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[10 comments]

Gap Inc. attracts a better type of job applicant

June 26, 2014

When Gap Inc. announced last February that it was increasing the minimum wage paid to its entry-level workers, it was widely believed the move would boost the chain's image among job seekers. That is, in fact, what the company believes has happened as job applications across all its banners are up from the same point last year.

The number of people applying for jobs has increased at least 10 percent, the effect being most apparent at its Gap and Old Navy chains. In the case of Old Navy, higher wages has reversed the trend from declining applications to a double-digit boost.

The larger pool of applicants is giving Gap Inc.'s divisions the ability to attract stronger candidates as well, according to the retailer. "The customer is more educated, so the store associate has to be more knowledgeable," Lynn Albright, vice president for Old Navy stores, told Bloomberg News. Seventy percent of Gap Inc. customers research products before they come to its stores, Ms. Albright said.

[Image: Gap Inc. jobs]

More knowledgeable and engaged staff is a critical element of chairman and CEO Glenn Murphy's strategic plan for the company as a whole.

Earlier in the year, Mr. Murphy wrote in an open letter that Gap Inc. had benefitted from its investments in e-commerce technology. "Looking ahead, it will be the combination of innovation and people that will further set us apart," he added.

FINANCIALS:     [NYSE:GPS] [ ]

Discussion Questions:

Are you seeing other retailers, as in the case of Gap Inc., come to the conclusion that they need to attract better job applicants than in the past? If so, how should they accomplish that goal?

While we value unfettered opinion, we urge you to show respect and courtesy for people or companies about whom you comment. Keep in mind that this is a public, professional business discussion. RetailWire reserves the right to edit or refuse the publication of remarks that we deem unsuitable. We may also correct for unintended spelling and grammatical errors.

Instant Poll:

Do you see the market for retail employees becoming more or less competitive in the next several years?

Comments:

Their site looks great. While I doubt that Millennials feel a job at a Gap store is much more than a JOB, I applaud Gap Inc. reading the tea leaves and seeing how raising their own wages attracts a better group of employees.

Watch other retailers announce wage increases as a competitive advantage.

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Bob Phibbs, President/CEO, The Retail Doctor

Money talks and minimum wagers walk. The only way to attract young, fit, good looking, quick on their feet, enthusiastic employees is to pay more for labor. All retailers know this and Gap didn't just suddenly figure it out. Some retailers need good people. Other retailers just need disposable warm bodies. There are only so many good people available for hire and the labor pool is limited. Cash and benefits will get their attention.

David Livingston, Principal, DJL Research

Here's the "gap" in this thinking. We don't know what "better" means. Generally we've made huge assumptions as to the qualities that make an ideal retail salesperson—but do we truly know?

I've just gone through this in bringing on a CEO for a start-up and I am working with a system to define the profile of an ideal programmer or systems engineer. Then the challenge is to come as close to that ideal profile as possible. What I've learned is the "best" qualities that have emerged out of folklore don't necessarily work, and certainly paying the wrong person more money isn't the answer.

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Ian Percy, President, The Ian Percy Corporation

For whatever reasons they choose to do it, retailers that increase wages will get more applicants and that means a stronger pool of prospective employees. Now they need to work on keeping those employees and slowing down the revolving employment door that retail has become. I salute Gap—and today IKEA announced that it would raise wages—for taking this step.

As a side note, in the article Gap CEO Glenn Murphy says that the company had benefited from its investments in e-commerce technology. Maybe someday Gap will enter the world of omni-channel retailers.

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Max Goldberg, President, Max Goldberg & Associates

It should be a certainty that when you advertise wages higher than minimum the number of applicants will rise. Duh. That is a no-brainer. The same applicants who apply at the minimum wage are certainly going to apply when the wages are higher than minimum. Add to that number of new applicants who will only apply when wages are higher and you have at least a double digit increase. Now the job of HR is to insure the better, more qualified candidates are hired and trained.

This is something The Container Store decided to do many years ago. Hire the best candidates, pay them a living wage and train them effectively to be strong representatives of the corporate culture. You can be sure this is a paramount reason they keep their hires for many years and enjoy a very low turnover. More companies need to take a lesson from them, but few will.

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Ed Rosenbaum, CEO, The Customer Service Rainmaker, Rainmaker Solutions

My daughter worked at Gap. The store manager asked her a number of questions, then slotted her into the in-store design team, where she put together displays and store-level marketing. She loved her time there.

In an era of more sophisticated customers, retail companies will be smart to pay attention to what Gap is doing.

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Cathy Hotka, Principal, Cathy Hotka & Associates

You know, you get what you pay for. Everyone knows that, yet for some reason retailers have always been pretty laggard when it comes to realizing this axiom at store level. Hopefully, Gap is the first of many large retailers to start the hunt for talent with the thought that good people have a lot of options in terms of career paths, and we have to compete for them.

The other reason it's smart to hire/pay for better talent now is the burning platform that Amazon sits on top of—competition from online retailers. All our research shows that consumers are very frustrated with the level of skill in stores and are slowly but surely drifting to online shopping.

The imperative for retailers with physical space is pretty clear; upgrade or get run over. No time to lose, or, another way to look at it is—there's no time like the present.

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Lee Peterson, EVP Creative Services, WD Partners

Yes. The process is very direct and clear. Better money, plus better training and a better workplace. The retail leaders all know and have shown that this works.

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Kai Clarke, President, Kowa Optimed, Inc.

Retailers are certainly taking a long hard look at the in-store customer experience and this, in many cases, means hiring different sorts of workers and yes, paying higher wages.

The store is still the place where retailers will win over the consumer. That requires having the right people to represent the brand and provide the services that the customer expects.

My 2 cents says that it is high time retail starts looking at in-store positions as far more valuable than in the past. Way to go Gap!

Lee Kent, Encourages retailers to meet share and learn, YourRetailAuthority

Why is this a shocker for so many people? Better pay attracts a larger pool of workers to choose from which increases the odds of finding qualified people. More retailers will follow suit to stay competitive, for sure.

My worry in all of this is that it will exacerbate the friction between Main Street and Wall Street that already exists. Bigger payrolls will undoubtedly come under fire at the first sign of economic trouble. What then?

Hopefully boards of directors and stockholders will be able to make the leap and take the long view for the good of their companies. Wall Street is the unpredictable wild card and has in the past had no appetite for long-term growth strategies.

This additional payroll must produce increased PROFITABLE sales! These new, talented and engaged associates must increase sales by engaging with their customers more effectively and efficiently or the additional payroll will just be throwing good money after bad.

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Marge Laney, President, Alert Technologies, Inc.

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