Telecom & Technology Consulting
Retailers are all-in with the latest technology. They’re automating pricing, inventory management, checkout, and other tasks. And by definition, they’re also reducing the amount of workers on the floor.
At the same time, store operations have become more complicated. Online fulfillment and pickup and delivery are now common aspects of retail.
It’s all well and good. That is, until both small and large stores see a rise in theft, poor customer service, and lackluster brand engagement. Those functions require people.
Executives may claim they have to reduce the workforce to help in the battle for higher margins and profits. The thinking is that technology can cut costs enough to make shareholders happy.
But that strategy can have dangerous long-term implications for retailers. In a recent survey by Theatro, 60% of consumers said inadequate staffing has made the shopping experience not as enjoyable.
It turns out that being laser focused on the tech/profit correlation greatly affects what retailers can’t measure: customer perception, reasons for decreasing loyalty, and even issues like worker morale.
Of course, technology has immense value to both retailers and their customers. With one example, Artificial Intelligence (AI) is exponentially speeding up the pace of inventory management, fulfillment, pricing, theft-detection, and other tasks. AI simply performs with a level of speed that people can never match.
AI also allows employees to focus on other, higher-level functions, and enables them to unleash their critical thinking skills. With technology, retailers can get more done in less time, an efficiency gain that ultimately gets passed down to the average shopper.
But this isn’t always the case. Look at self-checkout, which is the obvious – and most relatable – example of how retailers have adopted technology to reduce costs. On one hand customers appreciate the convenience, yet they also get frustrated when scanning errors cause them to wait for minutes for a worker to resolve the issue (this is just one problem with self-checkout).
Ironic, isn’t it, that when the technology doesn’t work as intended, the customer seeks out a human worker for help – they very person who apparently wasn’t needed for the job itself.
Indeed, stores are overlooking customer expectations in favor of automation. And when expectations aren’t being met, those shoppers might move to a competitor and never come back.
Much of the problem is due to the fact that in 2022, labor costs increased while productivity decreased for the first time since 2008. At the same time, retail tasks have become more complex: gathering online orders, bringing orders to curbside pickup, and the people required to work at collection desks accounts for more hours than forecasted.
And since labor costs are low-hanging fruit for budget slashing, they’re the first item to be cut. Yet without sufficient staff, there’s a higher likelihood of theft and missed chances to engage customers. Which is why retailers can’t overlook the objective value of having workers visible on the floor.
There’s a real domino effect when it comes to hiring and retaining employees. A recent U.S government subcommittee on Counterterrorism, Law Enforcement and Intelligence found that retail crime and fear of potential injury are a key factor in a retailer’s inability to hire employees.
Lack of sufficient staffing also causes people to quit their retail jobs, as they feel overworked and not properly supported in carrying out their tasks; there’s simply not enough co-workers to help with a heavy workload.
Brands have to consider the unintended consequences of reducing the amount of workers in their stores. The good news is they can have the best of both worlds – cutting-edge technology that serves employees, customers, and most critically, brand equity and the bottom line.
