Cutting Clerks Is Cutting Into Retail Sales

1. May 2018.








The brick-and-mortar store closures that have swept through retail in recent years have captured a lot of attention, but the purge of retail staff has actually been bigger and is often absent from the headlines, according to news from The Wall Street Journal.

Consumers waiting longer at the checkout are certainly noticing the difference.

Today, Macy’s has as many stores as it did in 2008, but it has 52,000 fewer employees. JCPenney has cut twice as many workers as it has locations. The pattern holds at almost every major retail outlet — Target, Kohl’s, Nordstrom and Walmart — whether they opened new locations or closed down shop, one way or another, they all saw their headcounts drop in recent years.

“Retailers are shooting themselves in the foot trying to save pennies by lowering labor costs, and that’s costing them dollars on the top line,” said Rogelio Oliva, a business school professor at Texas A&M University. Oliva noted that, according to his research, stores are understaffed by as much as 15 percent.

Some of the decline in employee numbers is the result of better technology, which makes workers more productive; come can be attributed to shifting personnel models that have consolidated a few part-time roles into single, full-time positions (headcounts do distinguish between part- and full-time workers). But at least part of it has been a push to save on personnel costs in an era of hyper-competition and cost-cutting.

Some stores — like Kroger’s, Macy’s and DICK’S Sporting Goods — are rethinking the trend and hiring back staff.

Over the holidays, DICK’s added more cashiers, “because if there’s one thing that drives me nuts, it’s waiting at the register,” said Chief Executive Edward Stack.

On the whole, however, retail staffing has not kept pace with economic growth, which experts now believe is exerting a high cost at the wrong time.

“Many retailers are at the tipping point of cutting too much labor,” said Craig Rowley, a senior partner in the retail division of Korn Ferry International, an executive search firm. “If you cut staff every year, pretty soon you’re at minimal staffing.”

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