What’s top of mind for small and large retailers in 2021?

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February 26, 2021

Mirror, mirror on the wall, what is top of mind for retailers large and small?

Key themes for 2021

The events that took place in 2020 were unprecedented for all businesses.

When it comes to the severity of the disruption, though, the retail industry was arguably one of the hardest to be hit.

The turmoil came on multiple fronts. Essential employees became regarded as heroes as the global health crisis unfolded. At the same time, brick-and-mortar businesses were forced to close amid social justice activism and civic unrest in the streets.

Combine all of that with the simultaneous economic fallout and omni-channel acceleration that took place and it’s no wonder HR leaders were kept up at night contemplating a whole new set of questions about the workforce from business leaders.

Regardless of your retail segment (grocery, apparel, restaurants, home goods, or specialty), all HR leaders were pushed and pulled in different directions as they scrambled to find temporary solutions while also keeping an eye on long-term topics, like:

  • How can we motivate, attract, and retain hourly workers who don’t have a safety net in times of an emergency?
  • Can we help mitigate exhaustion to maintain the productivity of employees who are caring for family or separated from family geographically?
  • Is the COVID-19 workforce plan sustainable (i.e., can we make it today, tomorrow, or even a year operating in this socially distanced environment)?
  • What should we do about the talent shortage for omni-channel initiatives since we are limited to operating storefronts?

As we move forward from the early days of the pandemic, Mercer has identified key retail HR themes to focus on in 2021. Read on as we share insights and experiences from our conversations with companies in the industry.

Legislative changes affecting hourly pay

When the pandemic first hit, many segments began offering “hero pay" as temporary increases to the hourly (nonexempt) rate frontline retail workers were being paid.

Although some essential retailers have now applied the hero pay rate increase to workers’ permanent hourly rate, the vast majority have discontinued it.

At the same time, local governments across the country are now introducing legislation that would shift hero pay increases into permanent pay increases for hourly workers.

On the federal level, legislation was introduced in Congress in 2019 that would have allowed for the federal minimum wage to be increased from $7.25 per hour to $15 per hour. The legislation passed in the House but was not taken up in the Senate.

The new administration has introduced legislation that would increase the federal minimum wage to $15 per hour, but it remains unclear how quickly it will pass.

With so many moving pieces related to hourly wages on the local, state, and federal levels — whether related to the pandemic or not — it’s critical that employers be aware of all of the latest changes.

Employee well-being

Last year left employees feeling exhausted, stressed out, and even frightened.

For retail workers in particular, it meant a myriad of difficulties — from financial struggles and the strain of customer interactions during the pandemic to childcare, family needs, and isolation from loved ones.

Employees’ mental well-being and quality of life are critical for the success of every retail organization. This goes beyond just making sure employees give customers a good experience — leaders should feel a genuine sense of responsibility for their people.

Looking beyond informal discussions with workers, HR professionals and business leaders should consider conducting engagement surveys for insights on which benefits and rewards employees value the most.

Amid a shift in retail workers’ priorities, Mercer has observed companies adding a number of new benefits into the rewards mix, including:

  • Flexible working schedules based on new childcare needs
  • Mid-year adjustments to health insurance electives
  • Mental health resources

Retailers continue to seek out ways to incentivize workers to get vaccinated, including adjusting work schedules and offering paid time off.

Transforming the talent model

At the height of the pandemic and civil unrest, retailers no longer had customers walking into their stores or restaurants in person.

Acting quickly, they implemented a variety of flexible working models:

  • One sports apparel retailer, Mercer observed, began offering workers temporary reassignment from closed brick-and-mortar stores to a distribution center within driving distance and they compensated for the difference in pay
  • Another specialty retailer supplemented its traditional in-store appointments with online appointments in order to meet social distancing requirements
  • Mercer saw most retail corporate offices shift their workforce from on-site to work-from-home, while supporting workers with necessary equipment, if needed

In 2021, retailers will need to evaluate these types of temporary remote/flexible working practices to determine how to make them sustainable in the long term.

In addition, they’ll need to evaluate pay programs, such as sales incentives or shift differentials, and assess training programs to ensure all levels of the organization — from the C-suite to the sales team to workers on the warehouse floor — are aligned with this new flexible talent model.

A shortage on talent and skills

As retailers were forced to accelerate their omni-channel presence, they found that the digital talent and key skills in supply chain, distribution, and remote customer service were in short supply.

Complicating matters was the fact that demographic changes were making it difficult to find people with the right skills to do the challenging work that was required.

For example, the largest generation of workers (baby boomers) is currently aging out of the workforce, while the smallest (Generation Z) is entering it.

More than ever, that means organizations need to think about their employee value proposition and rewards offerings in the form of competitive compensation, benefits coverage, and financial wellness to attract talent.

Paying top dollar for workers with years of experience is not necessarily going to help win talent that has the necessary skills for the present day.

Instead, organizations need to think beyond the traditional talent strategy. Some questions to ask are:

  • Does my brand resonate with the demographic I’m seeking for employment?
  • Do I change how I invest in talent by hiring nonskilled employees and developing the technical training on the skills that are most critical for the role?
  • Am I limiting my talent pool with requirements that are overly stringent for my roles (i.e., a college degree or a certain number of years of experience is required)?
  • Do I know what motivates my talent to work in certain job levels (i.e., sometimes pay is not the primary motivator but, instead, it might be flexibility, autonomy, or benefits)?

Retailers are discovering there is no one answer to any of these questions. But there are insights to be learned by conducting deep-dive analyses into the data and practices and then benchmarking against all relevant markets.

It’s time for HR professionals and business leaders to put the data to use to make sure:

  • You’re focused on being as competitive as possible, not just compliant
  • You’re truly concerned about employees’ overall well-being, not just providing coverage
  • You’re willing to up-skill and develop employees, not just turn them down in the event of a skills gap
  • You’re constantly transforming your organization and never retreating

The pandemic brought on new, sometimes dramatic, changes to the retail industry. Even as the overall situation improves, many of these changes will remain. Efficiently benchmarking your rewards and HR data will be key to excelling in the new environment.

 

If you need support along the way, please don’t hesitate to get in touch with a Mercer consultant at surveys@mercer.com.