Photo: Five Guys
Is an on-demand workforce heading to retail’s selling floors?
Retailers have used a wide variety of on-demand delivery services to support online delivery, but an article in The Washington Post, “Now hiring for one day: Retailers are embracing the gig economy,” implies the practice of using on-demand employment is much more widespread.
Five Guys, McDonald’s and Papa John’s Pizza were establishments mentioned in the article. The downside of using temps as fill-in employees was noted. A manager at a Five Guys said, “On the whole, it’s way better if you can hire someone who’s always there when you need them.”
But with U.S. unemployment hitting a 17-year low, rising health care costs and the flexibility appealing to employees, on-demand work is promising to become more common.
For workers, the negatives of working on an on-call or temp basis include concerns about the lack of steady employment and health insurance benefits and fewer work-place protections. But many have little choice as they face a marketplace characterized by stagnant wages, income inequality and a lack of job security fed by the Great Recession.
On the plus side, temp workers may gain more flexibility in their work-life balance and some appreciate tackling new tasks on a regular basis versus getting “stuck” in the same everyday routine. That’s leading to predictions such as one from the Intuit “2020 Report” that contingent workers would exceed 40 percent of the workforce by 2020.
For employers, temp hires can mitigate staffing problems caused by low unemployment rates. A number of online services, such as Snag Work, Wonolo and AllWork, make gig hiring less expensive and more efficient than traditional temp-hiring agencies. The services vet temps through interviews and background checks. Employers are asked to rate the performance of each employee after each work session, providing an incentive for the temp to perform at a high level.
Using temps also takes a permanent employee off the books and eliminates the need to cover their increasing insurance expenses.
“By contracting directly with a business or through an agency, these contract workers increase business efficiency, agility and flexibility,” Intuit’s report stated. “They also cost less and turn employment expenses into variable costs.”
Discussion Questions
DISCUSSION QUESTIONS: Should retailers embrace the flexibility and the cost savings of an on-demand workforce? How will the trend affect the quality of store operations and customer service? How do you see the ratio of full-time, part-time and temp associates playing out in the future?
Poll
BrainTrust
Chris Buecker
Founder & Chairman, International TCG Retail Summit
Joanna Rutter
Marketing, Dor
Filling in gaps with some on-demand temps could be helpful, but it’s no replacement for well-trained, permanent employees. As unemployment levels hit rock-bottom lows, it’s understandable that retailers will turn to any means available to find workers and on-demand employees could make sense for some roles, but I don’t see this changing the full-time/part-time mix dramatically.
It may help an employer to hire someone for a day or two, but will that temp be able to competently fill the shoes of a regular full-time — or even part-time — employee? Will customers tolerate the slower service that lack of experience causes? On-demand might seem like a good idea on paper, but retailers should consider how inexperienced workers will impact more than the bottom line.
I see the cons outweighing the pros with this service. Sure, you can fill employee slots with on-demand employees, and if the company providing them is good at what they do there’s a fair chance they will deliver some excellent employees. And there are cost savings. But the cons? 1.) The people are not familiar with your operation so how well can they do their job? 2.) When the customer asks a question, rather than hearing that annoying classic line we are accustomed to from the new hire, “Sorry I don’t know. Today is my first day.” We’ll now hear, “Sorry, I don’t really work here.” How is that going to be for the customer experience?
I find it frustrating that retailers who are always looking to chop at store level don’t explore other ways to find dollars. They refuse to give employees enough hours, so the employees wind up quitting, they don’t want to pay for health insurance, and too many of today’s retailers don’t want to provide a decent wage. So now here is another short-term solution that will not improve store sales and indeed not the customer experience. How about we look to let some executives go, reduce some of the extremely high executive pay and cut down on the bonuses? Hmm … guess what, you’ll probably have more than enough money to hire talented associates and train them. Do that, and you WILL increase sales!
We recently discussed the negative aspects of not providing employees with fixed work schedules (on-call). Now we are talking about on-demand, again. On-demand employment will work only if the potential employee can provide his/her availability, and if retailers are willing to accept that these employees will not be well-trained, by definition. Not a great idea, but this may be what happens when unemployment is low …
Balance is the key. Retailers need a core of employees who are stable. Those employees are there to deeply understand the brand promise, the processes, offer deep customer care and provide a solid knowledge base of the product or offering. Then it is reasonable to have access to freelancers and temporary staff. These help fill in the cracks, and help with heavy load times and projects.
Having been a consultant for a few years, in B2B I experienced 90-95 percent core employees with 5-10 percent freelance/temp. However, I think this could be as high as a 70:30 split during peak times of holiday shopping season for most brands.
Extreme on-demand labor supply may happen at the margins but I don’t see it becoming a mainstream solution. Having trained, trusted staff who know what they are doing and how to treat customers is critical for so many businesses. A completely transitory and ever-changing workforce can’t deliver on these needs. In any case, I can’t see too many employees wanting to work in this way, so the supply of labor for this way of working is likely to be restricted.
Another great idea from the bean counters — you know the people that always damage retail.
So sensible in so many ways except for the increased burden/cost of training, the marginalization of retail careers, the lack of loyalty to places of employment and the almost guaranteed degradation of customer experience.
There may be a silver lining in this trend for people who want to work but have significant restrictions on when and where they can. One of the reasons for the low unemployment rate is that U.S. labor participation rates overall are also at historic lows. Some portion of that idle labor pool is comprised of people who would like to work but need significant flexibility to call their own schedules. Maybe this will give them that opportunity.
From the employer’s perspective, this model has worked for agricultural and construction jobs for years. Day laborers are common, competent and relatively effective. So there is a place for this model. But I still think it is sub-optimal for retailers versus having a pool of trained full and part-time workers to meet all their scheduling needs.
This trend certainly flies in the face of many of our recent conversations around retailers finally stepping up to better train and retain their in-store associates to deliver on a better customer experience. I would warn retailers against relying too heavily on this model for customer-facing employees and perhaps use these types of services for more back office functions like inventory or re-stocking.
When “anyone will do for the day” is embraced it will be more for saving money. And with virtually no training, if you’re bringing anyone’s bad habits into your store (and just for a day, when they can most destroy your brand) — count me out.
An on-demand workforce is very tricky. Yes, it is cheaper and it represents a cheaper model, but what about the customer experience we are always talking about? This is true in particular for products that need to be explained; electronics or DIY, for instance. No, a retailer who wants to excite the customer with excellent service should not follow this route.
While it is often seen as bad news for employees, more and more people are looking at working in the gig economy and filling their time with several jobs at a variety of companies. It has been in use in the supply chain with warehouse employees and certainly delivery drivers and others.
In some countries, retail already uses part-time workers very efficiently, though these tend to be employed by the company without fixed contracted hours. This is undoubtedly the most efficient way to run a retail business as it provides the flexibility to bring in staff required based on the level of business at any particular time. Fixed hour contracts can make it difficult for a retailer to run as efficiently.
What needs to happen is to work out ways of making this practice effective for the employees as well as the employers. In many cases it does and a lot of Uber drivers would argue they do not want fixed contracts. However, it also fails to work for a large number of employees who are not given the option. There are commercial gains to be had so it just needs to be worked out to make this equitable on both sides.
Leases and store footprints are shrinking, so it makes sense that retail labor timelines would shrink too. On-demand labor can work well when executed with the right tools like Allwork (mentioned in the WaPo article above) and leadership willing to reinvent training methods and take risks.
Just being open to new training methods is too simplistic an answer, especially when a retailer is only paying for someone to work for them for one day. I do not understand how someone could bring this into McDonald’s, which is one of the most highly regarded franchise processes in the world, and call it a success. It’s not taking risks, it’s making a mockery of the training.
Joanna, please do not be discouraged by the number of “red thumbs” on your comments today. Remember that those red thumbs do not mean that you are wrong — only that a majority of the members of our community are working with a different paradigm. And that’s what we all do, apply our own paradigms to the discussions posed here. Can’t call that a bad thing either, because it is quite literally the only way we humans are capable of behaving. So keep slinging your own thoughts. We benefit by hearing from all quarters.
Service levels in many stores are bad enough already and changing out staff on a daily basis can only make it worse. This could also become a headache for LP departments, as the model seems ripe for exploitation.
This sounds like a Band-Aid solution for the problem of a scarcity of good workers. If you are decisive about your strategy and commit to making investments in either superior talent or increased automation, you shouldn’t get distracted by Band-Aids.
This definitely could work in theory — particularly in CPG, fast-fashion and a few other verticals. Theoretically, a private organization could recruit and develop the talent, give them process and let them loose in those retail environments. I can’t see the feasibility at this stage in luxury or anywhere with an average transaction over $250.
It could be semantics and the “parlance of our times,” but I thought retail has always had workers “on demand.” All part-timers (essential to the success of any store) are as you need them. Not busy? Send ’em home. Too busy? Call ’em up. So I’m struggling to see the difference.
It’s always difficult to see how temps or “on-demand workers” can offer major benefits over a regular workforce. For one, how do you get someone up to speed with the job, including all of the in-store systems, for a day or two? At a time when in-store experience has never been more important, retailers could run the risk of providing something below par simply by not having properly trained and competent staff. It’s not the fault of the temp staff, but it’s impossible for someone to come into a new role and not make mistakes or need to ask questions. The only thing that might make it easier is if McDonald’s used a pool of temps with McDonald’s training — but then why not just hire and train employees? I think if you’re in a tight spot you might be grateful for some on-demand workers, but on the whole it doesn’t sound like a good thing for retailers, customers or the temp.
I understand that staffing is a big challenge for retailers, however, I don’t feel that temporary on-demand employees are the answer to this problem. The quality of customer experience is already a concern for some brand and infusing temporary employees will likely have a negative impact on service. It is not realistic to expect on-demand employees to operate at the same level of performance as experienced sales associates and it could result in disappointed customers and lost sales. As we move into a guided selling, real-time retail environment, training becomes critical in the sales process and on-demand employees do not work in that model. Non-customer facing positions like stocking, put-away and BOPIS tasks would be suited to on-demand but for a majority of retail tasks the model is risky.
A better approach, in my opinion, would be to better train and reward your current team to improve retention and the quality of customer service.
Presumably the retailers who want to employ the “flexibility and the cost savings” are not the same ones who read the steady parade of articles in RW about the problems surrounding erratic scheduling and the benefits of investing in workers (or if they do they scoff at them). I expect those retailers whose entire goal seems to be to shift the costs of running a business onto society will make abundant use of the wonders that the “gig economy” has to offer.
I wrote a blog post last week about robots and how they are popular because the goal of many managers has been to eliminate humanity — ignoring that committed, quality front-line employees are the key to being unique. It’s far more interesting to managers to believe in the myth that robots, and now “on demand” workforce, can get rid of those headaches of dealing with pesky employees. Here’s that post: “Are Robots A Way to Avoid Critical Business Questions?”
It’s incredible to me that some in retail have given up — decided they offer so little value to customers that a temp (what “on-demand” really means) is just as good as a committed, informed, quality long-term employee.
I’m also reminded of a quote I just saw from Tom Peters new book: “Excellent customer experiences depend entirely on excellent employee experiences!”
It’s hard to imagine that “on demand” at retail creates anything remotely like an “excellent employee experience.” Retailers need to hire well and treat people with respect — they will be surprised at how they thrive.
This makes me think of similar situations, like temporary office workers, whereas those contract employees are often not well regarded in their temporary assignments by the permanent staff. Not necessarily a big deal. For those peak times in retail, I can see hiring temporary staff, as many already do. With all the external and internal factors mentioned, I can see this trend growing.
Warm bodies does not = Customer Service, I’m afraid. However, as Boomers age and want to at least partly back out of the workforce, there may be a new part-time resource where the same worker wants to consistently work a small number of hours each and every week at the same store while building the knowledge needed to be good at it.
When I first read this article, I choked on my coffee more than once. Look, if the temp is there to do the necessary jobs, such as helping move fixtures, help in warehousing, etc., maybe this is possible. I know we’re speaking of nice people coming from a reputable temp agency. But going head to head with my customers with little to no experience on the job? Can’t happen. I’ll tell you why; current employees will start to feel less important and less respected by management. (I’ve worked here six years, and someone with no experience ….”) Then in agitation, they start letting the temps do more and more with customers. Danger. Plus, I wouldn’t feel comfortable having a temp for five days, ending up working for a competitor next week. Who knows what stories and strategies they could disclose. Perfect storm.
Frankly, I have a hard time with temps in retail. First, one of the he most precious commodities a store can possess is great customer relationships, which are built primarily through professional interactions of staff. There is a place for temp staff in stores, which I would place in areas as warehousing, relaying fixtures on the floor and helping in store display, etc. But there are two real issues I would be concerned with: First is with my current staff attitudes, as in, “I have been here six years building relationships and selling, and they think a non-trained person can come in and do the same?” Secondly, I would be very concerned with any non-trained help working with customers in this competitive environment. If any of our retail clients called us to ask if we thought they could use temps, I would answer with; “Walk very carefully. Remember, your brand is built through all you do and largely by your staff.”
It is obvious that customers will be served better by regular, well-trained employees. However, if a retailer utilizes on-demand labor when it is in the best interest of the individual worker, then it is a big positive. People who want and/or need additional hours of work will benefit. But if retailers use this to substitute for regular employees as a cost-saving measure, it is wrong.
The larger societal question is that if this segment of labor continues to grow, then how will we ensure these people receive basic health and other benefits normally associated with regular employment? If we are to embrace the gig economy fully, we must also embrace social safety nets including universal health care, IMHO.