The food industry, like most other sectors of the US economy, has been working hard to overcome hurdles in hiring and retention to keep their operations properly staffed.
According to the Food Retailing Industry Speaks 2022 report from Arlington, Va.-based FMI – The Food Industry Association, in 2021 the turnover rate for food retail employees was 48%. For grocery stores’ supplier partners, it was 29%.
That was better than in 2020, when the supermarket turnover rate hit 58%. But it’s still well above pre-pandemic numbers. And turnover rates for part-time employees sits at a whopping 67%.
That said, turnover is not a novel phenomenon to the grocery industry — even in more “normal” times.
“Our industry has always faced high turnover rates,” said Mark Baum, FMI’s chief collaboration officer and senior vice president, industry relations. “Even back in 2014, we saw a turnover rate of 41% for food retail employees.”
The difference this time around, Baum said, is that the labor shortages are not just at the store level—they’re pervasive throughout the supply chain.
Further, store-level employees have been on the front lines of COVID for at least two and a half years, as have those working in distribution centers, manufacturing facilities, and truck drivers.
“It will take significant industry collaboration to develop creative solutions to the labor shortages we are facing,” Baum said.
The impact on instore
Grocery retailers are facing up to 20% worker shortages in their stores, said Stephen Midgley, vice president of marketing for Toronto-based Invafresh.
Coupled with those severe shortages and high turnover are new hires’ lack of work experience, he added. And COVID sick days continue to cause resource challenges, and moral can be low due to staff being overworked.
Production, Midgley said, is one area that suffers the most in grocery fresh departments from labor-related problems.
“Variety and freshness of instore production are impacted by the fact that there is no labor to produce a full assortment at the desired times,” he said. “Reduced labor has led to problems with stores producing to plan causing out-of-stock issues, product fresh product or provide full services to customers.”
Some retailers, he added, are being forced to close their full-service meat and seafood counters permanently or operate them on reduced hours.
“The bottom line is experienced staff are hard to replace and it creates a serious knowledge gap that can impact all aspects of in-store operations.”
Adding to the challenges, the grocery stores of today require workers with different skill sets, Baum said.
Some of the new jobs in grocery stores that previous generations of retailers probably wouldn’t recognize include data scientist, chief diversity officer and vice president of digital/ecommerce/omnichannel.
The grocery industry has a long history of promoting from within, Baum said. Many current executives started out as clerks.
While that will always be a point of pride, retailers also have to think of new ways of bringing in the right talent to fill the jobs of today and tomorrow.
“The food industry must start looking outside our industry for people who can bring new and different experiences and skill sets to our businesses,” Baum said.
All along the supply chain
The effect of labor problems permeates a retailer’s entire operation. According to the FMI Speaks report, 80% of food retail and supplier respondents said their inability to attract and retain quality employees is having a negative impact on their businesses.
“We continue to see issues related to labor throughout the supply chain,” Baum said. “For example, there’s a particular issue with trucking and a shortage of drivers.”
According to the American Trucking Association, driver shortages totaled 80,000 in 2021. That’s more than four times as many shortages as in 2012.
Labor shortages, coupled with high fuel costs and transportation and packaging challenges, are all contributing to higher grocery prices, Baum said.
“We must acknowledge that these increases are not something that simply happened overnight or that are entirely pandemic-related.”
That said, food retailers are doing what they can to lessen the impact on consumers. And grocery consumers have proved resilient, despite this perfect storm of problems. According to FMI, 86% are reasonably confident they can manage their household budgets accordingly, particularly when it comes to grocery shopping.
Grocery retailers are working hard to come up with ways to attract new talent and keep it.
The most common approach, not surprisingly, is to offer higher compensation, either through higher wages or bonuses, Baum said.
But money isn’t everything. Grocers and their supplier partners are also creating additional incentives, like improved benefits, training and skills development, flex time and employee wellness programs.
Training and skill development is a particularly important consideration throughout the industry, reflected by the fact that food retailers are investing $500 per employee and suppliers $1,700 per employee for training.
Almost all retailers (92%) and suppliers (85%) have in-house training and development programs, and a majority (63% of retailers, 70% of suppliers) also have developed programs in conjunction with third-party vendors.
It’s hard to overestimate technology’s impact on retail grocery, and labor-related issues are no exception.
“Technology is the great enabler,” as Baum put it. “Food retailers and suppliers are harnessing technology to create more efficiency and better understand customer needs.
Since 2019, most food retailers have been piloting innovative technologies to improve customer experience (73%) and efficiency (80%), along with ecommerce (70%), according to FMI.
When it comes to labor, food retailers and manufacturers are utilizing technology to augment or supplement several job functions, Baum said.
For example, 62% of companies are experimenting with strategies to enhance self-service or tech-enabled experiences throughout the store. That translates to more self-checkout stations and the use of robots to handle tasks like inventory, which then frees up staff to focus on customer relations and support.
Despite those and many other technological breakthroughs, the human factor will always be crucial in retail grocery.
“Technology is not replacing the roles of employees in our stores,” Baum said. “Instead, it’s supporting staff and allowing them to focus on other differentiation tactics and high-value activities such as customer satisfaction.”
Invafresh’s technology helps retailers manage their labor problems by delivering low-touch, easy-to-adopt data-driven production recommendations with a best-in-class AI/ML forecasting to solidify the demand signal, Midgley said.
“The result is less time spent on the production process overall and more time serving customers and delivering the freshest experience possible.”
For grocery retailers, Invafresh’s platform optimizes the labor that is available at any given time by making it easier for employees to be productive. They’re presented with one number to produce to, which also makes training easier for new employees.
By providing an accurate forecast with one recommendation, Midgley added, department leads can relax, knowing that the tool is easy to use and that staff will not over/under order or over/under produce items if they are not around to supervise them.
Invafresh’s Perpetual Inventory (PI) holds up overtime, limiting labor requirements in the department, and its efficient and easy to use applications ensures quick on boarding for new employees
The company’s Financial Inventory module, meanwhile, allows stores to do a full inventory in all stores in 24-48 hours. “This takes many retailers a week or more to complete today using third party services or a large number of team members,” Midgley said. “We eliminate all this labor and use technology to produce a more accurate count in less than half the time. And we have tools built into the application that allow us to produce into the next day’s demand if stores are short on labor.”
For example, a smaller store might not have meat cutters in full time or daily, so Invafresh’s platform can ask the application to produce a percentage of the next day’s demand.