which have had difficulty differentiating their offerings, interacting with shoppers and providing value outside of the products they offer.
Macy’s Avoids Strike At Flagship Store
As Walmart shuffles its store personnel, Macy’s handled a difficult employee situation of its own, averting a strike at its flagship store in Manhattan, which is a major tourist attraction. The retailer reached a four-year deal with the Retail, Wholesale and Department Store Union, which represents nearly 5,000 Macy’s workers in the flagship store and four other Macy’s locations within the New York City area.
While many specifics of the agreement have not been disclosed, the union indicated that it included wage increases, changes to the employees’ health care plan and scheduling changes.
“It raises the bar for what retail jobs can be and should be,” said Stuart Appelbaum, the union’s President in a statement. “It’s a major step forward for the entire retail industry, and it shows the importance of what our union does to empower retail workers.”
Macy’s health insurance plan was the hot button issue in question; the union claimed it was too expensive for 75% of workers because of high deductibles.
Given the Q1 performance of Macy’s — particularly its brick-and-mortar stores — the retailer could ill afford a work stoppage that would affect operations at its biggest and most famous store.