For a sector that has traditionally had a highly transient workforce, retail has undergone something of a transformation during the recession. The sector skills council Skillsmart Retail says that annual labour turnover among larger retailers may now be as low as 20%, compared with the normal figure of 40%, as employees decide to “sit out the economic downturn”.
In a report on skills priorities for the sector, published in February, the council highlights why retailing has offered relatively secure employment. Perhaps contrary to popular opinion, total job losses accounted for only 1% of the sector’s workforce last year, and 60,000 new jobs are planned in the grocery sub-sector alone over the next three years.
Debenhams’ HR director Nikki Zamblera confirms the fall in labour turnover has been much more striking than in previous recessions, but says this can create problems as well as benefits. “The drop in labour turnover is not always a good thing because maybe people you need to move on are not going anywhere.”
For Paul UK, the French-owned bakery with 22 outlets in London, increased stability has helped maintain sales growth during the recession. HR director Esther O’Halloran says: “What we have found is that from the customer’s perception, we have better trained staff who are more knowledgeable and more confident.”
One Paul initiative has been to create a new role of ‘expert’ in a particular skill. “We give staff a skill they can take back into the shop to train people in, things like sandwich production,” explains O’Halloran, who adds that much more time is now spent on coaching staff, too.
For Liz Bell, HR director at DIY chain B&Q, the recession has meant less emphasis on growth, and more on how they deliver the best service and experience for customers in the stores, through their staff. This has partly been done by encouraging staff to complete recognised qualifications.
“We have been building bespoke training programmes with City and Guilds to enable our staff to better serve their customers,” she says. Last year, more than 17,000 B&Q employees either enrolled on or completed a work-related qualification.
As well as higher retention levels, there has been a huge increase in the number of job applicants. At Debenhams, this rose by 47% in the three months to February 2010, compared with the same period last year. “The challenge has been coping with the volume,” says Zamblera.
Martin Collinson, HR director and company secretary at Poundstretcher, says: “Recruitment is always a challenge in terms of getting the right people to run our stores. If you had to pick a crucial role within our organisation, it’s the store manager – they’re the people who have a direct impact on sales. To some extent, we have benefited in certain locations from the demise of Woolworths.”
Poundstretcher demonstrates that retailing has not necessarily been as safe a haven for HR as it has been for other parts of the retail workforce. Its HR team has downsized from 18 to two following several years of losses. “Every element of cost you could imagine has been looked at and reduced wherever possible,” says Collinson.
He adds that legal advice on HR issues has been outsourced, but with limited success. “The system still involves a significant direct administrative workload for area managers, and we feel that distracts them from their focus of driving sales.” As a result, HR staffing is now being increased to six.
Travis Perkins, the builders’ merchanting and DIY group, is one of several retailers to have centralised its HR function ahead of the recession. HR director Carol Kavanagh says: “The test for us as an HR organisation was whether our model was robust enough to survive. We are really pleased about how it has shaped up and how commercially focused the HR team was over the past 18 months.”
Debenhams restructured its HR function five years ago, halving the headcount to around 100. “We moved away from the old model of having an HR manager standing next to the store manager,” says Zamblera. “It enables you to have more control over your business.” By capturing data centrally rather than receiving anecdotal evidence from each store, she feels much more abreast of HR trends and issues.
Refinements have continued, and last year, to cut costs, the company’s internal HR service centre was relocated from London and Harrow to Taunton. This fits in with the picture painted by the Skillsmart Retail report: “Strict cost management, tighter control of cash and more efficient use of administrative processes have helped make many retailers leaner and better able to deal with the tough trading climate.”
Stationery giant Staples also opted for a more centralised HR function, although this was as a result of restructuring due to a takeover in 2008, rather than the recession, according to HR director Ewan McCulloch. He says: “We now provide day-to-day advice over the phone; previously, we had consultants in the field.”
Like Zamblera, McCulloch feels he gets a much clearer picture of where HR is most needed. “I can ensure the quantity and quality of the advice being given and analyse the nature of the calls so we can see where we need to be providing interventions. It allows us to be a bit more scientific.”
Retail has long been viewed as the career choice of last resort due to low pay. But Debenhams’ HR director Nikki Zamblera believes this is now changing, partly thanks to the success stories of people who have come from a wide mix of backgrounds.
“It used to be the case that if you didn’t do well at school, you could get a job at Woolies. But if you look at some of the people who are seen as great leaders, retailing is seen as a place that can be a really great career,” she says.
Debenhams has received 2,000 applications for the 25 graduate trainee places available this year without advertising beyond its own website and graduate career websites.
The illustrious career of Sir Stuart Rose, the Marks & Spencer chairman who launched his retail career straight from school, demonstrates that graduate recruitment is by no means the only way of attracting potential talent.
This month, Tesco launches a fast-track management training scheme for school leavers. After completing an NVQ level 3 and a Duke of Edinburgh gold award in the first two years, they will be enrolled onto the wider Tesco trainee management scheme.
Retail director David Potts argues that mainstream education is not for everyone. “We want to show there is another way for young people to progress into well-paid jobs with prospects.”
His point is reinforced by budget retailer 99p Stores, which has emerged as one of the biggest success stories of the recession, more than doubling in size last year to 132 outlets. HR manager Ram Dutt says nearly all of its managers started at the bottom of the company’s career ladder.
“Nine of them have become operational managers and one has become operational controller,” Dutt says. “These are the same people who were originally counter staff or working on the shop floor dealing with deliveries.”
Centralisation has reduced the size of McCulloch’s HR team from 16 to 13 over the past 18 months, but he says the savings have been re-invested elsewhere in the function. He admits a ratio of one HR person to every 346 employees appears “lean”, but adds: “It is appropriate to our business – it’s about quality, not armies of HR people doing the job that the business maybe should be doing itself.”
Centralisation has inevitably reduced openings for generalist HR professionals. Zamblera says now that more careers start in HR service centres, career development often requires more sideways moves to gain experience. “I think it’s about changing the mindset,” she says. “We’re always looking to see if somebody needs a different set of skills.”
Despite the cutbacks in staff, retail is still widely seen as an ideal grounding for new entrants to the profession, because it is such a fast-changing environment. That dynamism shows no sign of abating as the spread of online retailing gathers pace.
In January, Shop Direct Group announced up to 1,500 job losses as it adjusts to customers increasingly shopping online rather than going through its call centres. The Skillsmart Retail report says that by 2014, 37 million consumers are expected to be buying online, up from 27 million in 2008.
Kavanagh argues it is the speed at which retail HR initiatives and interventions come to fruition that make the job so exciting. McCulloch, who previously worked in financial services, believes the commercial acumen gained from working in retail makes it a highly attractive recruiting ground for other sectors. He says: “I think there’s something that’s very dynamic in retail HR that maybe one does not get in other sectors.”