With the Holidays looming, it's time to staff up and retailers are well into their yearly dance with seasonal employees, courting them with extra holiday spending money and those 10-30 percent staff discounts. But while many familiar faces are already filling up their dance cards, Walmart is standing with its back up on the wall: they aren't hiring. Instead, for the second year consecutively, they will distribute additional holiday hours among their existing associates.
Their press release announcing the plan framed it as an ideal solution for associates, customers, and, of course, Walmart: “These extra hours will help staff traditional roles like cashier and stocker, and newly created technology-empowered positions such as personal shoppers and Pickup associates,” their press release stated, while noting that with a similar set up last year, they “heard great feedback from our customers and associates.”
Yet, in a year where Macy's is looking to hire 80,000 seasonal workers, nearest rivals Target and Amazon 100,000 and 120,000 respectively, and UPS and FedEx combining for another 145,000, it is worth pausing and considering Superstore's motivations.
As far as we can tell there are a couple of things at work here, and both have to do with broader changes omnichannel integration has brought to the retail landscape: 1) The retail labor market is utterly, inescapably brutal, making it difficult to attract seasonal employees and even tougher to retain current ones; 2) Walmart has integrated technology into its stores to make its workforce more flexible and scaleable.
Which leaves us wondering: Is it possible Walmart is close to solving the omnichannel retail labor puzzle? That means to say, has Walmart found a way to leverage technology to make its labor force responsive to both seasonal traffic shifts and sudden changes within the retail landscape?
Let's Back Up: What's Up with the Retail Labor Market?
Since the recession, we've become accustomed to assuming that there are more job-hungry people than there are jobs. While this is certainly remains the case in many professions (any formerly-aspiring academics out there?), this is simply not the case in the retail sector. Not even close.
The desperate occupational and economic situation in which many Americans found themselves post 2008 has, by and large, improved. This is great news for many, but bad news for retailers who relied on labor surpluses to keep wages down, to quickly scale up during boomtime (summer and holidays) and down in between.This, combined with the new, low skill jobs opening up for people outside of traditional brick-and-mortar retail (welcome to the conversation, Amazon) leads us to where we are now: with a bunch of empty retail positions.
How many? According to CNN, in July there were 625,000 unfilled retail job openings. That's a lot of help wanted signs. Market strategist Peter Boockvar summed it up succinctly: “The demand for labor is there but finding willing and skillful warm bodies to fill them remains a challenge.”
Which brings us back to Walmart. Its name not exactly synonymous with stellar employee relations to begin with, Walmart likely knew it would find itself in the back of the hiring line. Indeed, improving its reputation in the retail labor force is primary goal of this holiday initiative. It's not just that finding seasonal employees is easier said than done these days, it's also that, when retail labor is a finite resource, companies have to do what they can to hold on to what they've got.
Obviously, beefing up employees hours goes along way to improving satisfaction among a workforce notoriously frustrated with their inability to get enough paid hours a week. Dan Schlademan, a spokesman for a Walmart advocacy group, believes it's high time this seasonal policy becomes permanent. “The struggle to get enough hours has been the number one issue angering associates. We've never been able to understand why Walmart continues hiring seasonal workers when there are so many people begging them for extra hours.”
So, making Walmart jobs more attractive isn't just good employee relations, it's good business. This also explains why Walmart has been steadily increasing employee pay from its excoriated depths up to $10/hour. Walmart would like their ubiquitous smiley faces to not just represent lower prices but happier employees as well.
Nobody's going to mistake Walmart for Norma Rae, so there's obviously some sound business reasoning embedded in this move. Purdue consumer sciences professor Richard Feinberg sees the economic sunny side: “The first incentive for Walmart is that they automatically increase their profits—it's much cheaper to pay an existing employee than to hire and train new workers. Experienced employees are also more knowledgeable and effective than new hires, which means they're getting greater productivity while also cutting costs.”
Of course, Walmart might not ask its employees to put in more hours, it might demand it. At least that's the fear among some Walmart labor advocates.
Retail Robot Revolution?
But it still feels like there's at least one gap in this story, right? If Target—Walmart's closest analog—needs 100,000 additional bodies...surely Walmart's existing sales floor force can't cover that kind of hours increase, right? Right. It had us wondering too.
But we couldn't help but remember some recent news items about Walmart accelerating its in-store technologies to a point that it had began to obviate many back store occupations. No, not robots like Westworld or even Wall-E. More like money counting machines making certain accounting positions redundant. Indeed, as of 2016, automation technology had already cut 7,000 jobs. But the employees in those positions were not leaving Walmart, at least not by force. According to Digital Trends, they were offered other in-store positions. That same year, Walmart began its no-seasonal-workers policy that they will again roll out this year.
We can't help but connect the dots and wonder if this was at least part of Walmart's formula. As technologies create new positions—the very “technology-empowered” positions Walmart's press release described—it necessarily obviates others. By going full bore into technological and digital integration (an arms race triggered by Amazon nonetheless) Walmart has possibly found a way to have its cake and eat it too.
Make no mistake about it, this move, and every other trick Walmart has up its sleeve, is another shot fired in Walmart's race to omnichannel dominance with Amazon.
Look, we don't talk enough about labor. We talk about markets and customers, technologies, supply chains, and delivery operations. But all of this is ultimately powered by the people on the ground; labor, we often forget, is a resource.
And as technology shifts retail's labor needs, any big-box retailer's labor force would ideally be flexible—able to occupy many different positions as needed—and scaleable to meet seasonal demands internally without the expense of temporary workers.
In the throes of a brutal labor market, Walmart has perhaps found a singular path to optimizing this delicate balance. We aren't sure if they've solved the great retail labor puzzle of our time, if they've merely solved today's, or if they've solved nothing at all. But as it attempts to wall up the Amazon, it is certainly worth monitoring.
