42 minute read
Overcoming the Labor Crisis
from CSN-1021
by ensembleiq
Expanded and extended unemployment benefi ts, challenges around childcare, and new worker priorities are forcing c-store retailers to adapt to a new labor market
BY DON LONGO
WOULD YOU OFFER FREE IPHONES to induce applicants to apply for a job at your stores?
That’s what a McDonald’s franchisee in Altamont, Ill., is doing to attract new hires during a labor crisis that is affecting companies in every business across the nation. The labor shortage is being felt particularly hard at the store level in the convenience store industry. It is also affecting businesses all up and down the supply chain, from the distributors of in-store food and merchandise to companies that supply fixtures and equipment for new stores.
Employment numbers in August came in far below economists’ expectations. The United States added only 235,000 jobs, way short of the 720,000 jobs that were expected to be added. It was the worst monthly increase since January.
And that poor figure was despite high demand for workers. In August, the Labor Department said there were more than 10 million job openings nationwide — the highest ever recorded.
The unemployment rate declined by 0.2 percentage points to 5.2 percent in August, according to the Bureau of Labor Statistics. That’s still far higher than the 50-year low of 3.5 percent in February 2020, before the COVID-19 pandemic hit.
Most retailers would agree that the No. 1 obstacle facing the convenience channel right now is the nationwide labor shortage. C-store operators are upping wages, offering hiring bonuses, and doing more in the way of recruitment to try to attract workers.
Signs of desperation, such as the McDonald’s franchisee’s free iPhone offer, are becoming more and more commonplace. “The labor shortage is real,” said Gus Olympidis, president and CEO of Valparaiso, Ind.-based Family Express Corp., a chain of 73 convenience stores in northwest and north central Indiana. “There’s hardly a business without a help wanted sign on the door.”
Most retailers blame the federal government’s COVID-19 subsidy, which started at $600 per week and was later reduced to $300 a week, on top of extended state unemployment benefits as the primary reason for the current worker shortage gripping the nation. The length of time a person could receive unemployment benefits was also extended. (As of press time, the federal subsidy had just expired on Labor Day for more than 7 million people.)
“I have no doubt the primary reason for this labor shortage is that the government is continuing to pay people not to work,” said Olympidis, echoing comments heard from across the retail industry. “This is essentially moving people out of the workforce and driving them to stay at home.”
Retailers are right to ask why an unemployed person would go back to work if he or she could receive almost as much income from the government just by staying home. But that is an oversimplification of the labor crisis, according to Dave Gilbertson, vice president and chief customer officer for UKG, a global provider of payroll, human resources services and workforce management solutions.
Citing the results of a UKG study of 3.5 million hourly employees, Gilbertson noted that in the 26 states that eliminated or reduced the federal benefit early, in June and August, the labor shortage in those states was actually worse than in the states that continued to hand out the subsidy, as measured in the number of shifts worked.
“Admittedly, a number of those states didn’t get as hard hit by the pandemic as others,” Gilbertson pointed out, “but the findings imply that the federal stimulus checks didn’t have as big an impact on the shortage as some may believe.”
Gilbertson listed some other causes for the retail labor shortage:
• The challenge around childcare
and elder care: There hasn’t been this much uncertainty around this issue in the past 50 years. If you are unemployed and your childcare is set up around you being out of work, it is very hard to change that.
• The health factor: Clearly, store-level jobs dealing with the public can expose workers to the
COVID-19 virus and its variants.
Sometimes, it’s hard to know how seriously the company where you are applying for a job takes the health and safety of its frontline employees, according to Gilbertson.
There’s been a degradation of activity in terms of people clocking in at work over the past several months, the UKG study found. More people are taking pent-up vacation time that had been accrued during the pandemic.
“We’ve seen retail and hospitality employment recover more strongly in mid- to late-June, but declining growth since then,” Gilbertson said.
Nevertheless, retail is coming back faster than other industries, such as health care, which has really struggled. Skilled jobs, such as truck drivers, are also struggling more than retail.
A Problem Long in the Making
In the short term, as school childcare schedules are solidified with the restart of in-person learning, workforce activity should pick up, Gilbertson predicts.
Help wanted signs, like this one at FriendShip Food Stores, are prevalent throughout the c-store industry right now.
“We’ve recovered about 90 percent of the workforce from pre-pandemic, and should get back to pre-pandemic levels of employment sometime in 2022,” he said.
Economists are reported to be split on whether the government subsidy is the main reason businesses cannot hire enough workers. One economist pointed out that only four in 10 workers actually make more in jobless benefits than from a paycheck, according to CNBC.
Another factor cited by economists is the acceleration of the mismatch between the skills of current workers and those that employers want. Automation and globalization were changing the way people work even before the pandemic and many employers were having difficulty filling open positions. All that sped up over the past year and half as employers found new ways to continue serving their customers with fewer workers and a greater reliance on technology.
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What was expected to happen over the next 10 to 20 years instead occurred over just a few months, and the problem doesn’t appear to be going away anytime soon.
“I think the labor shortage was inevitable even without the pandemic,” said Steven Kramer, CEO of WorkJam, a digital workplace provider for organizations with frontline employees. “Before the pandemic, you already started to see that frontline workers were looking for better conditions.”
Workers were better informed and wanted to work for companies that communicated better, were easy to work for, and had a good workplace culture and socially responsible policies in place as an organization, Kramer said.
“The pandemic accelerated how all this played out,” he continued. “The money from the government gave people the time to evaluate, consider and embrace their alternatives. They asked themselves: ‘Do I still want to work in retail?’ Many thought about pursuing a different career or going back to school.”
There’s also a lot of competition for frontline retail employees, both inside and outside the convenience store industry. Look at what McDonald’s is doing in Illinois, giving away iPhones, or Yum Brands’ Taco Bell holding a job fair to hire at least 5,000 workers to support its store expansion plans.
To get the best employees, c-store retailers need to reconfigure how they look at and manage their workforce. They need to adapt to the new labor market.
“One of the things retailers can do is to embrace technology that makes it easier for their employees to do their jobs,” said Kramer, who added that a company’s values — such as embracing diversity and inclusion, and communicating these values — are also very important to today’s employees.
The reasons behind the labor shortage are deep-rooted. “It’s too easy to just blame the stimulus checks,” said Kramer. “The states that stopped the federal stimulus checks early still have the same labor problems as the states that didn’t.”
— Steven Kramer, WorkJam
After being home and unemployed for so long, people have a different appreciation for family time, and they want more flexibility in where and when they work.
“Some of our clients are doing a fabulous job of meeting the challenge,” he said. “For example, our Open Shift Marketplace allows store employees the flexibility to pick up a shift at a store at a different location from their usual store. Other clients are using technology to communicate better with their workers around subjects like diversity and inclusion.”
The labor shortage is not going away anytime soon. “It’s imperative that a retailer become an employer of choice. That means a positive culture, good tech tools, and being a Good Samaritan company, a place where people are proud to work,” said Kramer.
This is the first time in at least the past 20 years that there are more job openings than unemployed people, Gilbertson at UKG pointed out. “Outside of increasing pay, the pressure is on retailers to increase benefits, provide more shift flexibility, and train their managers better in people skills,” he said.
It’s all about adapting to the workforce of 2021 and beyond.
Our cover story explores the labor crisis from all angles: the dynamics behind the labor shortage, what convenience store retailers are doing to attract workers, retention strategies to keep existing workers, and how c-store operators can do more with less labor. Read on.
OPX + EX = CX
CSN sits down with Steve Kramer, CEO of WorkJam to discuss why c-store operators must streamline and digitize their operationsÑand how to do so.
CSN: What is the biggest challenge c-store operators face today? Steve Kramer: Staying ‘on brand,’ delighting customers at each location consistently. In this ever-changing business climate, streamlining communications and digitizing operations is required to ensure a high-caliber customer experience with each visit and at each store. Overcoming this challenge is critical, because the better and more consistent customers’ experience is, the more loyal they will be—and that loyalty drives c-store profi tability.
Streamlining operations means enabling employees with communication and education on how to perform tasks correctly and consistently across the store. It’s the case whether tasks involve cleanliness, health and safety or product stocking. Staff capabilities need to be maximized through cross-training and upskilling so they can serve wherever needed: foodservice, maintenance, or merchandising. Streamlining operations also involves maximizing staff across each district or region so that shifts are covered, and your opportunity is met, by enabled associates delivering the service level you and the customer expect.
The need to take steps to streamline operations is clear. Time and time again, research has shown that if customers’ expectations for service, product, store environment, aren’t consistently met, they’ll start shopping elsewhere. And if they do forgive a bad customer experience once, they aren’t likely to do so repeatedly—to the detriment of the bottom line.
CSN: What should c-store operators do to bring their a-game each time to keep them on brand? SK: Several elements come into play here, including employee education, open communication, digitized tasks, and the development of an ongoing dialogue with the workforce. Employees need to be able to access the tools they require to do their job and do it right, such as direction on which tasks to perform when as well as how to complete these tasks and what the outcome should look like. Management by the way also needs the same set of tools along with real-time visibility. When this happens, the customer experience benefi ts.
Digitizing once-manual processes like task management, learning or communications is no longer optional.
Think of all the processes now used to disseminate individualized, prioritized task lists; inform and remind employees of standard practices (SOPS). This all needs an upgrade!
CSN: Improved operations through better employee enablement clearly leads to a better experience for the customer and a better bottom line. But other than in the task and training piece, where does the employee experience come into play and how can c-store operators improve it to optimize their operations? The high level of employee enablement that has a signifi cant impact on the customer experience, retention rates, and by extension, profi tability, also comes from giving frontline workers a stake in their own schedule and success, recognizing their need for a good work/life balance. Technology can enable employees to communicate their shift preferences and interact with each other to initiate shift swaps— while at the same time, enabling management to achieve more with less.
CSN: How does WorkJam help c-store operators to address the challenges and requirements weÕve discussed? SK: WorkJam is the digital workplace platform built for the frontline. In over 45 languages and countries, it delivers real-time communication, task management, learning, open shift management, workfl ow planning and reports. Each module can work seamlessly together or in standalone mode.
Trusted by major operators from Shell, to Sheetz, to Chevron as well as by smaller c-store players, the WorkJam platform is appropriate for franchisors, franchisees, and company-run operations.
GETTING EMPLOYEES IN THE DOOR
Convenience store operators are utilizing various tactics to incentivize job seekers
By Danielle Romano
WITH JUST MORE THAN 700 employees, Plaid Pantry, the Beaverton, Ore.-based operator of 108 convenience stores, is about 50 workers shy of the workforce it would like to employ for its business. The retailer, operating primarily in the greater Portland area, faces a myriad of challenges in securing labor in today’s market.
Those challenges include the usual suspects such as benefits and job flexibility, but then there are the intricacies of the COVID-19 pandemic, like finding affordable childcare, higher-than-normal unemployment insurance payments, and the fear of contracting the virus.
“We are struggling to find enough associates to work and fill the needed shifts to keep our stores operating efficiently. This means our existing staff are asked to pick up extra shifts and that means high costs and less productivity. We are hearing and seeing the same dynamic from our suppliers and competitors alike,” Jonathan Polonsky, president and CEO of Plaid Pantry, told Convenience Store News.
Compounding the lack of associates has been the state of Oregon’s extension of federal unemployment benefits, which were expected to expire on Sept. 4, 2021.
“With Oregon continuing to offer extra federal unemployment benefits, it’s not surprising that entry-level openings are hard to fill,” Polonsky expressed. “If the benefits expire, it will absolutely help, but I’m not expecting a flood of applications the following week. There are still a lot of other programs in place, like eviction moratoriums, that will curb the enthusiasm of potential job seekers.”
Similar to Plaid Pantry, Sprint Mart is experiencing difficulties due to a lack of available labor across its footprint. The retailer has had to adjust its operating hours and shuffle its current workforce around to make sure some of its more rural locations are staffed.
“The impacts have been broad-reaching and have resulted in some new incentives for us to try and attract new talent, whereas at the beginning of this, we may have been leading the way as far as offering new incentives to join the company,” explained Chris McKinney, director of human resources for Ridgeland, Miss.-based Sprint Mart, which
operates 107 c-stores across Mississippi, Alabama and Louisiana. “In our neck of the woods, incentives have been the new norm, so if we were to do away with incentives, then we would be behind our competitors.”
Incentivizing Potential & Existing Employees
With convenience store associates deemed essential workers during the height of the COVID-19 outbreak in 2020, Plaid Pantry lost a number of employees at the beginning of 2021 because they were burned out, Polonsky shared.
Losing employees quicker than it could replace them, Plaid Pantry decided to increase its investment in hiring. In addition to in-store signage, the Northwest operator has boosted spending with job posting website Indeed, focused its social media efforts more on employment advertisements vs. products and promotions, and occasionally held job fairs.
Then, to show appreciation for its current employees, Plaid Pantry has given out small thank-you bonuses, and offers time-anda-half to hourly associates who work extra hours. Salaried managers receive a $125 shift bonus if they have to pick up a shift because of a callout they can’t fill.
“We also long have had a ‘buddy program’ that rewards existing associates for recruiting friends or family,” Polonsky said. “If we hire the friend or family member of an associate, the preexisting associate gets $100 if the new hire is still with us after 30 days, $200 if he or she is still with us after 90 days, and $300 at 180 days. This program is outlined in our Employee Handbook and we remind employees about it at P&L meetings and in newsletters.”
For Sprint Mart, a purposeful tactic has been highlighting the company’s signing bonus on its website. This move enables the c-store operator to be as vocal as possible in communicating that it is offering enticing incentives to attract employees to the company — above and beyond what they would have gotten in years past.
On June 1, 2021, Sprint Mart introduced the signing bonus, in addition to a referral bonus. The $1,000 signing bonus is paid out as $250 quarterly and is designed to encourage an employee to stay with the company, while the referral bonus is paid out at different intervals. If an employee stays 30 days, then the existing employee
In June, Sprint Mart introduced a $1,000 signing bonus that is paid out as $250 quarterly.
who referred the new hire receives $100. After 90 days, if the new hire stays, the referring employee receives another $100, for a total of $200. And there is no limit on the number of employees that can be referred.
“We asked ourselves: What kind of incentives drive the business results that we want to see? We wanted to be able to provide something that feels like it has tangible value to the employee but, at the same time, benefits the company in that it increases longevity and assists in meeting our business goals, like keeping the doors open and having the right labor in the right place at the right time,” McKinney said.
Since implementing these measures, Sprint Mart has emerging data points that show the company has increased tenure and reduced turnover marginally, plus it is seeing information reflected in employee surveys that the incentives have a positive impact.
Richmond, Va.-based GPM Investments LLC, a wholly owned subsidiary of Arko Corp., is likewise combatting the labor challenge with new hiring and retention initiatives. They include offering fas REWARDS points to existing associates, overtime hours, companywide “all hands-on-deck hiring events,” virtual job fairs, and substantially increasing its talent acquisition team.
Additionally, GPM rolled out a sign-on bonus for all new associates companywide in June. The company has seen a 5-percent increase in associate retention since implementation.
“We track our open positions very closely to support our operations and sales teams. Our industry typically has high turnover, so our goal each week is to hire more associates than we lose to ensure a positive gain in head count. By keeping the goal simple, it allows us to quickly and easily measure progress and helps keep our team motivated,” explained Veronica Donchez, senior vice president of human resources at GPM, the sixth largest U.S. convenience store chain with approximately 1,400 company-operated stores and 1,650 dealer sites to which it supplies fuel in 33 states and Washington, D.C.
Embracing Technology
Despite the physical limitations of the COVID-19 pandemic, c-store operators did not falter in implementing new hiring practices and reaping the benefits of such efforts.
For example, Sprint Mart was almost completely digital as far as hiring and onboarding is concerned pre-pandemic, so the company was well-positioned to press on when the spread of the coronavirus kicked into high gear.
“The speed with which we reach out to candidates has increased dramatically. Now, we recognize that within the labor market, the attention span is even shorter than it was. It is a blessing and a curse making jobs so easy to apply to,” McKinney told CSNews. “It’s a blessing in attracting new applicants, but then it can present its own challenges because applicants are simply applying to multiple jobs a day because it’s so easy to add their application to.
“There’s a lot of noise when it comes to what the applicants are hearing from the many places in which they’re submitting their information,” he continued, “so we have made the conscious effort to be faster in our initial touchpoint when it comes to trying to attract people who are applying to our stores.”
During COVID, GPM adapted and embraced new ways of hiring candidates, and changed the way in which it connects and interacts with them. The convenience retailer implemented texting software and has experienced great success in using this platform as an avenue to communicate and engage with more candidates than it could using traditional methods.
In addition to the texting, the biggest change GPM has made is the way in which it conducts interviews. Pre-COVID, all interviews were done in-person. In the current environment, the majority of interviews are conducted virtually.
“This has been a shift in culture, but it has been positive for both our candidates and our hiring managers, and significantly improved our speed to hire,” Donchez pointed out.
Sprint Mart and GPM laud technology for the capabilities it provides in optimizing its current workforce, too. Namely, both
GPM has seen a 5-percent increase in associate retention since implementing a sign-on bonus companywide.
companies implemented tech-driven solutions to help ensure sufficient labor is available.
Prior to the pandemic, Sprint Mart employed a robust scheduling platform that includes an advanced scheduler, which it is leveraging with UKG Ready. The key to making the scheduler the most effective and/or the best it can be for the company is leveraging it in a way that seamlessly allows stores to share labor.
“We had a situation prior to implementing the scheduler where it was much more difficult to seamlessly cover staffing holes. When we installed the scheduler, we did so in such a way to give every single scheduling manager access to all of those employees who would be available and trained to work right now,” McKinney explained. “So now, the ease in which a manager can reach out to staffing managers at another store to coordinate staffing has allowed us to remain as agile and as efficient and effective throughout the entire pandemic.”
GPM recently partnered with delaPlex to implement and deploy Blue Yonder’s Workforce Management (WFM). The solution improves budget forecasting, scheduling and time capture accuracy. It delivers a highly accurate activity-based labor model that addresses the challenges associated with varying operating hours, store designs and layouts.
“It is also equipped with tools and training to adjust to the multiple labor standards for the growth and evolution of GPM’s business,” Donchez said.
THE CHANGING FORMULA FOR EMPLOYEE RETENTION
To hold onto existing workers, c-store operators must meet employees’ needs and make it easier for them to stay than to look for something better
By Angela Hanson
TO SOME, SOLVING THE labor shortage is a simple issue of supply and demand: offer higher wages and prospective employees will show more interest.
It’s true that money is a shortcut to being more attractive as an employer, and non-competitive pay rates will put businesses at a disadvantage no matter what. However, it won’t get convenience store operators all the way to their destination of having a fully staffed business with minimal turnover, as many retailers both in and outside of the c-store industry have reported continued staffing shortages even after boosting wages. The COVID-19 pandemic is something of a smokescreen for bigger problems in the retail labor market, according to Steven Kramer, CEO of digital platform WorkJam.
“There’s a recalibration happening in the labor market,” Kramer told Convenience Store News. “It started before the pandemic. People understand they have choices.”
Some of the choices workers make are tied to the values and culture of an organization. Five or six years ago, a job was a job, according to Kramer; today, people are takinga closer look at where they work. Businesses that demonstrate a sincere commitment to the issues people care about, such as diversity and innovation, are positioning themselves to have a competitive advantage over businesses that offer similar work and pay scales.
Improving company culture is well worth doing, but it is also a long-term task. C-stores can take a variety of other steps to ease the pain of the labor crunch in the short- and medium-term.
While the pandemic may not be the only reason it is harder to hire and keep employees, addressing COVID-related concerns is a must-do. Former retail employees who have expressed hesitation about returning to their former jobs overwhelmingly list fear of contracting COVID-19 and the need to feel safe in their work environment as factors in their decision. Businesses that prioritize safety may find it easier to lure back these experienced workers.
Maintaining improved cleaning protocols, mask requirements and physical barriers help fight transmission of the coronavirus and make it clear which businesses recognize it is still a danger. Retailers can also encourage COVID-19 vaccination by offering paid time off for vaccination appointments and recovery from post-vaccination side effects, plus incentives for vaccinated employees.
A simple but effective approach is for retailers to simply ask employees whether there is anything else they can do to make them feel safe, and truly listen to the answers. Employees who feel that their concerns are heard and acted upon are more comfortable at work and more likely to stay, according to integrated cash distribution network Loomis.
The pandemic has also made employees concerned about health benefits. A recent survey conducted by job search platform DirectApply found that jobseekers are looking for “fundamental” benefits, with health insurance listed as the top desire for nearly one in five people. Other in-demand benefits include dental and vision insurance, paid vacation, and a 401(k) plan.
To get more potential employees in the door, some businesses have begun offering cash bonuses for new hires, but Kramer is skeptical regarding the long-term value of such bonuses, especially considering that employee retention is as important as the initial acquisition.
“I really don’t think money is the only solution,” he said, instead pointing to the value of creating a productive environment. “The relationship that an employer has with their employee is really important.”
One method of improving that relationship is finding new ways of being flexible to meet
employee needs as well as the needs of the business. Workers may struggle to balance their jobs with childcare or other family duties, especially when many children face the prospect of virtual learning during the school year and high-risk individuals may still limit contact with non-family members due to the pandemic. Identifying good employees and scheduling around their obligations makes it easier for them to stay than to go through the process of searching for a new job that will fit their schedules.
Retailers may also want to consider scheduling half-shifts for employees who are willing to work but have limited slots of availability, or setting shift changes outside of rush hour to cut down on travel time if they operate in a densely populated area. Chains could also authorize employees who are looking for extra hours to work at multiple locations.
Additionally, while it may become more difficult to both be flexible and build a reliable schedule, employees appreciate knowing their hours farther in advance. The retail industry is notorious for schedules being released at the last minute, which means that businesses that offer more advance notice will stand out.
Part of the problem on both sides of the scheduling issue comes from the lack of ability to easily input employee availability. Kramer recommends investing in tools, such as WorkJam’s Shift Management, that simplify the process of scheduling while taking into account employee availability, internal regulations and overtime laws. With such tools, employees can also trade shifts without having to go through their managers.
Retailers looking to improve the scheduling process should consider how employees must request days off as well. “Time off may not come up a lot during the interview process, but it’s an important part of consideration once you’re in the job — how easy it is to take time off, what the process is around that,” Kramer said. “Time off, particularly in today’s environment, is important for general health.”
The Digital Advantage
The use of digital tools to attract and retain workers goes beyond scheduling software. Paytronix Systems Inc.
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recommends c-store operators consider the use of employee dining programs, which have evolved from free meals during a shift to something more dynamic. They are now part expense account, part loyalty, part employee retention and part motivation, according to Scott Walters, head of convenience store sales at Paytronix.
“The style of the program is driven by the c-store brand’s needs and goals. These programs are extremely customizable, and the functionality of the program is driven by the retailer’s goals,” Walters explained. “Employee programs can be used to motivate and incentivize employees, to retain staff, to run integrated marketing campaigns, to communicate directly with employees, and to track employees’ purchases.”
Retailers can choose to offer different incentives based on their needs and what they want to offer employees. Options include discounts, incentives for overtime, reward dollars, and more. Incentives can be loaded onto employee accounts as redeemable rewards, bankable points or discounts on specific products, and can be capped at certain dollar amounts.
“Because they operate like an internal loyalty program, employee programs provide a direct line of communication between brand and staff,” Walters said. “Convenience brands can use this messaging capability to communicate safety protocols, new marketing promotions, and other internal news.”
As a side benefit, if a brand offers a customer-facing loyalty program on the same platform, employees become well-versed in the platform’s benefits, allowing them to better communicate the program’s benefits to customers and contribute to its success.
“At Paytronix, we look at things through the lens of loyalty and ask: What is going to keep consumers and employees happy and engaged with the brand?” Walters said. “We recommend the same strategies that have long been successful in retaining customers: reward the employee for being loyal to the brand and create a personalized experience.
“Under an employee program, that might mean allowing employees to earn double or triple points per hour of overtime, which they can then use to fill their gas tank for less,” he added.
“It could also mean allowing employees to choose their own rewards, so they have a personal, rewarding experience with the brand. The same strategies that keep customers coming back will encourage employees to stay loyal to the brand as well.”
— Scott Walters, Paytronix Systems Inc.
digital tools for employees into a single app if possible. “As a frontline worker, it’s difficult to use many different tools,” he said.
Platforms such as WorkJam can combine practical functions such as scheduling and team communication with other features like employee recognition programs and training modules that can help workers advance to higher-up roles, which could cut down on turnover.
“It doesn’t have to be a dead-end job,” Kramer said.
Whatever incentives they choose to offer, he believes that c-store operators need to bring together their leaders from operations, human resources, the executive team and other parts of the organization to look at things holistically and develop a unified corporate vision.
“This problem started before the pandemic accelerated it, and the need for change and to adapt is, in my opinion, the difference between winners and losers,” he said. “The end of the pandemic won’t make all these problems go away — this is a new reality.”
THE INTERSECTION OF LABOR & INNOVATION
Optimizing operations and leaning on technology help retailers do more with less
By Melissa Kress
LIKE MANY CONVENIENCE store retailers, Alimentation Couche-Tard Inc. launched a hiring initiative this past spring. In early May, the parent company of Circle K advertised for 20,000 open positions and filled nearly 19,700 by the end of the first quarter of its fiscal year 2022.
Though it has since added to that number, challenges remain.
“It remains a difficult market and we still have stores that are affected by the labor disruption, and we can also see the effect of this labor shortage in many areas of our supply chain in North America,” Chief Financial Officer Claude Tessier said during the Laval, Quebec-based company’s earnings call on Sept. 1. “We’re trying to mitigate those impacts in our network.”
The global retailer is navigating labor challenges as it moves full steam ahead with its new foodservice program, “Fresh Food, Fast.” In the first quarter of its fiscal year 2022, the company introduced the program to 500 stores in the United States, as well as in Canada, Denmark, Sweden and Lithuania. In total, Fresh Food, Fast is available at roughly 2,000 of its stores.
“As we expand the offering, we continue to gain valuable insights and believe we’re building the right production platform, one that’s taking into account a very tight labor market and supply chain challenges,” Couche-Tard President and CEO Brian Hannasch said during the September earnings call. “We’re preparing additional new initiatives that simplify operation and execution, reduce labor, and allow us to create a full food culture for our team members and our customers.”
At Arko Corp., its foodservice model plays in its favor as other operators struggle to fill their rosters.
“We were not fully involved in foodservice, and we decided to shift gears toward grab-and-go and frozen foods where less labor intensity is required,” Arko CEO Arie Kotler explained during the company’s second quarter 2021 earnings call on Aug. 12. “We have the challenges like everybody else, and we continue to work through those challenges.”
With some locations more significantly impacted by the labor crunch than others, the company has tweaked operating hours in roughly 75 stores where it made sense from a profitability standpoint.
Arko is the parent company of Richmond, Va.-based GPM Investments LLC, which operates and supplies fuel to c-stores in 33 states and Washington, D.C. It has 3,000 locations comprised of approximately 1,400 company-operated stores and 1,650 dealer sites to which it supplies fuel.
Technology can provide c-store retailers with optimized schedules built on a strong foundation of artificial intelligence and machine learning.
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“They’re not significant. We’re trying to shave them in the morning and the evening, and we’re even in the process of starting to restore those hours now,” said Arko Chief Financial Officer Don Bassell. “They’re being done strategically where it makes sense, where we’re having problems, but it wasn’t like cutting out massive hours. It was just being done where we had particular issues.”
Enhanced Scheduling
Doing more with less labor has been a topic of conversation between Zebra Technologies and its customers not only in convenience but also across retail, banking and healthcare.
“It’s been across the board in the last 18 months,” said Suresh Menon, senior vice president and general manager, software solutions at Zebra Technologies. “How can they do more with the staff they are finding hard to keep, staff that is becoming more expensive, and having that same staff do more with less?”
According to Menon, convenience store operators can take several steps to deal with this new reality. Step one, he said, starts with more accurately predicting staffing requirements and scheduling the right number of staff for the predicted workload.
“Can we avoid overstaffing, which hits the bottom line, and can we avoid understaffing and provide the best customer experience?” he posed.
Traditionally, scheduling has fallen under the responsibilities of the store manager, who has had to juggle spreadsheets and figure out how to staff a store on the average Saturday afternoon over a holiday weekend, for example. This is where technology can play an important role — by providing optimized schedules built on a strong foundation of artificial intelligence (AI) and machine learning, Menon explained.
“Some of our customers in this space have seen, on average, store managers save anywhere from four to eight hours a week from the automation that comes with technology,” he said. “That allows the store manager to run a better operation.”
The Post-COVID Era
All signs point to technology playing a critical role in solving staffing woes;
— Claude Tessier, Alimentation Couche-Tard Inc.
however, this can be a hurdle itself in a channel that is known to be a slow adopter.
“The retail industry is at a crossroads and convenience stores, which were already battling for razor-thin margins, have been hit hard. Thin margins are the main reason the convenience channel has been slow to embrace new technology because in the past, new technology has been expensive and inconvenient to implement,” explained Standard AI CEO Jordan Fisher.
“That was changing even pre-COVID, as convenience stores yearned for new customer experiences to battle Amazon and delivery services like DoorDash. Add in the pandemic and in the past year, interest in autonomous checkout has skyrocketed due to the need for low-touch options to bring customers back to stores and keep them safe and labor shortages,” he said.
According to Fisher, AI-powered “retrofits” of existing stores, powered by camera-based computer vision technology, enable retailers to rapidly deploy and deliver new shopping experiences in their existing stores without having to rebuild from the ground up for costly sensor fusion-based shelving and other similar overhauls.
Solutions, similar to Standard AI’s platform, allow associates to focus on other value-added tasks, such as restocking, interacting with customers, and helping shoppers find items.
Artificial intelligence can also be used to ensure the right staffing mix at the right time — which can be difficult when comparing this year to 2020 given the changes in consumer patterns and behaviors during the pandemic. According to Menon, this challenge can be avoided if the tech solution uses AI-based disruptive scheduling, a capability that was developed to take into account the unknown, such as hurricanes and snowstorms.
GPM tweaked operating hours in roughly 75 stores where it made sense from a profitability standpoint.
how many people will actually get on the road Memorial Day weekend? How many people will be stopping at these gas stations? There is no comparison to last year or even 2019. This is where the disruptive scheduling AI really made a difference. It was able to get signals in real time and come very close to reality,” he said.
Employee Power
Another trend in retail is putting staffing into the hands of the employees.
“In the times we are in right now where finding labor is hard and keeping labor is harder, it’s about giving flexibility in terms of shift-swapping, and putting this in the hands of the employees gives them a lot more autonomy, improves the employee experience, and we’ve seen it has reduced attrition,” Menon pointed out.
Zebra Technologies is currently working with a consortium of grocery chains in the United Kingdom to pilot a program aimed at gig economy workers. The consortium is tapping into the same pool of employees who may want to work three days at one place and two days at another place. With this option, individual retailers do not have to go through the process of onboarding employees, and they have access to their work availability.
“If this trend continues — with the squeeze in labor and the rise of people who want to have autonomy and flexibility in their work schedules and who they work for — solving the gig worker problem for customers is coming,” Menon said.
Mobile workforce technology can help managers and employees do more with less as well. As a multitasking tool, it allows c-stores to run more efficiently, according to Rob Klitsch, director of the retail, hospitality and foodservice practice at UKG.
Among the benefits, manager tasks formerly contained to a backroom computer are now done on the floor, allowing managers to be more present. Employees can keep up with required activities and track completion of daily tasks without retreating to the back office, and they can handle personal activities like clocking in and out from an app on their mobile device.
“A lot of applications that sit on some of the largest timekeeping platforms today help streamline everything from employee communications and employee surveys to task management,” Klitsch said. “Mobile access to schedules and employee shifts makes it easier than ever for employees to pick up open shifts, whether at a single location or across numerous stores within a set radius.”
This should be particularly appealing to store managers hoping to fill gaps in their schedules in near-real time, he pointed out.
“Ultimately, mobile technology creates far less restrictions around what can be accomplished and where, and that’s a critical factor when c-stores are short staffed and looking for ways to optimize all available labor,” said Klitsch.
Optimizing Operations
Standard AI’s Fisher agrees that technology is complementary to retail staff, helping supplement available workers and freeing them from behind the cash register to offer service to shoppers, restock items, take inventory — among other tasks — and help retailers operate more efficiently while providing a better shopping experience to customers.
“Retail is a hard business to hire for and attract talent, requiring a sizable workforce with substantial turnover. As retailers across the world begin to reopen doors and look to hire workers, technology can help make retail jobs more attractive. Instead of scanning and bagging items, workers can focus on more impactful and rewarding work,” he said.
Aside from staffing issues, it is also about what employees are doing when they are on the job. Optimizing labor means being able to give employees a list of tasks that can be adjusted as disruptions pop up during the day. From a productivity standpoint, it’s about making sure every employee is being utilized optimally during a shift.
“This has made a huge difference in terms of employee labor savings,” Menon noted, “being able to reduce employee staffing requirements as more gets done in a period of time with the same resources.”
In the end, if the question is how to streamline operations, the answer is technology, according to Klitsch. “Just think about the increased demand for mobile ordering and curbside pickup. Curbside requires more staff — not less — but you want to be able to accommodate customers. In order to support this operating model, you need to look at other ways to become more efficient,” he said. Technology provides those ways.
Retailers may invest in self-ordering kiosks, apps or alternate payment options that enable mobile checkout or let customers pay for fuel using their E-ZPass transponder.
“Technology is enabling c-stores to redirect and optimize their labor — in and out of challenging times — while creating a frictionless or even
— Rob Klitsch, UKG
contactless shopping experience for those who want it,” Klitsch said. “Staff can focus more on in-demand services like curbside, or behind-the-scenes operations like foodservice and stocking coolers, or they can spend more time interacting with customers and delivering a differentiated shopping experience.
“It doesn’t quite matter where you shift your labor to, the point is that bringing new technology into play is going to allow you to innovate in new areas and continue to optimize on all fronts,” he added. “C-stores that invest in technology are in a position to remain agile.”
A Tech-Focused Future
Looking ahead, Fisher believes autonomous checkout will be one of the key pillars of the future of retail given the many benefits it brings for retailers, employees and customers.
“It’s a way to deliver a transformed customer experience, lower operating costs, manage the labor shortage, and get people back to stores,” he said. “As people spend more time out in the world, technology like autonomous checkout can make shopping fast and enjoyable, offering some of the same benefits of e-commerce, like seamless checkout, with the added benefit of instant access to your goods.”
For retailers, this can result in the ability to lower prices and increase convenience at the same time — thus, improving margins and revitalizing physical retail to bring more people into the stores to enjoy shopping again, Fisher added.
However, this doesn’t mean we are moving to an associate-free world, according to Zebra Technologies’ Menon. At least, not yet.
“Technology is not going to replace the human being at the store. Maybe one day it will,” he said. “Think about technology in our cars — it keeps you in your lane, it tells if there are things in your blind spot, and it will automatically pump the brakes when there is an obstacle ahead. In the driving context, it’s all about making you safer. In the c-store context, technology is really about making you more productive and optimized.” CSN
