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The Curse of 4 Percent Unemployment

Furniture World Magazine



Here are five great ideas that will make it easier to hire better, more loyal employees in this very tight job market.

There is an ancient proverb that says “What we think is a curse is sometimes a blessing, and what we think is a blessing is sometimes a curse.” You really don’t have to look too far back to see that. Last decade’s recession was a cursed period for retail and manufacturing business, but the blessing was that business managers and owners had to really pay attention to every dollar spent. Efforts to streamline and “go lean” were in high gear. Many of the practices adopted during that recession are still being used to help keep businesses efficient and profitable.

Another curse of 2009-2013 was harsh unemployment. You may remember that it topped 10 percent early on, then finally dropped below eight percent in 2014. If you were unlucky enough to live in Nevada or Michigan, the high number was close to 15 percent. It’s hard to call it a blessing, but if you were a manager or business owner you could count on having a deep pool of potential employment candidates. For the most part, these were good people who did great work, but were just unlucky. If you had good people on your team, the recession made them loyal. Most people knew outside prospects were dim, and they worked like their job depended on it!

"A four day work-week gives employees the option to have one less day of childcare and commuting, or one more day to pursue experiences."

For many different reasons, the economy has turned for the better. The current unemployment rate in the US is 3.8 percent. Back in the old days when I hitched my horse at school, college economics professors taught us that four percent unemployment was considered “Full Employment” meaning that everyone who wanted a job, had one. Shave another 200 basis points off of that and you can see a recruiting crisis is looming.

Greatest Challenge For Retail

Whenever someone asks me what I think will be the greatest challenge for retail businesses over the next five years, my very fast response is “Recruiting Great People”. There are four factors that lead me to this conclusion:

  • Not anyone's dream job: Retail is the dream job of no one! If you asked every high school senior about their career choice following graduation, I believe less than one percent would say that they want to pursue a retail career. The pay may not be enough to cover their student loans.

  •  Schedules are lousy: Retail schedules are not family or work/life balance friendly. Stores are open nights and weekends because that’s when people are off work. Your prospective recruits want that time off, too!

  • Benefits aren't always the best: Sure, some of the Big Box retailers offer some good benefits, but things like healthcare and paid time off are darned expensive. However, next to national security, healthcare ranks number two as an issue on people’s minds.

  •  Shoppers can be difficult: Robert Moses is quoted as saying “I love the public; it’s just the people I can’t stand”. Retail shoppers are ready to fight over the least little slip up. If your delivery truck is 15 minutes late, or there is a pinhole tear in the product plastic wrap, many shoppers want to escalate the issue for extra discounts, new products, and sometimes your employees’ necks! And their language ain’t too pretty either.

What You Can Do

You can combat this! All you have to do is convert your company culture from being just another retail job (aka-my career before my real career) to being THE PLACE TO WORK.

The only catch is, getting and keeping good people will cost you money.

Empty chairs and revolving employees, however, will cost you more! Assume your mattress store has a staff of three RSAs, full or part time. Or, if you have a furniture store, let's assume 10 people are on your sales team. If you lose one person, the rest of the team will pick up SOME of the slack, but they will never cover all the lost sales due to unattended or under-attended shoppers. Experience shows that monthly sales losses total about $25,000 in sales in a mattress store, and $45,000 in a furniture store. Flooring and Appliance stores can suffer an even larger loss. If your net profit (EBITDA) is six percent, you are losing $1,500 to $2,700 in net profit dollars per month just from being understaffed.

Even just changing the way you view staffing and making some no-cost or low-cost changes will help reduce this loss. Here are five areas to consider.

1. Recruiting: Retail stores succeed when their sales teams look more like their customers. If you don’t believe me, check out Victoria’s Secret, The Apple Store, Jared Jewelers, and Pearle Vision. Jared’s RSAs look like they are in competition with Mr. T for most bling, and everyone at Pearle wears glasses whether they need them or not. Many of your shoppers have tattoos, piercings, and some wild haircuts and colors. When candidates come in for interviews, don’t discount their abilities based on how they look. If you are looking to add on some bilingual candidates, then be sure to advertise in non-English newspapers, radio stations, and websites.

"If your net profit (EBITDA) is six percent, you are losing $1,500 to $2,700 in net profit dollars per month just from being understaffed."

2. Consider college loans: It may not be number one on people’s lists of concerns, but large college loans are a big burden many young people carry. It is probably the biggest reason that they are living with Mom and Pop longer, and not buying home furnishings. One of the greatest benefits you can offer is college loan assistance. Just offering to pay off $1,000 in college loans after one year of employment and $2,000 a year every year after that will gain and keep great loyal people. It boils down to $80-$160 a month cost per person.

3. Address scheduling. Scheduling is where most retailers lose out. Here, flexibility is key. Consider options such as:

  • Offering a four day work-week (full or part time) to give employees one less day of childcare and commuting, or one more day to pursue "experiences".
  • Options to work alternate weekends or just one weekend day per week.
  • Late shift bonus pay.

Sure these strategies will complicate staffing, but if you don’t get on the work/life balance bandwagon, you’ll miss out on hiring the best people.

4. Healthcare. It’s hard for smaller retailers to keep competitive with retail giants when it comes to covering insurance costs. Your best bet is to look for program options, take advantage of employee funded HSA and FSA accounts, and consider cutting back on hourly or commission (taxable) income in favor of offering more generous healthcare coverage.

5. Personnel protection: You should never tolerate the harassment or bullying of employees. Either should be grounds for immediate termination. Retail associates are bullied and harassed by shoppers and customers every day. I have seen this play out as a customer and stopped it as a manager. Every shopper is important, but there should come a point where you must draw the line and let unruly and out-of-line shoppers know they are not welcome to shop at your business. Protecting the dignity of your employees will earn you much more loyalty than pay raises and Christmas bonuses. Plus, it's absolutely the right thing to do.


Enjoy the blessings of a robust economy. People have money and the confidence to spend it now. These things are cyclical, and will change at some point. Building a strong, diversified, and loyal team in good times will pay off in lean times.

About Gordon Hecht: Gordon Hecht is a Senior Manager for Serta Simmons Bedding’s Strategic Retail Group comprising over 400 locally owned and operated bedding stores across the country selling Serta Simmons branded and America’s Mattress-branded mattresses. He started his career in Home Furnishings as a delivery helper and driver, later moving to sales and management.

Gordon has been a store manager, multi-unit Manager and National Director of Sales and has been recognized for outstanding achievement with Ashley Furniture HomeStores, Drexel-Heritage, RB Furniture, Reliable Stores, and Sofa Express. See all of Gordon's articles on the furninfo.com website at www.furninfo.com/Authors/List. Questions and comments can be directed to Gordon Hecht at ghecht@serta.com.

About Gordon Hecht: Gordon Hecht is a business growth and development consultant to the retail home furnishings industry. You can reach him at Gordon.hecht@aol.com