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As Store Layoffs Mount, Retail Lags Other Sectors In Retraining Workers

May 23, 2017
Originally published on June 22, 2017 11:47 am

Harry Friedman has run a consultancy training entry-level retail workers in customer service and other basics for 35 years. But in all his years, he has not retrained retail workers for new skills.

"Nope; we do none of it," he says. "I don't know that anybody does any of it."

Many retail workers are undergoing what economists call "job displacement," meaning they are losing their jobs largely because of major technological shifts. Layoffs in traditional retail have accelerated sharply this year, with hundreds of store closings and nine U.S. chains filing for bankruptcy so far in 2017.

Most of those losing their jobs are low-skilled, entry-level workers, while retailers look instead to bolster the e-commerce sides of their businesses, hiring for higher-skilled positions such as logistics and warehousing. Whereas some industries invest to retrain their workers with new skills for new times, to date the retail industry has not successfully done that.

Friedman says that is not good news for the laid-off workers. "It's a pretty bleak picture, I'm sorry to say," he says.

Staff and training in general are not top priorities for most retailers, he says, making things tough on his business.

Friedman compares retail to other businesses displaced by technology. "It's like owning a film processing store or a travel agency; it's kind of tough," he says.

Various industries continue to struggle to keep their workforce apace with the demand for more technical know-how. Manufacturing, for example, requires higher order computing skills on the assembly line, so workers have had to train up.

Retail is increasingly diverse, what experts call "omnichannel," meaning most retailers sell through a hybrid of online and traditional stores. Hiring is most in demand for work in e-commerce: warehousing, logistics and technology.

The National Retail Federation says that to better equip people for those new jobs, it launched a training and certification program for workers.

Maureen Conway is skeptical that will work. Conway, who is executive director of the Economic Opportunities Program for the Aspen Institute, notes the industry backed a similar certification program over a decade ago.

"Unfortunately, it didn't seem that retailers valued somebody with this certificate versus somebody who didn't," she says.

There are myriad challenges to retraining in retail.

Frieda Molina, deputy director of MDRC, a social research group, says many retail workers simply don't want to stay in the industry.

"It's hard to make that case to them, given the more negative reputation of retail, and the fact that many people at that lower level don't have the resources to be able to invest time and effort and lost wages potentially, in getting additional training," she says.

Kathryn Shaw, a professor at the Stanford Graduate School of Business, says manufacturing adapted in a way that retail cannot. "These [manufacturing workers] who need to be retrained were both highly paid, on average, and pretty skilled," she says, so there was a strong economic incentive for them to retrain and retool for the more complex jobs.

Retail workers, by comparison, tend to be young and don't intend to make a career in retail because of the relatively low pay.

"They're not very skilled to begin with, and they're not very attached to the industry," she says.

Shaw says when factories closed, their workers lived in a community, which made it easier to target them for retraining. By contrast, retail workers tend to be far more dispersed, geographically, making them harder to target for such programs.

Wal-Mart realizes it has a workforce challenge. Two years ago, the retailer started an academy that trains about a quarter-million of its employees a year, while they work, in more advanced skills.

Kathleen McLaughlin, chief sustainability officer for Wal-Mart, says the training — for both in-store and online operations — has paid off in higher comparable-store sales and improved customer service marks.

"It is very economic for retailers to invest in their people at all levels," she says.

McLaughlin says Wal-Mart is trying to partner with other large retailers to develop industrywide training standards.

"Retailers do need to look at their people, and create paths for them that are exciting, and provide the skills they need to succeed, not only in the jobs of today, but as these jobs continue to evolve," she says.

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STEVE INSKEEP, HOST:

Many retail workers are going through job displacement. That euphemism means that broad changes in the economy caused your job to be eliminated. Layoffs in traditional retail have accelerated sharply this year. Store closings and bankruptcies are expected to continue as the Internet hammers stores.

Retail firms will need more labor in the future - high-skilled labor - but companies have not invested much in retraining for new times. NPR's Yuki Noguchi reports.

YUKI NOGUCHI, BYLINE: For 35 years, Harry Friedman has run a Lenexa, Kansas-based consultancy that trains entry-level retail workers in customer service and other basics. I asked him whether he also retrains laid-off retail workers for new skills.

HARRY FRIEDMAN: No, we do none of it. I don't know that anybody does any of it.

NOGUCHI: He says training, in general, is not a top priority for most retailers, making things tough on his business.

FRIEDMAN: It's like owning a film processing store or a travel agency. (Laughter). It's kind of tough.

NOGUCHI: Retail is increasingly what experts call omnichannel, meaning most retailers sell through a hybrid of online and traditional stores. Just as manufacturing jobs evolved to incorporate more computing, retails hiring needs are mostly on the e-commerce side, jobs in areas such as warehousing, logistics and technology.

The National Retail Federation says to better equip people for those new jobs, it launched a training and certification program for workers. Maureen Conway is skeptical that will work. Conway is executive director of the Economic Opportunities Program at The Aspen Institute and notes the industry backed a similar certification program over a decade ago.

MAUREEN CONWAY: Unfortunately, it didn't seem that retail employers valued somebody who had the certificate versus somebody who didn't.

NOGUCHI: The challenges to retraining in retail are myriad. Frieda Molina is deputy director of MDRC, a social research group. She says many workers simply aren't interested.

FRIEDA MOLINA: It's hard to make that case to them given the sort of more negative reputation of retail and the fact that many people at that lower level don't have the resources to be able to invest time and effort and lost wages, potentially, in getting additional training.

NOGUCHI: Kathryn Shaw, a professor at Stanford Business School, says there's a basic question of the payoff. In manufacturing, there were government programs to support retraining, and the industry wages were pretty high. The same dynamics don't exist in retail.

KATHRYN SHAW: Coal mining is very vocal. Manufacturing is vocal. Retail is a very dispersed, diffuse group, not unionized. And therefore, they're going to be less vocal.

NOGUCHI: Still, some retailers see a business need to invest in retraining. Two years ago, Walmart started an academy that trains about a quarter of a million of its employees a year, while they work in more advanced skills. Kathleen McLaughlin, chief sustainability officer for Walmart, says the training for both in-store and online operations have paid off in higher comparable store sales and improved customer service marks.

KATHLEEN MCLAUGHLIN: It is very economic for retailers to invest in their people at all levels.

NOGUCHI: McLaughlin says Walmart is trying to partner with other large retailers to develop industry-wide training standards.

MCLAUGHLIN: Retailers do need to take a look at their people and create paths for them that are exciting and provide the skills needed to succeed, not only the jobs of today but as these jobs continue to evolve.

NOGUCHI: These new workforce demands will eventually affect every retailer, she says. So everyone should have a stake in retraining. Yuki Noguchi, NPR News, Washington.

(SOUNDBITE OF D.P. KAUFMAN'S "BRAVERY") Transcript provided by NPR, Copyright NPR.