Are Retailers Facing a Tech Skill Shortage?

Discussion
Nov 04, 2013

In a survey by SAP AG taken during the recent SAP Retail Forum North America in Dallas, 84 percent of retailers expressed worry about finding employees with the skills to handle an increasingly technology and data-driven business.

When asked to specify which skills are in high demand, retailers pointed to:

  • Understanding and applying business analytics and Big Data in retail (80 percent);
  • Optimizing the retail business for omni-channel commerce (72 percent);
  • Analyzing consumer buying behavior for improved operations (55 percent).

Within these functional competencies, 97 percent of the retailers surveyed are aware of the challenge of finding and training employees for new skill-sets.

Despite the challenges, 93 percent of survey respondents said hiring will not decrease over the next two to three years, according to the survey report that was e-mailed to RetailWire.

Retailers plan to approach this challenge using a mix of activities. Seventy-five percent plan to hire new people from outside the organization to fill these roles, if they can find them. More than half said they plan to use in-house educational resources or organically develop new skills through experience and training. Finally, 53 percent plan to offer external education opportunities to current employees to improve skills.

Other skills that are top-of-mind for retailers include mobile commerce management (50 percent), merchandise buying/planning (37 percent), and digital and social branding skills (37 percent).

SAP surveyed 76 retail managers from top retail brands during its forum, which was attended by retailers including Zappos, PGA Tour Superstore, Luxottica, eBay, Sports Basement and Shane Company.

Which is the best approach to the challenge retailers face in finding qualified tech applicants: hiring from outside or educating existing staff? How can recruiting for such tasks be improved?

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16 Comments on "Are Retailers Facing a Tech Skill Shortage?"

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Ken Lonyai
BrainTrust

I don’t see a one-size fits all answer to where to find qualified retail tech applicants. Some organizations may very well have the human capital within, but in retail, I’m doubtful. I don’t mean that as a slight against talented people, my point is that retail as an industry, has been dragged kicking and screaming into technology, so my guess is most brands don’t have much internal depth and breadth to pick from.

Additionally, I question how realistic these retailers are in their thinking and claims. Just three years ago, most were not really talking the talk, let alone walking the walk. So do most truly know what it takes to embrace cross platform analytics, omni-channel marketing, and the (tech enabled) consumer for tangible and effective results? I wonder.

Matt Schmitt
BrainTrust

While it’s certainly important to effectively wrangle technology in today’s retail world, it’s also important to maintain a strong base of legacy knowledge of the retail brand and its customers.

There will be some hiring of external people steeped in new tech skills, but I believe we’ll also see retailers leverage consultants and services from outside firms to help sharpen the focus and skills of internal teams. This has the potential to be a winning formula for some.

Mel Kleiman
BrainTrust
3 years 11 months ago

In most cases retailers are going to need to train employees who are already on board, if only for one reason: people with these skills are in high demand. They look at hard line retailing and ask why they would want to be there.

If you are talking about online retailers you will find a different picture.

One thing that retailers should/must do – and in fact every company that wants to hire great employees – is come up with a list of the 10 reasons why a great employee who is in demand would want to come to work for their firm and do the job they have to offer.

As I say in every presentation I do, if you don’t have a list of the 10 reasons someone should come to work for you, where are they going to get the list?

Paula Rosenblum
BrainTrust
I have a theory about the retail tech shortage (and general tech shortage in this country). That is, it’s the backlash against all the outsourcing of the ’90s and early 2000s. I didn’t make this up…someone I had lunch with suggested it to me and it rang true. It still does. Parents are involved in their kids’ lives more now than in years past. Truth is, when I was a kid, the last thing I was going to study was what my parents suggested. But inter-generational relationships seem to have improved. And what would a smart parent say in the early 2000s? I think the outsourcing boom suddenly made software engineering and programming appear undesirable. I knew people out of work for 2-3 years at its peak. So parents actively discouraged their kids from learning these professions. Who could blame them? As things turned out, outsourcing might have its place, but it’s nowhere near the scope originally envisioned, because it’s just not as economical as it seems. And now, we’re stuck. It will take a generation of interested students (10-15 years at least) to get us back into the game. So the best possible choice for retailers to go back… Read more »
David Livingston
Guest
3 years 11 months ago

I work with one company that not only hires from outside the company, they hire from outside the country. They have found that there are many extremely qualified software engineers from India who are willing to work for lower wages compared to American workers. They usually toss in a paid-for furnished apartment and benefits. Good workers, lower overhead – a win-win.

John Boccuzzi, Jr.
Guest
John Boccuzzi, Jr.
3 years 11 months ago

Part of the challenge for retailers (in particular grocers) is attracting the talent to the world of retail which has sometimes been looked at as slow moving (exclude web based retailers like Amazon, Zappos, etc.). The brightest and best want to work at Google or maybe a start-up. Retailers need to share the vision for the future with current employees and the outside world. This will 1) inspire your best employees to stay and learn new skills (provide resources internally and externally to do this) 2) attract new talent to fill in the gaps as people that are not prepared for the future move on.

Still, at the end of the day, retailers needs to instill that whatever new solutions come up – big data, small data, omni-channel, mobile commerce – it needs to be about the customer experience.

Doug Garnett
BrainTrust

I’m struck that this kind of worry is endemic within business with surveys back as far as the late 1800s reflecting this same fear.

But there’s a difference between fear and reality. My own sense is that if there’s a danger for US retailers, it’s because entry level tech jobs have been outsourced leaving no training ground for the next generation of technology savvy employees.

Bill Davis
Guest
All of the above. Retailers absolutely need to increase training of existing staff, but they should also be on the lookout for new talent that has deeper technical proficiencies. There is no single “right” answer to this question. On the hiring front, a big part of the challenge is the HR/recruiting function itself given they usually don’t have the strongest understanding of technology, both skills and trends. Companies look to hire someone with a specific skill set and if there is a shortage of candidates, rarely do they seek to find someone who can fill 80% of what’s required because they can’t judge a person’s background, so they stick to what they have been told. A big contributor to this has been the automation of recruitment that has happened over the last several years. While in some ways beneficial, it has also cost companies from hiring qualified candidates. Based on keyword matching algorithms, candidates get removed from the process if they don’t line up. The ability of the recruiter to evaluate a candidate is gradually being removed from the process. Whether that is resulting in better hires remains to be seen. IMHO, there’s a tremendous opportunity here for retailers to… Read more »
Lee Kent
BrainTrust
It actually goes much deeper than outside vs inside. While I don’t know the exact numbers right now, it is said over and over that retail spends upward of 60% of the IT budget on maintenance. Now how much of that maintenance is old legacy systems? See where I’m going with this? We are not even talking apples and oranges, at least they are both fruits. We are talking old software coding languages vs modern age. While in-house training would be a great way to go, it is also a long way to go for some of these folks. And let’s not forget that we still have that 60% or so of maintenance still needing attention. There are only so many hours in a day. So bottom line, we are talking big increases in staff until the old legacy stuff can be replaced by the new. Retailers, I know your pain! This is when you have to pick your battle and select what is the absolute most important for your brand. Start with some good, seasoned data analysts and start figuring out who your customer is and what they expect and want from you. Then lay out your strategy of… Read more »
Peter Charness
BrainTrust

The magic ingredient in software development has always been domain expertise and knowledge of what makes a specific retail business special. Whenever I’ve seen this capability in a software development team, they produce truly great products. The offshoring, and consulting groups who provide services to retailers rarely have this skill and frankly have no way to acquire it. This means that retailers will have to “grow their own” at least to fill in this critical requirement.

Gene Hoffman
Guest
Gene Hoffman
3 years 11 months ago

The traditional art of retailing has given sway to the science of retailing. There are more potential SKUs in technology projects today than there are in cereals. No wonder long-established retailers are puzzled.

What do do? I would suggest that the top dog in a retailing organization try to find study time to gain a deeper knowledge of the powerful tools of technology and how to better use them – and why. That should help reduce his/her insecurity and leave them to the best way to staff qualified the techies that will be needed.

Now let me venture and create another future question. The increased staffing of a technological segment of stores will probably be at a higher wage rates than current store employees. If so, that will stimulate the push for higher retail wages of all employees. That would likely impact on total retail cost structures. If that’s so, now add in the looming inflationary pressures being created daily by our government and calculate how these potential factors could result in a higher cost of living for consumers. And the question would then be: Who will get the credit or blame for directing such a high-ticket movie?

Jonathan Marek
Guest

It’s interesting…the question asks about “tech applicants” but the survey indicates the highest demand is really for analytics/strategy folks. These folks certainly must be grounded in math and science and they must be quantitative, but they aren’t IT people.

I also don’t think it’s that these jobs have been outsourced. Not that long ago, these functions didn’t exist at all. In early days, consultants filled in. But companies need to own these capabilities and hiring expensive consultants is not the solution.

The best answer is to find smart, aggressive, and math-y people while they are young – even straight out of school. Give them training in your business and give them room to advance.

W. Frank Dell II
BrainTrust

There is not a simple solution. One side recommends training existing employees that have an understanding of retail. On the positive side, they understand the business and can come up to speed quickly. On the negative side, they may have retail blinders on. This can limit their vision to test new ideas and they may solely rely on old industry thinking.

The other side says hire people with knowledge of the application, and they can learn retail. There is some value here, but often these employees spend hours testing and analyzing what we already know.

My recommendation is management should have the retail background and employees have the technology knowledge.

Ed Rosenbaum
BrainTrust

There are some excellent comments on this. But I wonder why, as John said, these bright tech savvy young people would want to work in retail which is not known for fast tracking young people into management positions.

Martin Mehalchin
BrainTrust

The answer is both of the above, due to both compensation and perception issues it can be tough to attract this kind of talent to the retail industry, so retailers should be pressing ahead with both external recruitment and internal training.

I’ve seen some retailers going the extra mile in this arena. Sears and Nordstrom have “labs” organizations that offer an employee experience akin to what one might find at a tech company, while Staples, Walmart and Macy’s have all opened eCommerce focused offices in San Francisco or Seattle.

gordon arnold
Guest
As a member of the retail market you know very well the importance of accurate and timely information. You are also aware of how it is important for the information to be in the proper hands in a format that is easy to access and comprehend. Consumer prospects, clients, suppliers, employees and company executives all need pertinent information to perform and/or respond to the company with positive results. Very few key executives take the time to itemize the information that is needed for the membership components just listed. It would be a good idea to create a list of what your personal customers’ needs include. Your customers are at least the entire list above. Testing your list against costs of goods sold, sales results and employee inquires is a way to stay relevant and in a driving position. Expecting your executive colleagues to have control of this without investigation and/or a list of your own is very much an indicator of how the company’s strategic controls are on autopilot in the present stormy economic condition. Once the test proven list is in hand, you can ask your Information Technology (IT) department to demonstrate a cost effective compliance while at the… Read more »
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