Retail Workers Are Trying to Escape the ‘Merry-Go-Round’

February 17, 2019 – Orlando, Florida, United States – A Payless ShoeSource store is seen in Orlando, Florida on February 17, 2019, the first day of the firm’s liquidation sale after confirming on February 15, 2019 that it will close its 2,100 stores in the U.S. and Puerto Rico. The company filed bankruptcy in 2017 and closed 673 stores. (Photo by Paul Hennessy/NurPhoto via Getty Images)

Sue Reich worked for 27 years at Shopko, a Midwest retailer that sold clothing, shoes, housewares, and electronics, until, one day, her employer didn’t exist anymore. Shopko, which employed 14,000 people across 26 states, filed for bankruptcy last year and closed all its stores last summer after it couldn’t find a buyer.

The same story is happening across the country as the retail apocalypse continues. In 2019, retailers including Payless ShoeSource, Dress Barn, and Barney’s closed 9,200 stores; Payless alone cut 16,000 jobs. Already this year, chains including Macy’s, Pier 1, and Fairway have announced closures and layoffs. Employment in retail in January was down 8 percent from the same time last year, according to new Bureau of Labor Statistics (BLS) data released Friday morning, at the same time, jobs in transportation and warehousing, industries critical for e-commerce, were up 28 percent. Department stores have shed 241,000 employees in the last five years, according to BLS data, and clothing stores cut 67,000 jobs.

But there is no national outcry as workers like Reich lose their jobs, no movement to protect the people being thrust out of work, calling for an end to store closures, or to find funding to ensure these workers end up in better jobs. Sure, there was a @SaveBarneys campaign, but it traded on nostalgia, featuring vintage TV spots and magazine ads, rather than on concern for workers, and it failed. The high-end retailer, which filed for bankruptcy last year, was sold to Authentic Brands Group, which started closing and liquidating stores in November.

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Compare this with the commotions that have surrounded smaller job losses in industries such as manufacturing or mining. When Carrier, an air-conditioning company, said it was moving 1,400 jobs to Mexico, then-candidate Donald J. Trump seized on the issue in his stump speech and eventually struck a deal to keep some of the jobs in Indiana. “We hear politicians talk about the loss of factories and manufacturing and mining, but there has not been the same level of outcry around the loss of retail jobs,” says Nicole Mason, the president of the Institute for Women’s Policy Research, a think tank based in Washington, D.C..

“I would conjecture that one of the reasons we’re not talking about it is that it impacts predominantly women.” Nearly 80 percent of cashiers were women in 2018, according to IWPR data. As online shopping grows, and employment in warehouses grows, retail jobs for women are shrinking, while men’s jobs are growing — an IWPR analysis found that the retail industry lost 54,300 jobs between 2016 and 2017; over that time, women lost 160,300 jobs while men gained 106,000.

In the past, when factories shut down or jobs moved overseas, the government stepped in to protect workers who lost their jobs. The federal Trade Adjustment Assistance (TAA) program, first authorized in 1962 and expanded in 1974, 2002, and 2009, assists workers whose jobs have been displaced because of trade; it offers training subsidies and a weekly income for people who have run out of unemployment benefits.

Workers over 50 who find new jobs at a lower wage than they’d been making can also receive money from a wage insurance program to supplement their new income. But those funds aren’t available to retail workers. “Because they weren’t trade-affected, they can’t get that monthly stipend,” says Liz Skenandore, a career services specialist at Great Lakes Training and Development in Wisconsin, who deals with a steady flow of laid-off retail workers. “It would be ideal, if there was a ‘you were affected due to the internet’ category.”

Similarly, in the 1980s, after a series of factory shutdowns in the Rust Belt, a group of Ohio legislators pushed for the WARN Act, which required employers to give advance notice of mass layoffs and plant closings and to pay back wages if they did not provide that warning. Around the same time, under pressure from unions, Congress created Manufacturing Extension Partnership programs, which use federal, state, and private dollars to retrain displaced manufacturing workers for jobs in high-demand fields.

Another thing Sue Reich didn’t receive when she was laid off from Shopko: severance pay. She spent decades working for the company, and says she was told that if she worked through the store’s liquidation, she’d receive severance. But Shopko never paid Reich or workers like her anything beyond a small sum for vacation days they hadn’t taken. “It’s been challenging every month,” says Reich, who scrambled to find another job and now works part-time at a credit union, though it has not turned into full-time work as she had hoped.

Her husband, a saw operator at a factory, is working overtime so the family can pay its bills. In contrast, the thousands of workers who have lost jobs at places such as General Motors and Ford over the past year have received months of severance pay based on the amount of time they had worked at the companies. Sun Capital, a private equity firm that owned Shopko, did not respond to TIME’s request for comment.

It’s no accident that there are government policies protecting workers in industries such as manufacturing. These are industries that have long been unionized, and in the 1980s and 1990s, as the United States negotiated trade deals such as NAFTA, unions worked with elected officials from districts that were in danger of losing factories, says Kate Bronfenbrenner, a professor at Cornell University’s School of Industrial and Labor Relations. They made sure that any trade deal included programs to help workers who would be displaced. To sell the trade deal, Congress had to agree to fund worker retraining and subsidy programs. Lawrence Katz, a Harvard economist who served in the Labor Department under President Clinton, says the administration tried to introduce a universal dislocated worker training program in the 1990s that would have helped retrain any displaced worker, but couldn’t get widespread support.

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But retail is disappearing not because of a trade deal, but because the way consumers buy things is changing. Tech companies like Amazon didn’t have to negotiate with Congress to be able to sell things online; they could just start doing it. That’s meant that there is no constituency that must make sure retail workers end up on their feet in order to get a bill passed. “When people lose their jobs in the service sector and retail sector, those are women and people of color, and there is no Congressional constituent for them like the ones that were negotiating the trade bill,” Bronfenbrenner says.

Factory shutdowns are visually jarring; hulking. Abandoned factories dot landscapes across the United States; in Detroit, entrepreneurs made a business out of giving tours of the ruin. Retail’s meltdown is also visually jarring, but is hidden inside America’s malls. TIME recently walked through a mall in Green Bay, Wisconsin that had lost a Shopko and Payless store, and there were twice as many vacant stores as operating ones. The lights were off in large sections of the mall that were blocked off with crime tape, and the only foot traffic was women in workout clothes walking the long, wide corridors for exercise in the cold winter months.

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As more sudden retail layoffs happen, Jack Raisner, a professor of law at St. John’s University, says he sees an opening for states or the federal government to pass more protections for retail workers. He recently helped New Jersey pass a bill that updates the WARN Act to apply to more retail workers, which he hopes will inspire similar bills in other states. The New Jersey bill, which was signed into law last month, was a response to mass layoffs that left hundreds of Toys “R” US workers who had worked through the holidays with the promise of severance without any such pay, he says. It says that any company that employees at least 50 people in the state is required to give 90 days notice of a mass layoff; without such notice, it must pay all laid-off workers at least four weeks of back pay.

If they don’t give 90 days notice, employers must also pay terminated employees one week’s pay for every year they’ve worked there. “Putting people out on the street after years of service without anything is a horror and a tax on the public,” says Raisner. He also worked with Senators Sherrod Brown of Ohio and Chuck Schumer of New York to craft the Fair Warning Act of 2019, which would update the WARN Act nationally. The bill was introduced in November. “The anxiety over these layoffs is unabated despite what everyone says about this economy,” Raisner says. “I think there’s a real grassroots movement interested in something happening about this.”

Though business owners in New Jersey say that the state’s new law will deter companies from coming to the state, broader protections for retail workers in the form of retraining or re-education programs could be good for the larger economy. As technology changes the nature of work, people who get more education or increase their skills are best positioned to do the types of jobs that computers and robots can’t yet do. This in turn grows the nation’s productivity rate, and its economy. Now, technological change is happening faster than ever before; McKinsey estimates that by 2030, growing automation will mean that as many as 375 million workers (14 percent of the global workforce) will need to switch occupational categories.

In retail, where the average hourly wage for people who aren’t managers is just $16.86, laid-off workers don’t have the resources to stop working for six months or two years to get a certification or degree in another industry. “For the most part, these workers are living paycheck to paycheck, and the idea of being without a job is scary,” says Anthony Snyder, the chief executive officer of the Fox Valley Workforce Development Board in Northeast Wisconsin, which helps laid-off workers find new jobs. That’s why many retail workers are on what Snyder calls the “retail merry-go-round,” where their employer dissolves or closes down, they find another retail-related job, and then get laid off from it, too.

Amanda Padgett has been on this merry-go-round for years. Padgett, a 36-year-old mother of two, was laid off from Shopko last year. Before that, she worked at an ice cream store and a call center for a national retail chain that laid off all its employees. With each layoff, she has wanted to go back to school and get a degree in something that would get her out of retail—maybe learning to become a medical coder or a radiology tech. But as long as she needs to pay the rent, put food on the table and take care of her kids, she needs to bring in a paycheck, so she finds herself in another low-wage job, making minimum wage, until it, too ends. When she heard the rumblings last year that Shopko was closing, Padgett says, “all I could think was, ‘here we go again.’”

The United States has systematically disinvested in resources that would help low-wage workers without a big financial cushion go back to school. Federal investments in workforce training have fallen 40 percent over the past 15 years, when adjusted for inflation, according to the National Skills Coalition, a group that advocates for worker training. This means many federally funded job centers only offer perfunctory classes such as building a resume or using a computer, rather than the type of longer-term interventions that typically help people switch careers, says Amanda Bergson-Shilcock, a senior fellow at the National Skills Coalition.

“You have a lot of workforce boards trying to figure out what interventions they can provide that are meaningful to the lives of workers and responsive to the needs of the industry,” says Bergson-Shilcock. “But at the same time, they’re doing it with less and less money from the federal level.”

There are some scattershot examples of states trying to help retail workers specifically. In Wisconsin, a grant for laid-off retail workers will pay for tuition for retraining in high-demand fields as well as help with mortgage payments and cover books, transportation, and child-care. It’s helped people like Ginger Gillis, 42, who did data entry for Shopko for 14 years until the company closed. Gillis always wanted to go back to school but never could make the financials work; she’s now getting an associate’s degree in Architectural Technology from Northeast Wisconsin Technical College. But Gillis has an advantage: her husband has a good job, which means she doesn’t have to worry about having an income while she’s going back to school. Many retail workers “don’t have a nest egg, so they run into the next retail job before we can even talk to them,” says Snyder, of the Fox Valley Workforce Development Board. Only 27 of the 400 dislocated retail workers in his district have taken advantage of the grant, and even then, he’s run out of money to give out. “There is not enough money to serve everyone we’d like to serve with the greatest investment,” he says.

Other countries have much more robust safety nets for laid-off workers, whether in retail or other fields. In Canada, workers whose jobs are eliminated in mass layoffs are guaranteed termination pay if their employer doesn’t give at least eight weeks’ notice, and severance pay if they have worked for an employer for five or more years. In European countries like Sweden, laid-off workers receive financial support, a job counselor, and money for retraining, provided they are members of a union, which about 70 percent of Sweden’s workers are.

In the United States, those types of strong supports are almost only available to workers in a union, which is a shrinking share of the workforce (just 10.3 percent of American workers were members of a union in 2019.) But those unionized workers are reaping the benefits. Some partnerships between labor and management have started training low-wage workers for new positions before they even lose their jobs. In the Building Skills Partnership in California, a local union struck a deal with dozens of businesses, agreeing that the businesses could take a small amount out of workers’ paychecks to fund retraining efforts. UNITE-HERE, a union that represents service workers in Las Vegas, bargained with casinos such as MGM Resorts International to require that they alert the union to new technology being used and guarantee job training for all displaced workers.

The question now is whether the government will step in to protect retail workers as it did manufacturing workers, even though retail is not unionized. Economists largely agree that retail is about to go through what manufacturing did, says Anthony Carnevale, the director of Georgetown’s Center on Education and the Workforce. Manufacturing was once one-third of the workforce; now it’s eight percent. “There’s no question,” he says, “that retail is up next.”

By Alana Semuels February 7, 2020

Source: Retail Workers Are Trying to Escape the ‘Merry-Go-Round’

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Five Reasons Why Legacy Retail Won’t Survive This Decade

Does legacy retail have a future in the age of digital?

It’s that time of year. No, I’m not thinking of Veganuary (I can’t even pronounce the word), no, I’m thinking of that time of year when most retailers declare their Christmas trading figures…..kind of. Because as we know, reporting periods are massaged and margin and returns are never disclosed.

However, although we may have to reach for a rather large pinch of salt, the annual list of Christmas winners and losers still gives a good indication of the relative state of the market.

A quick look at the Retail Week Golden Quarter league table for Christmas 2019 trading is at once both revealing, and depressingly predictable.

The Liverpool of the retail industry? Boohoo, who else? Closely followed by ASOS. Meanwhile, a scan further down the table shows the Norwich City’s of the retail world have one thing in common: a) they are older more established businesses who b) have their heritage grounded firmly in bricks and mortar retailing.

As with everything, there are some notable exceptions such as Fortnum & Mason, Primark and Pets at Home, however these are businesses who have a very clear sense of their purpose and brand identity and largely succeed because of that.

The remainder sit firmly within a retail category which is increasingly being polarized, differentiating itself by being average, uninspiring and mediocre. To what am I referring? Legacy retail.

Earlier this month, I was in New York for the annual retail festival otherwise known as NRF. And NRF 2020 will go down as something of a watershed conference for retail. Why? Because, the world is changing, consumer attitudes are changing and the conference reflected this shift towards a more human-centric, planet first, sustainable agenda.

Perhaps for the first time, the nature of the purpose of retail and of retail businesses is being openly questioned and challenged. To earn a profit for their shareholders or to do good for the planet. Or both? How retail businesses will be measured in the future as we move through this decade will be very different from today.


And in the twenties, this will have profound implications for legacy retail which will continue its, inexorable and predictable slide into oblivion. Here are five reasons why.

1.Ways Of Working

Silo’ed, vertical, hierarchical, top-down, command and control – sounds familiar? Virtually every retail business would say that they are customer focused, however the way they are organised is totally the opposite.

Instead of putting an emphasis on working as one business, powerful fiefdoms emerge, competing for resources in ways which ultimately may benefit them but not the holistic enterprise.

It’s typical of legacy retail, it’s damaging and it’s ultimately destructive. Never mind inappropriate touching or egotistical leaders and owners, this behavior is endemic. Legacy retail will always be legacy retail while this structure exists.

2.Metrics

While many traditional metrics, which have served retail for decades, are still entirely appropriate, there are others which have no place in new retail. They no longer reflect the changing landscape of retail and the new ways in which success and the path to growth should be measured.

Legacy retail still clings to a sales first business model where everything revolves around the Monday morning sales meeting. Let’s be honest, many still have difficulty in sales attribution in an online world. Listen to a newer start-up retailer and they simply refer to sales, they don’t differentiate between online and physical because it’s all one entity.

For those still measuring sales per square foot, see you later.

3.Digital Skills

It’s all very well having clever, digital natives in your marketing, merchandising, IT and commercial departments but if the very top of the business isn’t on the same wavelength, you’re wasting your time.

Sadly, the board of most legacy retailers is anything but digitally savvy. This is important for two very good reasons. Investment decisions abound and there will always be a list longer than the budget allows.

But sometimes, instinct rather than hurdle rate, needs to take precedence. This is where a digitally enabled board can make the difference between success and failure.

4.Social

Spoiler alert: we’re still only scraping the surface of the potential for social engagement and social selling in retail. Legacy retail doesn’t really do social. It should, it really should. According to Maybe* the average social user spends two hours twenty two minutes each day scrolling through their social media feed.

Which is where they would see all that wonderful engagement from legacy retail. Except they don’t. Because for legacy retail, the priority is on measuring footfall, sales per employee and other meaningless metrics.

Ever asked yourself, how is my customer feeling? Give it a try, it just might surprise you.

5.Perfect Storm

Perhaps I’m being a little harsh on legacy retail? After all, aren’t they caught in a perfect storm, the like of which has never before been experienced? What were those reasons for poor performance again? Let’s see if I can remember them, in no particular order:

  1. Rising costs
  2. The weather
  3. Online
  4. Brexit
  5. Low consumer confidence

But you don’t hear new retail bleating about external factors. That’s because they have a clear sense of purpose, a laser focus on their brand and what it stands for and above all they know and engage with their customers.


Thankfully, there will always be those who come along to take the place of legacy retailers – on the high street and on our smartphones. And there will always be glorious exceptions to the rule where a sense of brand, authenticity, artisan, inspiration and excitement abound within their DNA.

But sadly, for many, the new rules of retail coupled with the new consumer, and an inability to reinvent, will mean only one thing. But as has always been the case, retail is an abundantly resilient industry and what we will witness this decade will be the rejuvenation of retail.

And for that reason alone, we have cause for optimism.

Follow me on Twitter. Check out my website.

For this, my 100th post for Forbes, I asked my Twitter audience what subject they most wanted me to write about. Legacy retail emerged an overwhelming favorite

I am a retail analyst, writer, and keynote speaker on retail challenges and trends with a focus on consumer behavior, customer experience, and technology disruption. Prior to founding Retail Reflections, during my 20-year retail career, I held senior positions at Kingfisher and Superdrug and have worked with many of the UK’s leading retailers. I’ve been named a top retail influencer by several publications and my observations on the High Street and many aspects of retail regularly appear in the press.

Source: Five Reasons Why Legacy Retail Won’t Survive This Decade

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Store Wars: The Rise Of Floorwalkers

Christmas gift returns and exchanges

A long time ago in a galaxy that seems very far away retailers used to provide something that has gotten lost over the century-long history of modern retailing.

Call it service, call it customer care, call it knowledgeable sales help, even call it guest services if you must, but whatever you call it, it all falls under one heading: people on the selling floor to help customers buy things.

From the days of the first general stores and the local merchant who stocked pretty much whatever you needed, the most basic part of retailing has always been about someone behind the counter who could help.

In the rush to dumb down modern retailing, that concept got lost in the spreadsheets, replaced by ever decreasing numbers of salespeople, self-checkout lines and minimum-wage workers whose main function was to stock shelves, not help customers.

With the online onslaught and the need to compete, that process is being reversed—not that it’s by any means a universal turnaround for retailing in general. Far too many physical stores are void of any human life forms there to assist. But some retailers are starting to get it.

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• Say what you want about the Story concept at Macy’s—and I still have my doubts they are ever going to make this work—but one of the pleasant surprises one finds when shopping these ever-changing pop-up shops is that there are living, breathing salespeople there to help you. They are for the most part cheerful, enthusiastic and knowledgeable about the products for sale in the area. It’s a stark contrast with the rest of the store.

• Showfields, the experiential retailer in downtown Manhattan that features small shops leased to mostly online brands, has a person in each of these areas ready to tell you all about what’s for sale. They’ve even tested a reality shopping experience where salespeople play-act roles revolving around the products being sold. It could go horribly wrong if the salespeople-cum-actors lay it on too thick but it works nicely in the best traditions of a Disney-Broadway mash-up.

• Whenever anybody pines for the good old days of department stores, they usually end up referencing Nordstrom as the only present-day player in the space that still adheres to the concept of professional salesperson. Even with some of its recent struggles, Nordstrom remains probably the most successful department store in the country and it’s largely due to the quality of their people. They are the poster child for customer service in today’s legacy retailing world.

There are many other examples but let’s not forget the reverse: the poster child for getting customer service wrong was the late, little-lamented Circuit City. During one of its iterations, the consumer electronics big-box chain systematically got rid of all of its best, most knowledgeable salespeople in the pursuit of lower costs. The move was a disaster as evidenced by the fact that the company went out of business a few short years later.

Contrast that with Best Buy, which has gone the opposite route, emphasizing customer service through its Geek Squad and other initiatives that thrive on salespeople helping customers through the often-frightening world of buying a big expensive electronics purchase. This strategy has made Best Buy the envy of most comparable physical retailers that are trying to come up with anti-Amazon strategies.

This Rise of the Floorwalker movement is catching on across many parts of retailing, though some stores remain oblivious. Those that get it right are likely to have long runs. Those that don’t probably won’t have any sequels in the Store Wars.

The business of retailing is my specialty…and boy is it special. Plenty of good, bad and ugly to go around and my job, as it has been for most of my career as a business journalist, is to try to sort it all out. I do so as a regular contributor to Forbes.com, as well as The Robin Report, Progressive Business Media and other media, plus my own blog, stupidbusiness.com. My regular commentaries have elicited both praise and scorn and I welcome them both equally. I expect to be doing this for the duration.

Source: Store Wars: The Rise Of Floorwalkers

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