Retailers worldwide are fighting for the biggest share of in-store and internet spend, which is projected to reach $22.492 trillion in 2015. But the ability of retailers to take advantage of growth opportunities depends on how well they’re reinventing HR to keep up with workforce trends.
Data from retailers surveyed as part of the SAP-supported Oxford Economics “Workforce 2020” study shows a direct correlation between above-average profit margin and revenue growth and strategic workforce development.
According to this report, high-performing retailers are better prepared than those with below-average growth to meet the demands of what has to be the most flexible, fast-changing, globalized workforce ever. Successful retailers not only understand major trends like millennials, an aging workforce, and the rise of contingent and part-time workers, but are significantly more likely than underperforming companies to say that human resource (HR) issues are driving strategy at the board level. This impacts every retailer’s ability to recruit employees with both base-level and advanced skills.
Sixty-one percent of executives at high-revenue-growth companies say workforce issues are already driving strategy at the board level. That number is slightly lower for underperformers—56 percent—but falls to just 21 percent in three years. What’s more, high-revenue-growth companies are significantly more likely to say workforce development is a key differentiator for their firm (46 percent vs. 39 of percent underperformers).
Bridging the Skills Gap
The digital economy is transforming the retail industry, requiring companies to adopt new business models staffed by employees with new skills. This survey found high performing retailers are ahead of the curve when it comes to employee development. Sixty percent of retail companies with above-average revenue growth say that the changing nature of employment requires an increased investment in training (vs. 50 percent of underperformers). In addition, high-profit-margin-growth companies are significantly more likely to say they have well-defined processes and tools for developing talent (47 percent vs. 36 percent of underperformers). Even more telling, 25 percent of companies with below-average profit margin growth say problems with talent and skills affect business performance (vs. 18 percent of high performers).
Leadership for the Future
Based on this study, all retailers are struggling to develop future leaders. High-revenue-growth companies are significantly more likely to use quantitative metrics and benchmarking as part of their workforce development strategies (almost 80 percent vs. 64 percent of underperformers). However, regardless of performance level, about the same percentage of retailers say problems with leadership are affecting their expansion plans for growth markets (36 percent of below-average-profit-margin-growth companies vs. 30 percent of high performers).
Worldwide retail sales across all channels will reach over $28 trillion by 2018. To capture the biggest market share, every retailer will need to up their HR game to better prepare for the future workforce.
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