Opinion: Skilled, engaged staff are key to retail’s future

Although the number of jobs in retail over the festive period was higher in 2017 compared to the previous year, employment was down by 73,000 compared to Christmas two years ago and by more than 100,000 compared to 10 years ago, in the midst of the financial crisis.

What’s driving these changes and what effect is it having?

The economics of retailing are shifting. Over the last two years, taxes on physical stores have grown by an estimated 8% and employee wages by 10% at the same time as overall sales have grown by less than 3% and pounds spent on non-food products in physical stores have fallen by 5%.

The cumulative effect of the disruption from technology – compounded by growing public policy costs – is piling on the pressure for retailers to consolidate store portfolios and workforces.

“Improving employee engagement at a time when cost pressures and the market environment are forcing retailers to change rapidly is not easy”

As a result, retailers are having to radically rethink how they operate in order to survive, investing more in technology and restructuring their store portfolios and workforce.

While the result will raise productivity in the industry, the transition will not be painless and will affect some communities more than others.

The shape of things to come

According to the BRC’s annual Workforce Survey, 42% of retailers have already invested in technology to drive productivity gains, but technology can’t solve everything, particularly in such a tough trading environment where cash to invest can be hard to come by.

The reshaping of the retail workforce has a huge part to play in driving productivity. On one hand, that means retailers are rethinking roles within their businesses, with 25% already having reduced layers of management and more intending to do so in the future.

On the other hand, it means that retailers are seeking to upskill and better engage their staff to realise their full potential.

However, improving employee engagement at a time when cost pressures and the market environment are forcing retailers to change rapidly is not easy.

The annual BRC Retail Employee Perceptions Survey revealed that employee engagement fell on average across the industry between 2016 and 2017, despite strong pay growth.

In an industry in which employees primarily value flexibility and personal interaction, it’s perhaps not surprising that rapid adaptation to financial reality is causing disruption.

In the face of technology-driven transformation it is encouraging that 61% of colleagues remain motivated to give their best at work.

But there is clearly more to be done to further support skills development and progression – particularly of part-time workers – because there is a perception of fewer promotion opportunities and a drop in the numbers applying for promotion over the last year.

On digital skills, a third of workers indicated they are not completely confident with new technologies coming into the workplace and only a quarter had received digital skills training in the previous 12 months.

“In an industry in which employees primarily value flexibility and personal interaction, it’s perhaps not surprising that rapid adaptation to financial reality is causing disruption”

The industry is committed to monitoring and improving employee engagement by developing better and more rewarding jobs, as well as working to position the industry as a career of choice.

A number of retailers are working together with us to ensure steps are taken to ensure that the employment opportunities across the industry are as attractive, accessible and well remunerated as possible.

The BRC’s Retail 2020 Dashboard provides a baseline measurement of progress towards this trajectory of more productive, more rewarding and better jobs.

Engagement, alongside developments in pay, jobs and productivity, are all being closely monitored by the industry through the Retail 2020 dashboard, which the BRC publishes regularly.

Change is a constant and the UK’s retail industry has evolved more effectively than in most other advanced economies. But it’s now an engaged and motivated workforce that holds the key to future health of the industry.