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Scott Purvis, COO, IRI Consultants3290 W Big Beaver Road #142Troy MI email@example.com
The retail and QSR Sectors are faced with continued turbulence in 2023 due to technology-driven changes, organizing on social media, forming of independent unions by younger workers, increasing willingness to strike or walk off the job, and high turnover. Employers are struggling to balance so many disruptive challenges occurring simultaneously. Add an uncertain 2023 economy and traditional labor unions getting new leadership promising to increase union organizing, and the challenges are even more intense. This article explains five common retail and Quick Serve Restaurant (QSR) challenges in 2023 and offers guidance on anticipating and responding to them within their organizations.
Every industry has experienced disruption and turmoil due to the pandemic and we are still resettling into a new normal, post-pandemic. Due to 2022 organizing successes, labor unions are preparing to take advantage of the turmoil because employees are still feeling largely disengaged and troubled. The retail and quick service restaurant (QSR) sectors are particularly vulnerable to union organizing in 2023 for reasons that include a workforce feeling like it was used during the pandemic with little regard for health and safety, younger workers who see employment as having a larger purpose than earning a paycheck, technology significantly changing consumer buying patterns, an uncertain 2023 economy, and recognition that worker driven unionizing keeps control of the process in the hands of employees. Employers must recognize the issues impacting the workforce and labor market to successfully recruit, retain, and engage workers and prevent union organizing.
The Bureau of Labor Statistics reports that the second largest increase in job openings as of the end of December 2022 was in the retail trade at 134,000 jobs. The number of job openings was 1,017,000, and new hires were 774,000, leaving a new gap of 243,000 unfilled jobs. The retail industry is in the most unsettled state it has experienced over the last year as many struggle to remain open due to a labor shortage and changing consumer buying patterns. This means the workforce is unsettled too. Due to the combination of an industry coping with various challenges that developed during the pandemic and employees inspired by Starbucks employees who are unionizing, retail workers feel empowered. Five of the major retail sector’s challenges impacting employees include the following.
Technology impacts the retail sector in several ways, though how it will unfold over the next few years remains to be seen. This creates uncertainty for employers and employees. This section discusses the tech transformation in retail and Quick Serve Restaurants (QSR) because technology increasingly influences employee engagement and retention.
The pandemic forced more people to shop online, so e-commerce accounts for a larger share of retail sales than it did in the past. In 2021, the online retail market share was 18.8 percent and grew to 19.7 percent in 2022 and is projected to grow to 20.8 percent in 2023 and to 24 percent by 2026. What does this mean for retail employees?
Researchers studied the relationship between technology, work stress, and job insecurity in retail organizations. One of the findings was that “…many technological changes cause high levels of job insecurity because employees fear that they will be unable to cope with the changing environment.” At the same time, retailers will need employees with tech skills.
Walmart is a good example. The grocery stores are primarily self-checkout, but the company also created Walmart Global Tech, which has a team of 15,000 employees: software engineers, data scientists, cybersecurity experts, and enterprise service professionals. The company is also working on using drones for the delivery of goods, groceries, and pharmacy items. There were 6,000 drone drops in 2022 at 36 markets in seven states, with 20,000 items eligible. As the drone delivery program expands, the need for delivery employees will decrease.
McKinsey anticipates retail companies moving along the tech transformation spectrum will go from less than 30 percent tech to non-tech staff to 50, 60, and eventually 70 percent tech to non-tech staff. In some situations, technology will displace employees, hindering efforts to engage the workforce.
Technology also impacts the workforce in the Quick Service Restaurants (QSR) sector, and there are many similarities between retail and QSR. For example, fast food managers of technology and customer engagement were asked about the next significant trends. They mention back-of-house technology like automated food prep and order fulfillment, but some went far beyond those innovations.
Solution: Invest in employee training and upskilling where appropriate. Employees should be well-trained in all areas, including brick-and-mortar locations, warehouses, distribution centers, corporate offices, and online sales operations. Most retail businesses now utilize sophisticated technologies that include point-of-sale and inventory platforms. Not only are well-trained employees better able to provide high-quality customer service and higher productivity, but they will also experience higher employee engagement. Employee training is also a form of recognition.
Social commerce is different from commerce. Shopify defines social commerce as “the use of social media platforms like Facebook and Instagram to market and sell products and services.” Approximately $992 million in global retail sales were on social media platforms in 2022; by 2026, social commerce retail sales are projected to reach $2.9 trillion. What does this have to do with unionization in the retail industry?
Each year, more consumers are shopping online via various social media accounts and using social media to discuss brands and their products and services, including customer service. Social media influencers impact people’s impressions of brands, which can influence the labor market. For example, social media brand followers mention rude employees with a chip on their shoulder or brands that violate their corporate social responsibility values by underpaying workers.
A good example is TikToker influencers who used the video platform to encourage other influencers and followers to blacklist Amazon. Gen-Z for Change led the “People over Prime” campaign with 70 participants and 51 million followers on TikTok. They demanded a $30 minimum wage at Amazon warehouses, no more productivity quotas, and a halt to Amazon’s anti-union efforts. Of note is that the TikTokers were also expressing concerns about Amazon’s environmental impact.
Amazon started an Amazon Influencer Program in which popular social media accounts can earn commission on their recommended products. The “People over Prime” TikTokers published videos that said things like Amazon refuses to pay workers fairly but will pay influencers. If you visit Gen Z for Change on TikTok, you will find one common thread that says you have to offer Gen Z things that benefit them now and not years from now if you want to attract and retain the younger workers.
Solution: Developing a process for digital media intelligence is crucial in today’s tech-based environment. Digital media intelligence is the collection and analysis of any digital media that includes text, audio, and video transmitted on the internet or a computer network. Digital media intelligence is the collecting and analyzing of data from online sources. Social media sentiment monitoring focuses explicitly on collecting and analyzing how people (including employees) talk about your brand on social media.
Digital Media Intelligence can deliver critical insights about the perspective of customers and employees on business practices and workforce issues.
In 2022, there were 374 worker strikes, a 39 percent increase from the previous year. When filtering the strikes for 2021-2022 for retail trade on the Cornell Strike Tracker, there were 22 labor actions in 2022 for retail trade at companies that included REI, Dollar General, Trader Joe’s, Macy’s, Union Kitchen, King Soopers-Kroger, Apple, Fred Meyer, GoPuff, Diversity Thrift, Fleishers Craft Butchery, Fullerton Auto Group, Shaw’s Supermarkets – Albertsons, and many others. Notice that all types of retailers experienced strikes and protests.
Bloomberg also tracks labor activity and says there were 125 retail industry work stoppages in 2022 out of 314 total work stoppages. It was a record-setting year, and labor activity will increase in 2023.
The things to note are:
Tracking the real union wave is challenging because the numbers don’t always capture the early stages of organizing and newer efforts like the Union of Southern Service Workers. There are other complexities to understanding union organizing in retail in 2023. For example, one of the reasons there is a wave of unionization and activism in retail and QSR is that highly educated people are getting jobs as baristas and retail clerks to pay for their education or because of economic conditions leading to layoffs in higher-paying jobs.
The retail and QSR sectors have often been a fallback sector for job hunters, and college-educated workers are becoming the leaders in unionization. They form alliances with those who did not attend college, creating a movement that embraces people across class and education lines. Author Scheiber, the researcher on workers and workplaces, summarized economic research by saying young college-educated workers have two core beliefs. “They have a sense that the economic grand bargain available to their parents — go to college, work hard, enjoy a comfortable lifestyle — has broken down. And they see unionizing as a way to resurrect it.”
Solution: Each employer should benchmark employee engagement and determine employee issues to address. This is done via pulse surveys, longer engagement surveys, leader rounding, face-to-face conversations, and in-person and virtual meetings. However, asking for feedback is only a first step. Leaders should develop strategies for change where appropriate but respond to all employee feedback and explain the reason for decisions or changes made. Failing to respond to employee feedback leads to employee disengagement.
Some of the issues all employers must manage are technology-driven changes, strikes, and employee activism on new levels. But the retail industry experienced an exceptionally high turnover rate in 2022 compared to other industries. Korn Ferry’s survey of retailers found that turnover is increasing. By November 2022, there was a 75.8 percent turnover for all hourly positions and 85 percent for part-time hourly workers. With a labor shortage still going strong, employees in lower-paying jobs know they can job hop easily.
Solution: Developing a high level of employee engagement in a positive workplace culture is the best route to reduce high turnover. Increasing employee engagement takes time and a mix of solutions. To lower turnover rates, employers need to address specific reasons employees leave, like giving employees clear career paths and training. The retail business should use data from exit interviews to determine the particular reasons employees voluntarily leave and address those. As Starbucks has discovered, raising the average barista’s pay to $17.50 an hour has not stopped union organizing.
Add development opportunities, especially for younger staff. These can take many forms, including workshops, mentorship, and educational assistance programs. Development is associated with career planning which is sorely lacking in the retail industry except for corporate employees. These opportunities signal that employees are viewed as long-term assets to the company, not just hourly workers who come and go.
Share the company’s corporate environmental and social responsibility policy and actions, and include employees in selecting and implementing initiatives. This strategy serves several purposes: attracting the best talent in a tight labor market, amplifying employee voice, increasing inclusion and belonging, and giving employees a foundation of values they can support and share with customers and on social media. Younger employees want more than a $15-an-hour wage. They want to work for companies that live and breathe responsibility to people and the environment. One of the most difficult challenges for retail and QSR companies to overcome is the image they are primarily interested in profit.
As advisory firm Brunswick notes, there is an increase in petitions filed with the NLRB for independent employee unions because employees feel like they have more control over negotiations with employers. The past year saw a significant increase in independent union organizing like the Amazon Labor Union, Trader’s Joe United, Apple Together, Working Washington, and many more. Because some of these independent unions represent a small number of employees, they do not get the attention large labor unions get and are not included in the NLRB strike counts. In addition, not all independent unions decide to file petitions with the NLRB, so they stay under the radar. But do not think they are less influential in the workplace once employees organize.
However, many independent unions are affiliated with or supported by traditional labor unions. Some employers are seeing a combination of independent union organizing and traditional labor union organizing at the same time. One of the issues for independent unions is that they need the resources that the national labor unions can provide. This equates to a high risk of some independent unions joining a major labor union in 2023 during or after organizing.
Solution: Recognize the increased likelihood of union organizing in retail and QSR establishments. Amplify employee voice to create a culture of respect and inclusion. The new labor movement has added more reasons for retail workers to organize and strike. Workers without an internal platform for expressing their voice will find many external platforms to advocate on and to use for virtual union organizing. Amplifying voice in retail and QSR requires more than adding a digital feedback channel. For example, you can create an Employee Resource Group or form a management advisory committee with worker representatives.
Communicating directly with employees is important. Personal communication is sometimes forgotten due to easy access to technology. Still, employers need to receive and respond to feedback and explain changes management makes due to employee input. It is a powerful engagement process. Track employee use of “voice” technologies, like internal social media or internal websites. Silence is not golden. You want employees regularly communicating. If they aren’t using these communication channels, it’s an alarm bell. You should find out why.
Across the board, industry experts agree that the retail and QSR sectors will experience more union organizing in 2023 and probably 2024. This only adds to the turmoil retail and QSR employers already face due to changing consumer buying patterns, technology, an uncertain economy, a pro-union NLRB and Biden administration, and labor unions fomenting dissent among employees. Employees are emboldened to take action. It is also clear that more than concentrating on pay and benefits is needed to engage employees in the current environment.
Conduct a union vulnerability assessment and proactively address weak areas. The vulnerability assessment identifies areas that could lead to a union organizing drive, strike, or walkout. Also, develop a union organizing response strategy so no time is wasted responding should employees begin the unionizing process. The company’s perspective on unionization should be shared with all employees at the time of hire and reinforced on an employee-facing website. However, should employees choose to organize, be prepared to dive deeper into explaining why a union is unnecessary.
Employees across industries are restless as Gen Z takes its place in the workforce, feeling empowered to bring change. Quite honestly, younger employees believe they are the ones who can drive change and not just talk about it. They believe they are the ones who, through activism, can get hard-working employees in the lower levels a living wage, training, career opportunities, personal time to care for family members, and a safe and just workplace. They are the new face of unionization.
Scott Purvis is a Chief Operating Officer, HR Executive, and Industrial Organizational Psychologist with a 15+ year record of driving and accelerating positive business/workforce transformations in rapid growth, restructuring, and M&A conditions.