C-store Retailers Turn to Technology & Incentives to Conquer Labor Challenges
A focus on training and development can also slow the pace of turnover.
NATIONAL REPORT — Ever since the COVID-19 pandemic hit in March 2020, labor has been an issue across all industries, and the convenience store industry is no exception. Whether it's attracting new workers, fighting turnover or figuring out how to keep the stores open and running with fewer employees, these challenges are expected to continue in 2023.
"We began to see a decline in applications in March of 2020," recalled Alex Olympidis, president of operations at Valparaiso, Ind.-based Family Express Corp., noting that the 81-store chain is still feeling the effects today. "Family Express is experiencing an increase in turnover this year in the mid-70 percent, compared to 50 percent pre-COVID."
Although labor issues started to become prevalent at the beginning of the pandemic, things seemed to get worse the following year as the problem hit manufacturers, suppliers and distributors as well — all having a direct impact on the c-store industry.
"The first year of the pandemic was not so bad, but then a year later, at the beginning of the reopening, it just started to unravel," said Jonathan Polonsky, chairman and CEO of Plaid Pantry Inc., based in Beaverton, Ore., and operating 106 convenience stores. "It was exacerbated by the supply chain because our suppliers didn't have the labor either. In some cases, they would drop off a delivery and not help our employees, and then our people were unhappy."
At Pilot Co., the Knoxville, Tenn.-based operator of more than 800 travel centers, labor shortages were seen in 2020 due to illnesses, quarantines and closures. However, the retailer then began to see the effects of the labor shortage manifest in supply chain issues and product shortages, said Jamie Landis, vice president of team member experience at Pilot.
"We learned a lot through this experience to inform how we're handling labor shortage now," he told Convenience Store News. "Overall, we've been able to leverage those learnings, lean into our people-first culture, promote our industry-leading benefits and continue to adapt to make sure we're taking care of our team to equip them to serve our guests."
Many other c-store industry players are on the same page, offering attractive benefits and salaries to try to bring in new workers and retain the ones they have. They are also turning to technology to enable their stores to run with less staff if necessary.
Making Do With Less
When it comes to finding workarounds, one of the top solutions is technology — whether it's robotics in the kitchen, self-checkout, or automated inventory and ordering.
"We are definitely lower than we want to be, and historically, as far as staffing levels," said Polonsky, who noted that computer assisted ordering has been very helpful. "We made an investment with a POS [point-of-sale] a couple of years ago and with PDI Technologies back office, which has the ability for your inventory to be perpetual. It takes a lot of work on the back end, but the advantage is the system will order your replenishment orders for you."
The first year of the pandemic, Plaid Pantry took different sections of the store and rolled out computer-assisted ordering. Today, the technology covers 80 percent of the store. While it still requires managers to check orders and monitor the system, it's a huge time-saver, according to Polonsky.
Pilot is also leveraging technology and logistics to gain insight into best practices across all its travel centers so that the company can maximize supporting its employees and customers, Landis said. One solution has been the introduction of self-checkout stations at its locations.
Attracting New Employees
When the labor challenges hit, many c-store retailers began looking for ways to attract new workers, while competing with all the other industries also dealing with staff shortages. With so many job openings these days, applicants can be more selective. Retailers must act quickly, especially when an applicant seems like a perfect fit for their business model, advised Zach Matook, director of marketing at Sprockets, the Folly Beach, S.C.- based provider of an artificial intelligence (AI) powered hiring platform.
"We tell people to see if a person's application matches the profile of their top-performing employees, but make sure you get back to them as soon as possible because they are applying to multiple jobs a day and the other c-store or retailer down the street could beat you to it," he cautioned.
Family Express takes this route at its stores, making sure its application gives the information needed to know whether an applicant is likely a fit. The chain's "custom industrial assessment" during the application process actually increases the drop-off rate of applicants to help the retailer "get the right applicant, not simply a warm body," Olympidis said.
The company has also found success hiring "in anticipation of attrition," meaning Family Express often has more people than needed at any given time. Also, because the chain has highly condensed stores in the geography it operates and a consistent operational system across them, the retailer can swap out employees when one store might be lower staffed.
Plaid Pantry, meanwhile, has made a larger investment in Indeed.com and social media advertising than it has in the past. And Pilot implemented recruitment marketing and advertising technology and services to "strategically place digital job ads to drive applications in tough-to-staff markets," said Landis. Pilot is using several platforms to make the process more mobile friendly, such as text messaging recruiting, AI recruiting and applicant tracking.
In addition to attracting new employees at a steady pace, c-store retailers are working to keep their current staff happy to avoid turnover. Methods range from pay raises and bonuses, to training and development opportunities.
"We decided to double-down our focus on retaining our quality workforce, rather than on recruitment [at the beginning of the pandemic]," Family Express' Olympidis said. "Even at that point, our wages were higher than our competitors without offering hazard pay. In June of 2021, we felt compelled to offer a new starting wage of $15 an hour — not because of any staffing shortage, but because we felt the effort of our frontline workers was heroic and deserving of a wage increase."
Upon increasing the wage to $15, the company saw a spike in applications for new workers and since then, the daily application total for new employees has remained consistent.
At Plaid Pantry, the company shows appreciation for its employees in some way every quarter. The goal is to slow turnover and reward employees, so they know how much they are appreciated by the company, said Polonsky.
Additionally, the retailer adjusted the time for compensation reviews to reward those who are doing well. Compensation reviews used to be at 30 days and 90 days, but the chief executive has given permission to managers to offer a raise sooner to individuals who show promise — even if it's within the first few days of employment.
Another best practice to retain workers is to focus on employee training and development. This is something today's workforce is looking for, along with a company that promotes from within and shows proof of that, noted Chloe Rosenthal, vice president at Millman Search Group, a recruiting firm based in Baltimore.
"Knowing they can take classes to better themselves and put that on their resume is something employees desire," she said. "Companies that say they promote from within and actually do it also have a huge selling point in retail."