Retail talent disrupted
Growing talent-related challenges for retailers
The retail landscape, like most sectors, is facing unprecedented change. Disruption is everywhere, driven by rapidly changing technologies, increasing customer expectations, complex workforce dynamics and the entry of new, nimble and digital players onto the retail scene.
- Factors that influence retailers organisations
- 5 Retail talent key trends
- How to respond to these changes?
Factors that influence retailers organisations
Deloitte has concluded that a bold new set of “rules” should be considered for retailers to attract, retain, and develop a workforce that can meet the needs of the evolving marketplace. To explore the disrupted retail talent dynamic, we examined retail businesses and we identified a number of factors influencing change for retail organisations:
- Changing customer expectations. Customers are increasingly influenced by digital rather than traditional marketing communications, and customers now have far greater product knowledge, meaning they expect increased product knowledge from employees. In 2015, 64% of in-store sales were influenced by digital compared with just 14% four years ago. Customers can shop any time and across the globe from home, so as a retailer you must make the instore experience much more compelling to drive foot traffic.
- Retail competition is increasing. The volume and variety of new players is increasing rapidly due to low barriers to entry for online compared with traditional retailers. Digital platforms such as search engines and social media have intensified competition by improving access and transparency across brands. This results into increased market volatility and fragmentation of market share.
- Retail operating models are shifting. Traditional value chains are being disrupted as vendors and customers interact directly through virtual stores, providing products ‘on demand’; removing or outsourcing the need for warehousing, inventory management, shipping and multiple other touchpoints. Companies are moving to leaner, faster and agile operating models to reduce cost, innovate and improve customer service.
- Retail talent expectations are evolving. Millennials are entering the workforce in high numbers and have changing expectations of work. They expect greater work/life balance, leadership opportunities and flexibility, and two in three millennials expect to leave their employer in the next four years.
5 Retail talent key trends
Well-established retailers seem to be hardest hit by these changes. Our recent study involving Retail Executives, Millennials, Retail Leaders and other recent literature revealed that well established retailers (founded before 1995) are being impacted by talent challenges most profoundly when compared with internet-age retailers (those founded after 1995). This research found five key trends:
- Retailers across the board are experiencing a shortage of qualified talent… but well-established retailers’ struggles are dramatically more pronounced
- Retail organizations are striving for increased agility and innovation… but well-established retailers are at a significant disadvantage
- Digital Is becoming engrained in the retail culture and operating model… and internet-age retailers are ahead of the curve
- Continuous change is driving evolution in retail skill requirement… and internet-age retailers are more adept to respond
- The competition for fresh, highly skilled talent is intensifying… and well-established retailers are falling behind.
How to respond to these changes?
Given this quantum of change, how you as a retailer respond? Our view is that talent is the key conduit that retailers must use to deliver an evolving strategy and brand promise to an increasingly diverse customer base. We recommend focusing on:
- Talent strategies: Building a talent strategy that reflects the disruptive external environment and evolving company strategy and focuses on accessing capabilities critical to future success. Understanding who drives value, and the future talent requirements must form the basis of any talent investment. Companies must leverage their employer brand to attract the talent they need based on the level of service and product differentiation in their business.
- Corporate agility: Designing the organisation to maximize agility, rapid decision making, innovation and collaboration. Building ‘on demand’ workforce models, attracting digital skills and integrating new talent models into the business model must all be at the forefront of investment choices. Deloitte’s 2016 HC Trends report found that 92% of organisations are reviewing their organisation design as they respond to the demands and opportunities provided by rapid technological innovation.
- Employee investment: focus on creating retail careers rather than jobs through providing career growth trajectories, rotational programs that increase exposure and provide critical experiences. Many organisations are now moving beyond traditional learning programs to employee-centric learning that can be delivered on-demand, mentoring, stretch assignments, new compensation models and performance management that focuses on real-time feedback and future development rather than an annual, backward looking review.
- Company culture: build a culture that connects with the emerging workforce, and engages millennials through providing flexibility and predictability; growth opportunities; diversity and inclusion; entrepreneurship and social responsibility. Consider the story you want to tell and how all the elements of your talent system reinforce this. Focus on a great employee experience to create company advocates and a leadership pipeline. An innovative, forward-thinking talent strategy could mean the difference between success and failure in today’s evolving talent landscape.