Attracting and Retaining Staff in the Convenience Industry – Keys to Success

The retail industry is a large and very important contributor to the Australian economy. Over the last decade, the Australian retail industry has experienced a number of significant changes, evolving to become one of the country’s major economic forces. In 2010, Australian retail sales reached $214 billion, an increase of 1.9% from 2009. Further, the retail trade sector is the highest-employing industry within the Australian economy, employing almost 1.2 million people and accounting for around 10.7 percent of the total Australian workforce. Retail is a dynamic industry, with constant changes to consumer preferences and the competitive landscape. Difficult economic conditions following the global financial crisis (GFC) have placed further strain on Australian retailers, with consumer confidence and discretionary spending decreasing as a result. The challenge for retailers therefore remains a focus on differentiation as a means of achieving long-term competitive advantage in an increasingly globalised landscape. Within retail this advantage often comes from front-line employees who interact with consumers on a daily basis. Despite this significant contribution to the Australian economy, retail workers are more likely to be unemployed or underemployed than any other industry. On average, employees in the retail trade have shorter job tenure than in the workforce as a whole, in 2008, 43 percent of employees in retail had been with their current employer/business for less than two years, compared with 34 percent across all industries. Retail employees are also more likely than unemployed workers from any other industry to have voluntarily left their last job.
In the Australian Centre for Retail Studies (ACRS) Convenience 2020 report released in 2011, it was noted by thought leaders that convenience retailing has one of the highest staff turnover rates of all retail industries, representing a huge labour cost. Due to its fractured nature and the extensive number of franchise stores it is difficult to obtain an accurate staff turnover figure for this sector. Nonetheless retention strategies were discussed as increasingly important, particularly in the short-term. Several convenience thought leaders also discussed the long-term requirement of the industry to develop convenience retailing careers in an effort to address many of the ‘people’ issues that have lingered over the past decade.
Best Practice: Quik-Trip USA

“I enjoyed working at Quik-Trip. It is a great place to move up into management positions. Quik-Trip is like a big family”.
Quik-Trip employee

Based in the United States, Quik-Trip has for the 10th year running earned a spot on Fortune Magazine’s ‘100 Best Companies to Work For’ list. Quik-Trip employs about 11,615 people and in 2010, the company had revenue of $8.8 billion, up from $7.3 billion in 2009.
Quik-Trip’s main purpose is to give its employees a chance to grow and succeed, and that is the driving force behind their winning strategy. Fortune’s website lists the annual average pay for salaried Quik-Trip store managers at $69,383 and the average annual pay for hourly relief assistants at $44,300. Quik-Trip is also among 19 companies on Fortune’s list that have never had a layoff. In addition, the company offers a fully paid sabbatical. Fortune notes that Quik-Trip added 198 jobs in 2011, giving it 3 percent job growth. This year the company has 45 stores under construction in 10 states.

“Great company to work for, amazing pay and benefits, good upward movement.”
Quik-Trip employee

Chet Cadieux, CEO of Quik-Trip, explains his view on employees in the Quik-Trip business strategy “Our store employees are our marketing plan.” Quik-Trip employees conduct almost two million transactions every day representing two million opportunities for them to get it right or wrong. If they get it wrong, the negative impressions that they create with customers would quickly overwhelm any advertising that the company does. The benefits of such programs are manifested not just in employees’ heightened skills and motivation, but also in the increased retention of experienced employees. Retaining experienced employees helps the organization respond quickly to marketplace changes, since these valuable staff members have the experience to know what is and is not working. Increased retention also reduces the high recruiting and training costs associated with rapid workforce turnover. Full time employee turnover at Quik-Trip is 13 percent, compared to 59 percent in the United States convenience industry’s top quartile and 109 percent in the industry overall. Quick-Trip employees also engage in a process of regular improvement. For every store position, Quick-Trip organises facilitated groups where employees regularly get together and discuss problems and
“Quik-Trip is a fast-paced hard-working environment. Most customers do not know how much work and effort goes into making QuikTrip what it is. It starts with the training and goes through to the management. A “family” culture best describes it all.”
Quik-Trip employee

improvement opportunities. The convenience store chain also invests in ‘relief employees’, i.e. people who do not report to a specific store but are able to fill in for workers who get sick, take a vacation, or have an emergency.
A key success factor for retaining staff is offering employees opportunities to advance their careers or to enhance their skills. If convenience stores do not offer attractive career development opportunities, they risk losing those skilled employees, thus returning the business to the costly and disruptive cycle of recruiting and training. For this reason, convenience store chains should aim to determine the extent to which they can offer attractive career development paths. They also need to establish appropriate performance criteria and evaluation processes for managing career development.

Another example of a convenience retailer reducing employee turnover is Thorntons, a convenience-chain retailer located in the US. Thornton’s encourages employee loyalty and commitment by offering regular rewards, cash bonuses, exotic vacation packages, and significant advancement opportunities. Thornton’s believes in being open and honest with its team members and setting clear, direct goals. As part of its core values, management reinforces respect for each other and the mantra that every team member counts. Everyone has a voice in the company and the result is that team members are eager to step up and provide ideas to ensure exceptional service to customers. Thornton’s has reduced turnover from a rate of 157 percent to 80 percent for front counter employees, and for management positions the turnover rate is at 15 percent, down from 70 percent in 2006. The convenience store chain also provides growth and development programs, allowing their employees to obtain new skills so as to ensure staff are not stagnant in their jobs. As such, many of the head office staff are promoted from front line positions.
Employee engagement considerations

• Have we explored enhancing compensation in order to attract and retain better-qualified staff?
• How do we motivate and train staff members to increase productivity and lower shrinkage?
• Do we offer career opportunities that will allow us to retain higher numbers of skilled employees?
• Can we link employee compensation to store performance?
• Can we provide store managers with information and technological tools to measure and understand what drives performance at their stores?
• How far are we willing to go in empowering employees to make decisions at the local level without negatively affecting the policies and financial needs of the overall organization?
• How do we identify and share what is working and what is not across stores?

Authored by Erika Pacini

Sources:
Australian Centre for Retail Studies, Convenience 2020 Report 2011
Australian Centre for Retail Studies, Retail Thought Leadership Report – War For Talent 2011.
http://www.indeed.com/cmp/Quiktrip/reviews
http://www.tulsaworld.com/business/article.aspx?subjectid=46&articleid=20120120_46_E1_QuikTr407580
http://www.csdecisions.com/2011/08/16/saluting-the-thorntons-team-2/
http://www.grantthornton.com/staticfiles/GTCom/CIP/Retail/Grant%20Thornton%20LLP_Convenience%20Store%20White%20Paper.pdf

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