We previously examined the complex labor shortage at restaurants and the debilitating effects it is having on the industry; however, the labor crisis goes beyond restaurants. Retail industries are facing the same shortages with potentially more long-term damage despite not grabbing the same amount of headlines as their restaurant counterparts. Issues like higher wages and better working conditions are sticking points for employees and employers are grappling with ever increasing competition and the allure of automation.

A major factor working against the retail industry are hours of operation. While there are some restaurant chains that operate on a 24-hour schedule, many operate for only a single daypart. Convenience stores and other retailers like Walmart can operate on a 24-hour schedule which creates a massive need for personnel when combined with their high volume of locations. The lack of workers has forced many companies to change their hours which has had devastating results on revenue. Retailers that are trying to drive up foot traffic risk alienating customer relationships if hours change or departments are no longer in operation due to cost cutting.

The elephant in the room is the minimum wage and the working conditions often associated with it. Retail stores have been just as slow as restaurants at increasing that wage over the years and while they don’t deal with tipped wages, retail stores are notorious for hiring multiple part time employees that work short shifts to avoid paying benefits. Retail stores are not often subject to the tight spaces of restaurants; however, employees face more interactions with customers who are not tied to a table. Cashiers and floor workers interact with customers for extended hours and COVID-19 has heightened health concerns. Mask mandates and social distancing requirements have placed the onus on employees to reinforce these policies which can lead to confrontations. Employees have been vocal about these issues and not all companies have responded. Unfriendly, and in some cases an unsafe, working condition has been a serious roadblock to enticing new hires.

Raising minimum wage is an issue that most retailers are divided on. Amazon.com Inc., Kroger, and Target have all hit the $15 an hour mark, although their competitors have shown resistance to the change. The wage hike could have a tangible benefit as Target is not facing the same hiring crisis as other retailers, yet their biggest competitor, Walmart, has presented the most pushback to higher wages. Walmart has raised the wages of many employees to an ‘average’ of $15 an hour; however, this clever wordplay has also been used by several restaurants to avoid public backlash. Excluding Walmart, many retailers, especially smaller chains, do have an argument about the difficulty of raising wages. High overhead costs, tightened supply lines, and reduced foot traffic make it difficult to simply raise wages across the board. There is also no guarantee that it will solve the problem.

Even though there are multiple issues creating the labor shortage, there are avenues companies can take to remedy the situation. Benefits packages are a way to circumvent a pure wage hike and health insurance and sick leave have gained greater importance during the pandemic. Walmart has taken another path by offering to pay for employees’ college tuition and other retailers have offered the same. Amazon has leaned into their internal promotion program that provides career paths to entice employees. Other retailers have taken cues from restaurants and offered signing bonuses and merchandise perks.

Of course, for some companies the answer to the labor shortage is to remove the need for so many personnel through automation. Self-checkout lanes have been a fixture for years; however, they have gained more interesting during the pandemic. The eliminated need for multiple cashiers and the reduced human interaction has been a lifeline for some and allowed them to keep normal operating hours. The advent of digital retailing is causing some stores to consider cutting their physical footprint and saving on employee costs. Both of these solutions have drawbacks as they require the proper infrastructure and invested capital that cannot be conjured overnight. We are a long way from automation fully replacing staffed stores, yet it could help avoid issues like this in the future.

There will not be one solution that solves this labor crisis, although companies need to start formulating their response sooner than later. Back to school shopping has already begun and after that the busiest time for retail, the holiday season, kicks off. Retailers usually expand their operations and hire seasonal positions that are flush with applicants; however, that will not be the case this year. If retailers can’t find a way to fill the permanent positions they have open now and scrape together some seasonal workers, then the holiday boom they have been waiting all year for will be a bust. Retailers will need to employ as many options as possible to convince employees that they offer competitive benefits while also providing a safe working environment. These kinds of changes traditionally happen over time, though the pandemic taught us that those who are slow to change are quickly left behind.