TALKING SHOP

From the rise of in-store self-service to automated click-and-collect points and the now common deployment of mobile devices in the hands of shop staff, bricks-and-mortar stores have become digitised.

This research shows 72% of store staff feel the pace of digital change in their stores is fast, with 14% suggesting it is too fast for them to keep up. Those finding it most challenging are store staff in the sports and leisure (31%), toys and gifts (27%), and home and DIY (25%) sectors.

However, others are calling for greater digital transformation. This is particularly true among those with longer retail careers. Those who have more than 10 years’ experience are most likely to say the pace of digital change needs to be quicker (8% versus a 4% average).

The drive for digitalisation

There is evidence supporting the business case for digital investment in stores.

M&S, for example, is known for adopting technology into its store environments. In May 2023, it introduced the ‘queue-busting’ option of offering payment in fitting rooms in its new full-line store in Leeds, freeing up store staff to focus on customer service. Customer choice comes first throughout tech integration, with another addition – the 164-seat cafe – offering both table service and digital ordering by smartphone to suit customers’ preferences.

Being outpaced

While M&S is in growth mode, companies such as Debenhams and Arcadia were slow to digitise their stores and combine their physical and digital assets – and they collapsed and disappeared from high streets and shopping centres in 2020. Other factors were involved, but the lack of modernisation in stores was a key reason for their move to a purely online model.

Despite their stores vanishing from high streets, both brands do still exist online and may make a return to physical retail yet – Arcadia’s brands were split between Asos and Boohoo, and Debenhams went to Boohoo, which trialled a 7,552 sq ft beauty store in Manchester’s Arndale shopping centre in December 2021.

Who’s embracing the switch?

Positively, most store staff are excited about the digital changes the industry is going through, with 71% reporting that they embrace it.

Store staff working in the health and beauty sector (24%) are most unsure about how they feel towards digital transformation. This sector has traditionally involved store staff offering significant levels of advice to customers – whether that is related to medical conditions or beauty product routines – so the idea consumers might be able to self-serve via touchscreens or learn more about products via online content could change their roles substantially.

On the subject of job security, 42% of store staff say they feel secure or very secure in their roles, with more than half (58%) of the workforce feeling less so, more than double than in 2020 (24%), suggesting there is work for senior leadership to do to empower their frontline teams.

While an overwhelming majority of store staff (81%) are not worried about digital change, there are learnings to be had from the 19% who are – 38% of whom fear new technologies, either using them or that they could take over their roles and leave them redundant, while almost a third don’t think they help them do their job better.

With the rise of and focus on artificial intelligence (AI), none more so than the attention Open AI’s ChatGPT tool has gained since November 2022 when it was released to market, staff worry that technology might replace their roles, that they may not understand it or that they may feel pressure to use it correctly.

AI and why the human touch is still important

The tech-replaces-people fear has persisted for decades and it is starting to show up in retail. BT’s announcement in May 2023 that it expects its workforce to be reduced by around 55,000 people by the end of the decade, many of whom will be replaced by technologies including AI, shows it is a valid concern.

Yet AI has its limitations and needs to be balanced with human interaction.

For instance, retailers such as Tesco and Amazon have introduced AI-powered checkout-free stores in the UK over the past few years, but these trials have produced varied results. For Amazon, the strategy to roll out its Amazon Fresh format nationwide was put on ice in September 2022 after its impact fell short of expectations. For Tesco, the latest iteration of its futuristic GetGo stores is a ‘hybrid’ variety, where customers can choose from app-based, tracked shopping that requires no checkout, a self-checkout or a manned checkout.

Through its trials, the UK’s largest supermarket chain has effectively concluded that AI-run checkouts only work, right now, if there is an option for human interaction alongside them, which shows the value of retail workers in the store environment.

The insider perspective on in-store tech

Tech is taking over tasks that, until recently, store staff had been doing and deployment can be unsettling or empowering for employees. Often the way tech is viewed can come down to how well a retailer communicates with its staff about the changes.

Broadly, store staff seem to be on board with tech being used for these purposes. A high percentage of frontline staff – 86% – say technology helps them to do their job more effectively, a statistic that remains unchanged from our 2020 survey where the same percentage of store staff reported having access to the tech needed to do their job effectively sometimes, often or all of the time.

Interestingly in 2023, the percentage of staff saying that they always have access to technology to help better their work has dropped to 12% from the 19% reported in 2020, with a higher percentage of staff choosing sometimes for this question (42% compared with 34% in 2020).

This is most prominent in the home and DIY, and music, books and stationery sectors, where 30% and 26% of respondents respectively said that they always or often have access to the tech they need to be more effective, compared with a reported average of 44%.

On the converse, charity (67%), general merchandise (53%) and toys and gifts (53%) seem to be taking the most noticeable strides in implementing technology to make store teams’ working lives easier.

It is encouraging that the significant investment retailers are putting into this area is valued by staff. The statistic comparison suggests that, in some sectors, businesses are really refining their approaches and getting better at retail tech investment, but it is also clear that in others there is still significant work to do in acquiring, implementing and training staff with the right technologies to enable them to work more effectively.

For the fourth year running, retail ranked among the worst industries for work-life balance by company review site Glassdoor at the end of 2022.

Recent investments in pay rises and wellbeing packages, experiments with investment in store space and technology, and flexible working suggest retailers recognise the need for change.

From Majestic Wine’s pay increases and relevant staff development to Ikea’s cost-of-living support package and the various experiments with four-day week models and parenthood leave, retailers are doing more, it would appear, to engage, reward and motivate their workforce.

But are these changes simply perceived as headline-drawing acts of corporate responsibility in an ongoing cost-of-living crisis or true beams of support in an industry burdened with challenges?

Speaking out

Our research shows that 47% of frontline staff think their opinion matters to leadership, but that leaves a majority who believe it doesn’t. There is clearly some work to do to ensure those at the coalface are being heard.

Retailers such as M&S and LK Bennett are working to change this, with each of these businesses’ CEOs putting in place clear avenues for staff to communicate with those leading the company and express their views about how their organisations are run. The respective initiatives, M&S’ ‘Straight to Stuart [Machin, CEO]’ and LK Bennett’s ‘Discuss with Darren [Topp, CEO]’, follow a similar model by encouraging staff to put forward their opinions and engage with wider strategy.

Machin’s scheme generated 10,000 messages in its first year (2022) and he has described the success of the initiative as “a testament to the culture and passion of our teams”.

Meanwhile, 71% think communications from head office to stores are effective. Playing into the aforementioned analysis in chapter two, this is an area of slight decline for the industry in the aftermath of the pandemic (compared with 76% in 2020) and should be prioritised by senior teams to ensure communications remain effective.

The sectors with the most work to do in this area are department stores and grocery, with 37% and 36% respectively saying communication is ineffective, while charity, fashion, and health and beauty retailers are ahead of the rest – 100%, 83% and 82% respectively say communication is effective.

One example of a retailer with a particularly happy workforce, according to WorkL, is Fat Face. In a report by Retail Trust and WorkL published in May 2022, Joanne Wilson, head of people at Fat Face, described the workplace culture as a key reason for staff contentment.

She explained that head office gives managers of different departments and individual stores the freedom to create their own culture “overarched by the wider business culture”.

Wilson said: “Empowering our teams to determine their own culture has created true accountability, which is really important to us. Every employee matters and every employee can have an impact on the culture at Fat Face.”

How supported are store staff really?

Our research highlights that 65% of frontline staff think head office either often or very often changes priorities and introduces new tasks into their daily routines. The Fat Face approach is one way to circumnavigate this management tactic.

Some 55% agree or strongly agree that they get enough advance warning to plan properly when asked to conduct new daily tasks, but there is clear room for improvement here. This is particularly evident in toys and gifts, home and DIY, and sports and leisure, the sectors where a negative response to this statement was given most frequently – 40%, 39% and 35% respectively.

The home and DIY sector, for example, has digitised more dramatically than many others in the months since the pandemic, with online fulfilment from stores now a core part of retailers’ operations, such as B&Q and Wickes, when pre-2020 that was not the case.

This new model seems to be good for business, with Kingfisher’s UK and Ireland division’s and Wickes’ like-for-like sales up by 15.3% and 22.8% respectively on a three-year basis. However, our findings serve as a warning for any business undertaking significant change that staff want more time to plan for any new tasks asked of them.

Department store staff showing signs of discord

Encouragingly, 64% of store staff feel they have a good deal of flexibility in their roles and are in control of their hours.

The sector where flexibility exists the least, according to our respondents, is department stores.

Overall, department store staff are the most likely to show disharmony compared with staff members working in other industries. As well as being most likely to highlight a lack of flexibility (44% versus an average of 35%) and inefficient communication between head office and the front line (37% versus an average of 29%), department store workers are also the most likely to report digital changes happening in their stores without them having a say on the matter (42%).

Only grocery staff (57%) feel more strongly about this latter point.

No sector of retail has been left unaffected by digital transformation, the wider economic environment and emerging consumer behaviours, but department store chains have certainly seen more disruption than most.

House of Fraser was acquired out of administration by Sports Direct – now Frasers Group – in August 2018 and is now about half the size it was at that point, although its 31 stores now in operation showed an improvement in trading last year, according to a half-year statement issued by the wider group in December 2022.

John Lewis permanently closed 16 stores during the pandemic, which represented almost a third of its estate.

Meanwhile, Debenhams and BHS no longer exist in physical store form after their rescue buyouts – so it is no wonder that staff in the department store sector feel cautious or disconnected from their respective businesses’ decision-makers.

However, recent performances by M&S and Selfridges indicate positive change is afoot. This year began with M&S – one of the UK’s largest retailers and a business that is once again in growth mode following an extensive period of digital transformation – unveiling an investment of almost £500m in stores.

The investment entails what boss Stuart Machin described as a move towards running “180 high-quality, high-productivity full-line stores while opening over 100 new food halls by April 2026”. Some 20 new M&S stores are planned for 2023/24 and they are in key city locations such as Leeds, Liverpool and Birmingham, while at the same time, poor-performing stores will be removed from its estate.

Machin says that the future of the store is in “bringing digital and physical together to create great shops that allow customers to shop the way they want to today”. He acknowledges that the company’s “historic failure” to modernise its estate means 40% of M&S stores pre-date the Second World War. And, crucially, he says that as well as making the stores fit for customers, it is crucial to modernise these working environments for staff.

At Selfridges, significant work is being undertaken in store to modernise its offering – much of it in line with a push to become more sustainable as a business. Under its ‘Project Earth’ strategy, the department store has introduced repair stations, a second-hand product resale shop and a rental service. This move to a circular business model entails engaging and developing staff in a new way of doing business as much as it involves educating consumers about greener ways to shop.