Commonwealth of Australia 2013

ISBN 978-1-921916-85-4 [online].

© Commonwealth of Australia 2013 This work is copyright. Apart from any use as permitted under the Copyright Act 1968, no part may be reproduced by any process without prior written permission from the Commonwealth. Requests and inquiries concerning reproduction and rights should be addressed to the Department of Industry, Innovation, Science, Research and Tertiary Education, GPO Box 9839, Canberra ACT 2601. Disclaimer: The material contained in this paper has been developed by the Australian Workforce and Productivity Agency. The views and recommendations do not necessarily reflect the views of the Australian Government, or indicate its commitment to a particular course of action. The Australian Government and the Australian Workforce and Productivity Agency do not guarantee or accept any legal liability or responsibility for the accuracy, completeness, or usefulness of any information disclosed. The Australia Government recommends that users exercise their own skill and care with respect to their use of this paper and that users carefully evaluate the accuracy, completeness and relevance of the material in the paper for their purposes and where necessary obtain any appropriate professional advice relevant to their particular circumstances. The paper can be accessed at www.awpa.gov.au. The issues paper

The Australian Workforce and Productivity Agency (AWPA) and Service Skills Australia are preparing a study of skills and workforce development issues within the retail industry with a view to identifying and addressing issues for the industry as a whole, for enterprises and for individuals. The key objectives of this study are to:

▶ examine factors which are impacting on industry workforce needs over the coming 5–10 years, including changing demographics, opportunities arising from the Asian century, economic change, technology, and human capital

▶ analyse sources of skill supply and demand into the future

▶ identify specific issues in relation to skill supply and demand and skills formation particularly in relation to the high proportion of unskilled workers, low engagement with VET and higher education, the need for improvement in school-based programs and workforce development practices for example in job design, recruitment and retention.

This paper is designed to elicit industry feedback and suggestions. It is structured as follows:

Part one presents a picture of the retail industry from the data.

Part two provides an overview of drivers of change in the retail industry, noting key trends and implications for the workforce.

Part three explores how workforce development challenges for the industry might be addressed.

Part four contains information on consultations and how to make a submission to this issues paper.

Contents

Executive summary

The retail industry employs more than 10 per cent of the entire Australian workforce and is the second- largest employing industry in Australia. Sales assistants, who make up close to 40 per cent of the retail workforce, are the largest occupational group in Australia.1 The industry is large, diverse and complex.

A number of characteristics set the retail workforce apart from other industries. It has one of the youngest age profiles, with almost three-quarters of workers aged under 45 years and more than a third aged 24 years or younger.2 Fifty-six per cent of the workforce is female and 48 per cent are employed part-time.3 Forty-one per cent of the retail workforce is employed in large enterprises (those that employ 200 workers or more), while 38 per cent are employed in small-sized enterprises (those that employ less than 20 workers). 4 Apart from retail-specific occupations, the industry also employs a number of non-industry specific occupations in areas such as finance and accounting, marketing and public relations, logistics and ICT.

There are immense opportunities for Australian retail in the continuing development of Asia, and the growing appetite for consumer goods and services among Asia’s emerging middle classes. At the same time, globalisation presents the industry with the challenge of international retailers establishing themselves in Australia and competing in the local marketplace. In order to capitalise on its geographical location, Australian retailers will need to develop knowledge and capability to identify opportunities within the global market; provide appropriate goods and services to international customers; and compete with large international retailers who can benefit from economies of scale.

Retailers operate in a market where confidence, consumption and spending patterns are continuously changing. While Australian consumer confidence improved in 2009 following the global financial crisis, it deteriorated throughout much of early 2011.5 The household savings ratio is now at around 10 per cent, which is about the same as the mid-1980s.6 Meanwhile, the growth in household consumption has slowed from around 2007.7

In volume terms, retail sales have increased substantially over the last two decades as a share of household spending. In nominal terms, however, the movement has been exactly opposite, with retail turnover falling as a share of household consumption. The difference between these two measures reflects the fact that the price of Australian produced services has been rising faster than retailed goods.8

The composition of retail sales is also changing. Fresh food sales have continued to trend up quite strongly, as has spending on eating out and on ‘other retail’ (including for example, stores selling mobile phones). For some years, however, spending in department stores, and spending on clothing, footwear and household goods has been growing only slowly. This is true in volume terms, and even more apparent in dollar terms.

1 Australian Bureau of Statistics, 2013, Labour Force, Australia, May, cat. no. 6291.0.55.003, ABS, Canberra. 2 Australian Bureau of Statistics, 2013, Labour Force, Australia, May, cat. no. 6291.0.55.003, ABS, Canberra. 3 DEEWR, 2012, Australian Jobs 2012, Australian Government, Canberra. 4 Australian Bureau of Statistics, 2012, Australian Industry, 2010-11, cat. no. 8155.0, ABS, Canberra. 5 Westpac Banking Corporation, Australian economic reports, www.westpac.com.au/about-westpac/media/reports/australian- economic-reports. 6 Reserve Bank of Australia, Chart Pack—Household Sector, www.rba.gov.au/chart-pack/household-sector.html. 7 Stevens G, ‘The cautious consumer,’ Address to The Anika Foundation Luncheon, Sydney, 26 July 2011. 8 Productivity Commission, 2011, Economic structure and performance of the Australian retail industry, Productivity Commission Inquiry Report No. 56, Commonwealth of Australia, Canberra.

Retail workforce issues paper 7 Technology poses significant challenges to the industry. Online retail is growing, with online sales expected to account for 9 per cent of retail sales by 2016, compared to the current 6 per cent. Two- thirds of Australian consumers are now using the internet for shopping.9 In addition a suite of options is emerging for in-store marketing including the use of smart devices and other interactive technologies. There is an emerging need for data analysis skills to understand and respond to the preferences of individual customers, with specialist skills required to access, design and implement new technology solutions.

At the same time, the industry has a relatively uncredentialled workforce. The majority of workers in retail (62 per cent) do not hold post-school qualifications, compared to 37 per cent for all industries. 10 While Certificate II and III qualifications in retail operations are the predominant qualifications, 43 per cent of employers used unaccredited training in 2011 and more than half (77 per cent) used informal training.11 Traditionally, the industry has provided employment opportunities for young people and women. It provides opportunities for people who are attracted to the casual and part-time work opportunities on offer while they study, for instance, or undertake caring responsibilities.

Now, however, employers are finding it hard to recruit suitable staff, battling the perception that the industry is low-skilled and lacks good career prospects.12 Staff turnover is higher than average.13 While a career progression framework is outlined in the industry training package and higher education offerings, it is poorly understood and underutilised. Strategies to improve recruitment and retention could include expanded opportunities for training and development including for casual and part-time staff, job redesign to allow employees to undertake a wider variety of tasks, and structured career paths within organisations.

Employment in the top retail occupations is expected to grow modestly both in the short term and in the medium term to 2025.14 Because of its high proportion of young workers, the challenges of an ageing population will be keenly felt as other industries compete for a dwindling pool.15 Job redesign to reduce more physically demanding aspects of sales roles could help the industry to recruit and retain older employees. New technologies could enable a change of this nature, and the demand for more sophisticated interpersonal skills to engage customers may provide a better fit for mature-age workers. There is evidence that this shift is already occurring, with the number of workers aged 45 and over in retail increasing by 16 per cent between 2005 and 2013, compared to 5 per cent for the industry as a whole.16 At the same time, it is important that VET in Schools (VETiS) can attract students and provide them with quality training and viable employment options. Industry concerns about the variable outcomes of VETiS programs may reflect the fact that many do not include work-based application.

9 Pricewaterhousecoopers and Frost & Sullivan, 2012, Australian online shopping market and digital insights, www.pwc.com.au/industry/retail-consumer/assets/Digital-Media-Research-Jul12.pdf; Jude G et al., 2012, How you can join the omnichannel shopper in transforming Australian retail, Telstra, Australia. 10 DEEWR, 2012, Australian Jobs 2012, Australian Government, Canberra. 11 NCVER, 2011, Australian vocational education and training statistics: Employers’ use and views of the VET system, NCVER, Adelaide. 12 Australian Centre for Retail Studies, 2011, The war for talent, Monash University, Melbourne. 13 Australian Bureau of Statistics, 2012, Labour mobility, Australia, February, cat. no. 6209.0, ABS, Canberra. 14 Australian Bureau of Statistics, 2013, Labour force Australia, February, cat. no. 6291.0.55.003 (DEEWR trend), ABS, Canberra. 15 Productivity Commission, 2011, Economic structure and performance of the Australian retail industry, Productivity Commission Inquiry Report No. 56, Commonwealth of Australia, Canberra. 16 Australian Bureau of Statistics, 2013, Labour force Australia, detailed quarterly report, comparison of May 2005 and May 2013 quarters, cat. no. 6291.0.55.003. 8 Small-to-medium enterprises (SMEs) face particular challenges in workforce development owing to the difficulty of releasing staff for off the job or other forms of training, and they are unlikely to have dedicated human resources personnel who can support a broader focus on other workforce development strategies such as career pathway development, job redesign and talent management to help with staff retention.

Management and leadership is a particular concern for the industry. Managers are typically employed without a formal qualification and promoted internally with minimal development. There is evidence that this has created significant skills deficits among managers, for example in basic financial management, people management and strategic thinking. While there are some retail-specific management programs, they are generally not well-subscribed. Some look for solutions in stronger professional qualifications while others believe a generalist business degree is more valuable.17

Given the changes in customer expectation, the skill levels of sales staff will become increasingly important. In addition to the need for higher level technology skills, sales staff also need greater product knowledge, more sophisticated interpersonal skills, and the capacity to provide a unique and compelling experience. Many back office roles are yet to be properly defined. There is also evidence that the sector is reticent in adopting digital technologies.18 A review of the skills needs of current retail occupations in light of new and emerging requirements may be timely.

This retail issues paper is focusing on strategies that may help the retail industry prosper and adapt to the plethora of technological and societal changes it faces. The final report will incorporate suggested policy directions arising from our extensive stakeholder consultations.

17 Service Skills Australia, 2012, Retail futures—Progress report—Stage one, SSA, Sydney. 18 Ernst & Young, 2011, ‘Australia productivity survey—Wastage adds up despite motivated workers,’ www.ey.com/AU/en/Services/Advisory/Australian-Productivity-Pulse.

Retail workforce issues paper 9 Introduction

The market stall supplying farmers’ surplus produce was probably the first example of retailing as we understand it today. It introduced the concept of displaying goods for purchase and attracted groups of people to browse and buy, which made it into a social as well as a commercial space. As villages and towns grew around the market place, it also became a key enabler of innovation.19 The market fuelled the development of notions of currency, insurance, supply chains and credit, but it also created a space for connection and became a catalyst for wider innovation:

A strong correlation exists between those dense settlements and the dramatic surge in the societal innovation rate… in the dense networks of the first cities, good ideas have a natural propensity to get into circulation… when the first market towns emerged in Italy they didn’t magically create some higher level group consciousness. They simply widened the pool of minds that could come up with and share good ideas.20

The market place, or the retail industry, continues to be central to our sense of community and a significant driver of innovation. While the industry continues to serve the public by providing access to markets for producers, access to goods and services for consumers, and, most importantly, a social experience, it has undergone significant transformation in response to wider changes in technology, society and the economy.

A snapshot of recent developments in the industry demonstrates that retail is constantly innovating. In the past century we’ve seen shops move from corner stores to department stores, to shopping centres and now to the use of online platforms. We’ve seen transactions enabled by cash, then by charge accounts, cheques and credit cards, and now people are using smart devices and cashless systems.

Current developments in technology and society mean that retail will continue to evolve even more quickly and more dramatically than in the past.

Not only does retail contribute to the social wellbeing of the community, it is also a driving economic force. Retail is the second highest employing industry within the Australian economy (after Health Care and Social Assistance) employing more than one in ten, or 10.5 per cent, of the entire Australian workforce. 21 Forty-one per cent of the retail workforce is employed in large enterprises (those that employ 200 workers or more), while 38 per cent are employed in small-sized enterprises (those that employ less than 20 workers).22 Thirty-nine per cent of employment in retail trade occurs outside capital cities—slightly higher than the all-industry average of 37 per cent.23 The retail industry contributed around 4.8 per cent ($65.6 b) to the national economy in 2011–12.24

Included within the retail sector is a wide range of enterprise types, such as supermarkets, department stores, specialty chains, commission-based retail, convenience stores and online. It also includes a range of large employers, retail chains and franchises, but is predominantly made up of SMEs.25

19 Johnson S, 2010, Where good ideas come from: The seven patterns of innovation, Penguin, United Kingdom. 20 Johnson S, 2010, Where good ideas come from: The seven patterns of innovation, Penguin, United Kingdom. 21 Australian Bureau of Statistics, 2013, Labour Force, Australia, May, cat. no. 6291.0.55.003, ABS, Canberra. 22 Australian Bureau of Statistics, 2012, Australian Industry, 2010-11, cat. no. 8155.0, ABS, Canberra. 23 DEEWR, 2012, Australian Jobs 2012, Australian Government, Canberra. 24 ‘Industry value added’ is the measure of the contribution by industry to gross domestic product (GDP) at basic prices. Australian Bureau of Statistics, 2012, Australian System of National Accounts, cat. no. 5204.0, ABS, Canberra. 10 Around half of retail workers are employed part-time (48 per cent) compared with the all-industry average of 37 per cent.26 Most of this part-time workforce is employed on a casual basis (that is, without paid leave entitlements). Retail has more than twice the proportion of casual workers, at 40 per cent, than industry as a whole, with an average of 19 per cent.27

Young people and women are attracted to the casual and part-time work opportunities on offer within retail because they provide a support income while, for instance, studying or caring for children. Employers also value the flexibility of such a workforce to accommodate fluctuations in demand in a retail environment. It is now becoming clear, however, that a largely transient and unskilled workforce creates issues in relation to retention, skill development, and the creation of a viable industry career framework—the industry infrastructure required to be agile and adaptive in the face of change.

The industry is large, diverse and complex. It covers 14 sub-sectors: supermarket and grocery stores; pharmaceutical and other store-based retail; clothing, footwear and accessories retail; motor vehicle retail; recreational goods retail; electrical and electronic goods retail; furniture; floor coverings; housewares and textiles retail; fuel retail; motor vehicle parts and tyre retail; non-store retail; and commission-based retail. See Attachment 1 for details.

Key retail-specific occupations include: sales assistants; retail managers; brand managers; retail supervisors; buyers; merchandisers and merchandise planners; and shelf fillers.

In this paper we will distinguish between in-store positions (sales assistants, retail managers, retail supervisors, shelf fillers) and back office and support positions (those employees who work in retail but do not normally have customer contact, such as merchandisers, buyers, human resources, marketing and ICT).

There are also a number of non-retail specific occupations employed within the retail trade covering functions such as finance and accounting, marketing and public relations, human resources, warehousing, logistics and information and communications technology (ICT).

There is an increasing number of positions required to support online platforms and technology adoption including areas such as data analysis, online design and development, online customer service, as well as supply chain platforms and logistics of home delivery.

This paper sets out to explore the nature of these changes and their practical impact on the retail workforce in the next five to ten years, particularly in the light of anticipated changes resulting from:

altered demographics (including the ageing workforce)

opportunities arising from the Asian Century

restructuring of the economy and emerging industries

human capital and opportunities for re-skilling

technology (both risks and opportunities and what this means for skill formation). 25 Australian Bureau of Statistics, 2011, Counts of Australian Businesses, including Entries and Exits, cat no. 8165.0, ABS, Canberra. 26 DEEWR, 2012, Australian Jobs 2012, Australian Government, Canberra. 27 Australian Bureau of Statistics, 2012, Forms of Employment, Australia, November 2011, cat. no. 6359.0, ABS, Canberra; Productivity Commission, 2011, Economic structure and performance of the Australian retail industry, Inquiry report no. 56, Commonwealth of Australia, Canberra.

Retail workforce issues paper 11 While these factors will impact on the retail industry in a range of significant ways, such as in legislation, industrial relations and planning, the focus of this paper is on the implications for the workforce and their skills and development needs. Through an analysis of data in relation to the supply and demand of skills, coupled with insights into the culture of the retail industry and the drivers of change both internally and externally, this paper will provide trigger questions for stakeholders about developing the skills and attributes required for a prosperous and sustainable future for the industry. This feedback will provide the basis for the final report.

The term workforce development relates to those policies and practices that support people to participate effectively in the workforce and to develop and apply skills in a workplace context. It concerns itself with issues such as recruitment and retention, job design and career development as well as skills formation. Workforce development activities within a firm help improve our productivity by enabling innovation through better management practices and organisational change.28

The Asian Century is set to provide extensive new opportunities for Australian retailing. ‘Asia’ is used in this paper, as in the Australia in the Asian Century White Paper, to refer to the group of nations that stretch from India through Southeast Asia to Northeast Asia, including Indonesia, other Association of Southeast Asian Nations (ASEAN) members (South Korea, Thailand, Malaysia, Singapore, Philippines, Vietnam, Burma, Brunei, Cambodia, Laos), China and Japan.29 Similarly, globalisation will continue to present opportunities and challenges from other regions around the world.

This paper has been prepared in collaboration with a retail industry reference group and incorporates feedback from industry practitioners who were engaged in the first stage of Service Skills Australia research, Retail futures.30 The research involved interviews with approximately 40 people from 21 retail enterprises and included CEOs, sales staff, frontline managers, strategic managers and human resource management.

Industry wide analysis

At this level, the definition of retail will be that used in the Australian and New Zealand Standard Industrial Classification (ANZSIC) 2006:

The Retail Trade Division includes units mainly engaged in the purchase and onselling, the commission-based buying, and the commission-based selling of goods, without significant transformation, to the general public. The Retail Trade Division also includes units that purchase and onsell goods to the general public using non-traditional means, including the internet.31

While some industry subdivisions are covered by other Industry Skills Councils under current governance arrangements and have been traditionally closely associated with other industry sectors (e.g. Motor Vehicle and Motor Vehicle Parts Retailing), it is not practical to exclude these subdivisions from industry- level data due to the following factors:

28 Skills Australia, 2010, Australian workforce futures, Commonwealth of Australia, Canberra. 29 Department of the Prime Minister and Cabinet, 2012, Australia in the Asian century issues paper, Commonwealth of Australia, Canberra. 30 See Service Skills Australia, 2012, Retail futures – Progress report – Stage one, SSA, Sydney. 31 Australian Bureau of Statistics, 2006, Australian and New Zealand Standard Industrial Classification (ANZSIC) 2006 (Revision 1.0), cat. no. 1292.0, ABS, Canberra. 12 1. The industry ‘retail trade’ includes all subdivisions as defined by ANZSIC 2006, including Motor Vehicle and Motor Vehicle Parts Retailing and Fuel Retailing. While data collected by the Australian Bureau of Statistics (ABS) can generally be disaggregated to exclude these subdivisions, this is not true of all data sources, including historical data series and education and training collections. Disaggregating specific subdivisions from top-level data therefore means it cannot be compared to other data collections.

2. Disaggregating specific subdivisions (in particular, significant subdivisions such as Motor Vehicle and Motor Vehicle Parts Retailing) from top-level data can result in data distortions.

3. Excluding key parts of the retail trade industry based on governance arrangements risks providing an incomplete picture of key trends within the sector.

Due to diversification a number of significant retailers have broadened their product offerings to include Motor Vehicle Parts Retailing and Fuel Retailing, which have traditionally been closely linked to different sectors. See Attachment 2 for a list of types of retail businesses.

Subdivision and specific occupation level analysis

For analysing supply and demand of specific occupations and workforce development needs, AWPA’s medium-term scenario-based modelling is available at the occupation level. This allows us to concentrate on specific subdivisions and/or key occupations.

Industry occupation vs ANZSIC occupation classification

There are some retail roles as classified by the industry (e.g. buyers), without a specific ANZSIC classification. While some assumptions can be made for some roles, quantitative analysis in this study will be largely based on ANZSIC classifications where reliable data (both historical and forecasts) is available.

Retail workforce issues paper 13 Part One The retail industry: A picture from the data

The retail industry comprises a wide range of occupations. These include occupations specific to retail such as sales assistants, retail supervisors, retail managers and merchandising, as well as supporting interdisciplinary roles in human resources, finance and technology. ABS data covers all occupations employed within retail trade, including sales-specific roles (such as general sales assistants, checkout operators, pharmacy sales assistants, motor vehicle and parts sales assistants) as well as retail managers, shelf fillers, retail supervisors and storepersons, among other occupations.

Specific functions within retail such as merchandising, buying, retail planning, online retail positions and retail loss prevention are also captured under the ABS Australian and New Zealand Standard Classification of Occupations (ANZSCO), but this level of detail (i.e. at the six digit ANZSCO level) is generally not available from data sources such as labour force surveys or education collections and has not been included in the analysis below.

1.1 Retail workforce overview

As noted previously, the retail industry is the second highest employing industry in Australia and employs more than 1.2 million people or 10.5 per cent of the entire Australian workforce.

As the table below demonstrates, the largest occupational group in the retail industry is Sales Assistants (General) comprising nearly one-third of employment across the whole sector. However there are a number of other sales assistant classifications (such as Pharmacy Sales Assistants, ICT Sales Assistants and Other Sales Assistants and Salespersons) which in effect means that sales assistant roles make up closer to 40 per cent of the retail workforce. In addition, it is worth noting that sales assistants are the largest occupational group in Australia, with an additional 130,000 workers employed in other industry sectors, such as Accommodation and Food Services, Manufacturing and Wholesale Trade.32

Table 1 Top ten retail occupations People Industry Occupation employed employment ‘000 % of total 6211 Sales Assistants (General) 370.3 30.5 1421 Retail Managers 163.2 13.4 6311 Checkout Operators and Office Cashiers 118.9 9.8 8912 Shelf Fillers 59.8 4.9 6214 Pharmacy Sales Assistants 32.0 2.6 6215 Retail Supervisors 31.2 2.6 6213 Motor Vehicle and Vehicle Parts Salespersons 23.3 1.9 7411 Storepersons 22.6 1.9 3512 Butchers and Smallgoods Makers 19.1 1.6 2515 Pharmacists 18.7 1.5 Total retail trade 1213.5 70.8

Source: ABS (2013) Labour Force Australia, detailed quarterly report, 2012 average of four quarters (cat. no. 6291.0.55.003).

The next largest occupation is retail managers at 13 per cent, followed by checkout operators and office cashiers at 10 per cent.

32 AWPA, 2013, Retail trade: Industry snapshot, Commonwealth of Australia, Canberra. 14 Workforce profile

The retail workforce has a number of characteristics which set it apart from other industries. It has one of the youngest age profiles, second only to Accommodation and Food Services, with almost three- quarters of workers aged under 45 years and more than a third (34 per cent) aged 24 years or younger. 33 Over half the workforce is female (56 per cent) and 48 per cent of the workforce is employed part- time.34

The retail industry is also characterised by a lack of formal qualification holding. The majority of workers in retail trade (62 per cent) do not hold post-school qualifications compared to 37 per cent for all industries.35 This indicates that retail trade is an industry which provides entry-level opportunities within the labour market, enabling people to gain a foothold in the world of work while pursuing study or other responsibilities.

Figure 1 Comparison of retail industry qualifications

Note: Excludes ‘Level of education not stated’ from total. Source: DEEWR (2012) Australian Jobs 2012 (ABS 2011 Census Data).

Retail serves as an effective entry point into the labour market, particularly for people seeking flexible hours and conditions, but it also provides longer term career opportunities. Data from the Household, Income and Labour Dynamics in Australia Survey (HILDA) indicates that 21 per cent of respondents working in the retail industry were still attending school, with an additional 16 per cent studying full- time at a tertiary institution.36

Job roles within retail are highly stratified by gender and whether employees are employed on a part- time or full-time basis. Analysis of 2009 Australia at Work data reveals that while women dominate employment in the retail sector, the employment tends to be part-time and lower skilled, while men tend to be employed in more physical jobs or more senior, permanent full-time positions. Skilled positions in retail are more likely to be occupied by full-time workers, with part-time workers occupying less skilled roles.37

Specialised occupations

The Specialised Occupations List (SpOL) is a tool developed by the former Skills Australia to assist in workforce development planning. ‘Specialised occupations’ are defined as those ‘where specialised skills, learned in formal education and training, are needed at entry level and where the impact of market failure is potentially significant for the economy and/or the community.’ 38 It is not necessarily meant to indicate occupations of greater value.

The only occupation on the SpOL among key occupations in the retail sector is pharmacists. While there are large numbers of people working in associated or supporting occupations on the SpOL within the

33 Australian Bureau of Statistics, 2013, Labour Force, Australia, May, cat. no. 6291.0.55.003, ABS, Canberra. 34 DEEWR, 2012, Australian Jobs 2012, Australian Government, Canberra. 35 DEEWR, 2012, Australian Jobs 2012, Australian Government, Canberra. 36 Centre for Research on Education Systems, 2012, Destinations survey for the service industries: HILDA survey, prepared for Service Skills Australia, University of Melbourne. 37 Chang J and Travaglione A, 2012, ‘Gender and employment-structure patterns in Australia’s retail workforce: An intra- industry analysis,’ Australian Bulletin of Labour, Vol. 38, No. 4, pp. 315-344. 38 AWPA, 2013, ‘Specialised occupations list,’ www.awpa.gov.au/our-work/labour-market-information/specialised- occupations-list/Pages/default.aspx.

Retail workforce issues paper 15 retail sector, for example in accounting or auditing, these roles are not defined as ‘retail’ occupations per se, as they provide services across a range of industries. As discussed later in this paper, there may be a need to better understand these roles within the retail context.

1.2 Industry skills demand

Demand to 2017

The Department of Education, Employment and Workplace Relations (DEEWR) forecasts an increase in retail employment of 4.1 per cent in the five years to 2016-17, an average of 0.8 per cent per annum, as shown in Table 2 below. This represents a projected increase of 50,400 workers.39

Table 2 Average annual industry employment growth, 2012–13 to 2016–17 (% per annum) Average annual growth Industry rate (2012–13 to 2016–17) (%) Motor Vehicle and Motor Vehicle Parts Retailing 0.5 Fuel Retailing 1.1 Food Retailing 1.5 Other Store-Based Retailing 1.5 Non-Store Retailing and Retail Commission-Based -0.2 Buying and/or Selling Retail 1.7 All industries 1.4 Source: ABS (2013) Labour Force Australia, February, cat. no. 6291.0.55.003 (DEEWR trend).

Over the five years to 2016-17, strong employment growth is expected in a number of retail industry subsectors (at the ANZSIC three digit level). These include:

 Non-Store Retailing (33 per cent)40

 Specialised Food Retailing (18 per cent)

 Clothing, Footwear and Personal Accessory Retailing (15 per cent)

 Hardware, Building and Garden Supplies Retailing (7 per cent)

 Supermarket and Grocery Stores (8 per cent).41

Demand to 2025

In the longer term, a range of factors such as changing technologies, globalisation, new patterns of work and the opportunities of the Asian century are making it harder to predict and plan for the future. To deal with this uncertainty, AWPA developed four plausible scenarios of the future to inform its 2013 national workforce development strategy, Future focus.42 These four scenarios provide policymakers

39 Australian Bureau of Statistics, 2013, Labour Force Australia, February, cat. no. 6291.0.55.003 (DEEWR trend), ABS, Canberra. 40 Non-store retailing refers to units mainly engaged in retailing goods without the use of a shopfront or physical store presence, including milk vendors, sole e-commerce retailers and direct shopping units. 41 Australian Bureau of Statistics, 2013, Labour Force Australia, February, cat. no. 6291.0.55.003 (DEEWR trend), ABS, Canberra 42 AWPA, 2012, Future focus: Australia’s skills and workforce development needs – Discussion paper, Commonwealth of Australia, Canberra. 16 with the means to make decisions about the future while helping to manage uncertainty and ensure that Australia has the adaptive capacity to cope with change.

Figure 2 The four scenarios

Retail workforce issues paper 17 In Future focus, the medium term outlook (to 2025) shows varying growth rates depending on which future scenario eventuates.43 Under all four scenarios, there will be some employment growth per annum to 2025 for all retail subsectors with the exception of fuel retailing and in other store-based retailing in the lowest growth scenario, Ring of Fire. Employment in non-store retailing and retail commission-based buying and/or selling is expected to experience the strongest growth. However this is from a relatively small base, with 21,400 workers currently employed in this subsector.44

Table 3 Average annual industry employment growth in four scenarios, 2011–25 (% per annum) Terms of Long Smart Ring of Industry Trade Boom Recovery Fire Shock Motor Vehicle and Motor Vehicle Parts Retailing 1.0 0.6 0.6 0.0 Fuel Retailing -3.3 -3.6 -3.7 -4.2 Food Retailing 1.2 0.8 0.7 0.2 Other Store-Based Retailing 0.9 0.6 0.5 -0.1 Non-Store Retailing and Retail Commission- 15.7 15.3 15.2 14.6 Based Buying and/or Selling Retail 1.4 1.0 0.9 0.4 All industries 2.0 1.5 1.6 0.7 Source: Deloitte Access Economics (2012) Economic modelling of skills demand and supply, Scenario output—detailed employment results.

This data suggests that overall there will be small growth in retail employment whichever scenario eventuates, with fluctuations within particular sub-sectors.

1.3 Occupational demand

As mentioned previously, Sales Assistants and Sales Managers make up the bulk of employment within the retail sector, and there have been slight variations in demand over the previous decade. Table 4 shows growth across key occupations (corresponding to the top ten job roles, as outlined in Table 1). While it is important to note that these figures refer to the expected number of people in these occupations across all industries, not just in the retail sector, we can anticipate that employment will continue to grow modestly for each of these occupations. However this data does not necessarily capture shifts in employment between online retail roles, back office occupations and other emerging retail areas.

43 A description of the scenarios and the Deloitte Access Economics modelling of employment in each, with state and territory breakdowns is available from AWPA at www.awpa.gov.au/our-work/national-workforce-development-strategy/2013- workforce-development-strategy/Pages/Scenario-Development.aspx. 44 Australian Bureau of Statistics, 2013, Labour Force Australia, February, cat. no. 6291.0.55.003 (DEEWR trend), ABS, Canberra. 18 Table 4 Average annual occupational employment growth, 2012–13 to 2016–17 (% per annum) Average annual growth rate Occupation (2012–13 to 2016–17) (%) 6211 Sales Assistants (General) 0.5 1421 Retail Managers 0.8 6311 Checkout Operators and Office Cashiers 0.5 8912 Shelf Fillers 0.7 6214 Pharmacy Sales Assistants 0.9 6215 Retail Supervisors 0.7 6213 Motor Vehicle and Vehicle Parts Salespersons 0.5 7411 Storepersons 1.5 3512 Butchers and Smallgoods Makers 2.4 2515 Pharmacists 2.4 All occupations 1.4 Source: ABS (2013) Labour Force Australia, February, cat. no. 6291.0.55.003 (DEEWR trend).

A comparison of occupation growth over the medium term (to 2025) across each of the AWPA scenarios shows similar patterns of modest growth for roles such as Sales Assistants (General) and Storepersons. However employment opportunities for Shelf Fillers and Checkout Operators and Office Cashiers are expected to decline under the majority of the four future scenarios.

Table 5 Average annual occupation growth in four scenarios, 2011–25 (% per annum) Terms of Long Smart Ring of Occupation Trade Boom Recovery Fire Shock 6211 Sales Assistants (General) 1.1 0.7 0.7 0.2 1421 Retail Managers 1.6 1.2 1.2 0.6 6311 Checkout Operators and Office Cashiers 0.1 -0.2 -0.2 -0.7 8912 Shelf Fillers -0.6 -1.0 -1.1 -1.6 6214 Pharmacy Sales Assistants 0.2 -0.2 -0.3 -0.8 6215 Retail Supervisors 2.5 2.2 2.2 1.7 6213 Motor Vehicle and Vehicle Parts Salespersons 0.8 0.4 0.3 -0.3 7411 Storepersons 1.6 1.2 1.1 0.5 3512 Butchers and Smallgoods Makers 1.2 0.9 0.9 0.5 2515 Pharmacists 0.3 -0.2 0.0 -0.8 All occupations 2.0 1.5 1.6 0.7

Source: Deloitte Access Economics (2012) Economic modelling of skills demand and supply, Scenario output—detailed employment results.

Demand for back office and online support occupations

It is projected, on the basis of this and other data, that overall growth in employment in retail will be moderate in the short-to-medium term. However a different mix of occupations may be needed to support a diverse range of retail business models in the future, particularly given the changes in technology and customer preferences that are redefining the industry. For example, DEEWR forecasts significant growth in employment within non-store retailing over the next five years (an increase of 33 per cent to 2017) while employment within department stores is expected to decline by 10 per cent over the same period.45

45 DEEWR, 2012, Industry projections to 2016-17, www.deewr.gov.au/LMIP/default.aspx? LMIP/Publications/IndustryEmploymentProjections, Australian Government.

Retail workforce issues paper 19 While quantitative data sources are limited in the extent to which they can tell us which individual occupations will be most in demand, there are growing indications in the qualitative research that there will be a greater need for technology and ‘back office’ occupations to support online design, display, purchasing, customer service, warehousing and delivery as well as marketing, branding and consumer analysis. Surveyed respondents in Retail futures confirm that there has been a shift away from in-store retail employment in favour of back of house roles: 46

We need a lot of buyers, IT staff and store designers … the back of house workforce is on the increase. The in-store workforce is declining; there is less need for cashiers and other in-store personnel.

The Productivity Commission also suggests that:

Growth of online retailing will result in a redistribution of employment through the economy. The combination of growth in the number of domestic pure play retailers, growth in sales activity of existing pure plays, and growth in activity of the online divisions of Australian multi- channel retailers will contribute to the redistribution of jobs away from bricks and mortar operations to online retailing and services such as website development and maintenance. Employment is also expected to shift to industries linked to retail such as transport delivery services and warehousing as a result of growth in online shopping.47

Past job opportunities offered by online-only retail sites such as Amazon, Groupon, and Ozsale include:

Online category Manager

Mobile Commerce Designer

Consumer Relationship Manager Analyst

Delivery personnel.

As online retail is heavily reliant on the development and maintenance of user-friendly e-commerce sites, there will also be ongoing demand for IT specialists in roles such as:

Data Analyst

User Experience Designer

User Experience Researcher

Software Development Engineer.

While positions such as Data Analyst and Software Development Engineer have been defined and understood in the context of other industries, there may need to be a better understanding of their role within the retail context, including the extent to which IT services are ‘bought in’ to the sector and/or the extent to which these roles are maintained in-house, particularly in the case of large organisations.

There is little data about the demand for back-of-house, retail-specific skill requirements although Retail futures indicates that there is a demand for positions such as visual merchandisers (both in-store and

46 Service Skills Australia, 2012, Retail futures – Progress report – Stage one, SSA, Sydney. 47 Productivity Commission, 2011, Economic structure and performance of the Australian retail industry, Productivity Commission Inquiry Report No. 56, Commonwealth of Australia, Canberra. 20 online) retail buyers, retail planners, brand managers and fit-out designers.48 A number of respondents suggest that many higher-level positions in these areas are sourced from other countries, particularly the United Kingdom.49

Back office positions also include a variety of professionally qualified individuals, such as human resource professionals, accountants and logistics professionals, who are likely to have undertaken qualifications within their area of specialisation and then transfer these skills into a retail context. Many of these occupations provide services to a range of other industry sectors, which creates competition with other industries that are perceived to offer better working conditions, remuneration and opportunities as discussed in the next section.

It is critical that more research is done to more fully understand the contributions and functions of the various non-store retail positions and the skills that these roles require. This will support workforce development strategies to ensure an appropriate supply of trained staff to meet demand for online and back office support staff.

▶ As an employer or industry representative, do you see that there is a growing need for back office and online support occupations? Which ones in particular?

▶ To what extent are these occupations filled in-house or engaged through a consultant on a contract basis? If you use a consultant, why is this?

▶ To what extent is there a need for retail-specific knowledge and skill for these roles?

1.4 Skills supply

There are a number of sources of labour for the retail sector including graduates from VET and higher education options as well as school-based programs. However there are no prerequisite qualifications for a significant proportion of positions in the retail sector. This is reflected in the current workforce profile. For example, in 2011, 71 per cent of sales workers, which accounts for the majority (631,800 workers) of employment in the industry, do not hold a post-school qualification.50 As mentioned previously, the lack of a qualification requirement can be appealing to people seeking casual and part- time work or entry into the workforce, and many employees in retail are attending school or university.

Typically people are recruited into retail on a part-time or casual basis and receive informal essential skills training. Some are employed through a traineeship or through a Training Package qualification other than a traineeship, or alternatively on a full time basis supported by internal or unaccredited training programs. Managers most often are developed and promoted through internal programs, which were characterised by Retail futures interviewees as largely focused on enterprise processes. However some managers complete a Certificate IV qualification, or achieve a degree or Masters of Business Administration, some with a retail specialisation.51

48 Service Skills Australia, 2012, Retail futures – Progress report – Stage one, SSA, Sydney. 49 Service Skills Australia, 2012, Retail futures – Progress report – Stage one, SSA, Sydney. 50 Australian Bureau of Statistics, 2012, Survey of education and work, cat. no. 6227.0, ABS, Canberra; Deloitte Access Economics, 2012, unpublished data. 51Service Skills Australia, 2012, Retail futures – Progress report – Stage one, SSA, Sydney.

Retail workforce issues paper 21 VET in Schools (VETiS)

VETiS programs are nationally recognised VET qualifications delivered to secondary school students by registered training organisations (RTOs), which can be the student’s school but also include school- based apprenticeships or traineeships. AWPA and its predecessor Skills Australia have drawn attention in Skills for prosperity and Future focus to the multiple purposes of VETiS programs but noted the variable outcomes when these programs are not followed up by further study or relevant work.52 Although VETiS could be considered a platform for recruiting young people into a retail career, Service Skills Australia reports that there is concern within the industry about the poor quality of some VETiS programs.53

▶ As an employer, have you engaged with the VETiS system? If so, what has been your experience of VETiS programs?

VET courses

While traineeships in Retail Operations (Certificate II and III) are the predominant qualifications for the retail trade, the industry makes significant use of unaccredited and informal training, as noted in the Productivity Commission report:

Employers in retail were less likely to use the VET system and more likely to use informal training—38 per cent of retail employers used the VET system and 77 per cent used informal training in 2011. By comparison 54 per cent of employers in all industries used the VET system and 76 per cent used informal training.54

The commencement data in Figure 2 below is more encouraging and shows steady enrolment increases (albeit from a relatively low base considering the number of people employed as sales assistants) in a number of Retail Services Training Package qualifications. Commencements in Certificate II in Retail Services have increased steadily at an average annual rate of 5 per cent since 2004. Similarly, commencements in Certificate III in Retail Operations increased at an average annual rate of 14 per cent since 2004.

The Retail Services Training Package also offers a Certificate III in Retail Supervision, Certificate IV in Retail Management and a Diploma of Retail Management. While the take-up of these courses is lower than the lower level retail qualifications as indicated by the enrolment data in Figure 2, growth in enrolments in Certificate IV in Retail Management has expanded at an average annual rate of 29 per cent since 2004.

Figure 2 Vocational Course Enrolments by Retail Qualification (2002–2011)

Source: NCVER, 2012, Students and Courses

There is also concern about the completion rates in retail (see Figure 3 below). NCVER data shows completion rates of around 45 per cent of sales workers in 2007 compared with a non-trade occupations average of 50.3 per cent.55 The Productivity Commission points out that the high levels of non- completion in retail may be partially due to the fact that a retail qualification is not a prerequisite for

52 Skills Australia, 2011, Skills for prosperity: A roadmap for vocational education and training, Commonwealth of Australia, Canberra; AWPA, 2013, Future focus: 2013 national workforce development strategy, Commonwealth of Australia, Canberra. 53 Service Skills Australia, 2013, Retail, wholesale and floristry environmental scan, SSA, Sydney. 54 NCVER, 2011, Australian vocational education and training statistics: Employers’ use and views of the VET system, NCVER. 22 employment.56 In its submission to the Productivity Commission inquiry (Economic Structure and Performance of the Australian Retail Industry), Service Skills Australia provided a number of other personal reasons but the majority of reasons (45 per cent of respondents) for non-completion remain related to changes in work circumstances such as resignation from a job, finding a job elsewhere, or the termination of employment.57

Figure 3 Vocational Course Completions by Retail Qualification (2002–2010)

Source: NCVER, 2012, Students and Courses

AWPA’s projections to 2025 show that the proportion of sales workers holding a Certificate III or IV qualification will increase from the current level of 10 per cent to 21–31 per cent across the three higher growth scenarios. This trend is also expected to be observed among clerical and administrative workers in the retail sector with the proportion of workers holding a Certificate III or IV increasing from 17 per cent in 2011 to 28–33 per cent in 2025 in the three higher growth scenarios.58

▶ When advertising for a position, do you find that applicants have VET retail qualifications? Does this affect your hiring decision? Why or why not?

▶ Do you prefer to use informal (in-house) unaccredited training or accredited training for developing your existing staff?

Higher education

The majority (70 per cent) of workers employed in professional occupations in retail (approximately 51,200 workers or approximately 4 per cent of the retail workforce in 2011) hold a bachelor degree or higher qualification. AWPA’s scenario-based modelling to 2025 show this level of educational attainment is expected to continue under the three highest growth scenarios, increasing to 75 per cent in the highest growth scenario. Currently, 20 per cent of managers working in retail hold a bachelor degree or higher qualification. This is projected to increase significantly to 29–31 per cent across the three higher growth scenarios.59

There are also a number of retail-specific higher education offerings, for example:

 University of Wollongong–Master of Retail Management

 Deakin University–Graduate Certificate of Retail Management

 University of Western Sydney ( in collaboration with Service Skills Australia)–Bachelor of Business and Commerce (Retail Management)

 Swinburne University–Associate Degree of Business Administration–(Retail Management)

55 NCVER, 2012, NCVER report 2: Overview of apprenticeship and traineeship institutional structure, Report for the Apprenticeships for the 21st century expert panel, NCVER, Adelaide. 56 Productivity Commission, 2011, Economic structure and performance of the Australian retail industry, Productivity Commission Inquiry Report No. 56, Commonwealth of Australia, Canberra. 57 Service Skills Australia, 2011, Submission to the Productivity Commission Inquiry, Economic structure and performance of the Australian retail industry. 58 Australian Bureau of Statistics, 2012, Survey of education and work, cat. no. 6227.0, ABS, Canberra; Deloitte Access Economics, 2012, unpublished data. 59 Australian Bureau of Statistics, 2012, Survey of education and work, cat. no. 6227.0, ABS, Canberra; Deloitte Access Economics, 2012, unpublished data.

Retail workforce issues paper 23  Victoria University–Bachelor of Business in Retail Commerce.

However, like the VET retail management courses, there is reportedly a low take-up of these programs. 60

It is reported that back office occupations are often recruited with specialist, non-retail degrees, such as fashion or accountancy. A small number of these positions are filled internally with some in-house development and/or the completion of a specialist qualification.61

Migration

Interviewees in Retail futures suggested that higher level retail positions such as retail buying, merchandising, planning, marketing and digital skills are sought internationally, particularly from the United Kingdom, because there are insufficient skills in those areas locally.62

The next section of the report considers factors such as demographic changes, globalisation and industry structure and their impact on the retail industry.

▶ Do you see a need for retail-specific higher education qualifications? Is there a need to distinguish retail management qualifications from generalist management degrees?

▶ How do you think retail fares in attracting talented human resources, marketing, IT and accounting individuals? Please provide details.

▶ There have been reports that higher level retail positions such as retail buying, merchandising, planning, marketing and digital skills are sought internationally, particularly from the United Kingdom, because there are shortages in Australia. Has this been your experience and why do you think this is the case?

60 Service Skills Australia and Deakin University report that it has been difficult to recruit students for retail specific management programs. 61 Service Skills Australia, 2012, Retail futures – Progress report – Stage one, SSA, Sydney. 62 Service Skills Australia, 2012, Retail futures – Progress report – Stage one, SSA, Sydney. 24 Part Two Issues driving change in the retail industry

In the past five years there has been a broad acceptance within the community that retail is changing, and this has largely been attributed to the emergence of mainstream online shopping. However, the reality is that the drivers of change in retail are much more profound and pervasive. There have been significant shifts in response to a range of factors, which include changing demographics, changed economic circumstances and consumer preferences, globalisation, new forms of competition, a new awareness of the need for sustainable practice as well as new and emerging technologies.

In order to respond to these changes, the industry recognises the need to review what skills are needed, how they can be best used in job roles, how they can be developed and how to attract and retain a skilled workforce through effective workforce development practices.

2.1 Demographic changes

The retail industry has traditionally employed a larger proportion of young people, women, casual and part-time staff than other industries. From the employer perspective this has provided the necessary flexibility to meet changing seasonal demands as well as the ability to customise shifts easily to meet day-to-day needs of the business. From the employee perspective, retail has provided part-time and casual work to allow for commitment to other activities such as study, home duties and caring. It has also provided a useful transition from study to work providing the opportunity for the practical development of employability skills.

However projections of the emerging profile of the Australian workforce overall suggest a number of issues that will impact on employment and recruitment practices within retail.63 It is anticipated that there will be a dramatic increase in the number of older Australians, with the number of people aged 65–84 set to double and the number over 85 set to quadruple by 2050. This will result in a decreasing pool of younger workers. There are currently five working age people for every person over 65, and this is set to almost halve by 2050, to 2.7. The median age of Australia’s population (36.8 years at June 2010) is projected to increase to 38.7–40.7 years in 2026 and to 41.9–45.2 years in 2056.64

Increased living costs and longer life spans are projected to delay retirements and there will be an increase in the number of mature aged workers.

In the future, retailers will be competing with other industries for a cohort of younger workers whose share of the workforce will be gradually declining. This may force employers to seek older employees to fulfill their labour needs.65

As discussed later in this paper, face-to-face sales positions are projected to continue to make up the bulk of employment opportunities in retail. These positions are often physically demanding, requiring long periods of standing, lifting and packing. They are also often part-time or casual with limited career pathways. Many older workers are therefore likely to be more attracted to positions in other industries that can offer greater flexibility, more internal development opportunities, and some security of

63 Department of the Treasury, 2010, Australia to 2050: Future challenges – the 2010 intergenerational report, Commonwealth of Australia, Canberra. 64 Australian Bureau of Statistics, 2010, Population by Age and Sex, Australian States and Territories, June, cat. no. 3201.0, ABS, Canberra. 65 Productivity Commission, 2011, Economic structure and performance of the Australian retail industry, Productivity Commission Inquiry Report No. 56, Commonwealth of Australia, Canberra.

Retail workforce issues paper 25 employment. The retail industry may need to consider job redesign in order to attract and retain older workers. The advent of new technology across the enterprise may well be an enabler of such change, and the demand for more sophisticated interpersonal skills to engage customers may provide a better fit for mature-age workers. According to Service Skills Australia, the sector already appears to be responding, with the proportion of workers aged 45 and over in retail increasing by approximately 15.9 per cent between 2005–2011.66

Nevertheless there is a need for strategies to further support enterprises to bring about the change in working conditions necessary to attract and retain a more mature workforce as well as to compete for the diminishing pool of young workers.

▶ Have you recruited more, or any, mature age workers in the last five years?

▶ What have been the barriers, if any, to employing mature age workers?

▶ What can the retail industry do to attract and retain more mature-aged workers?

2.2 Opportunities arising from the global market place

New opportunities for Australian retailers will arise through greater engagement with the global market place. Specifically, there will be new prospects for:

 procurement and warehousing of goods offshore

 servicing the product and services needs of the global consumer

 expansion into international markets

 expansion of international business to Australia

 the introduction of new business practices from global businesses and migrants settling here.

While there is virtually no region that does not offer such opportunities, the emergence of Asian countries has particular relevance for Australia.

The Australia in the Asian Century White Paper makes the point that Australia is well positioned geographically, economically and politically to benefit from the vastly increased prosperity of Asian countries, including China, India and South East Asian countries. Asia will become the largest producer of goods and services and the largest consumers of them.

Asia has transformed the way the world produces goods and services and it will continue to the production engine of the world and the home to the world’s biggest middle class.67

According to Ken Henry,

In 15 years time, Asia will have 3.2 billion middle class consumers … Those business that are likely … to be successful in the Asian century are those that … are already repositioning their

66 Service Skills Australia, 2013, Retail, wholesale and floristry environmental scan, SSA, Sydney. 67 Department of the Prime Minister and Cabinet, 2012, Australia in the Asian century issues paper, Commonwealth of Australia, Canberra. 26 businesses in order to market product, whether it’s goods or services, to those 3.2 billion middle class consumers in the Asian region.68

From the retail industry perspective, the opportunity is there to capitalise on this growing middle class, and in particular the appetite for luxury brands, unique products and quality.

Consumers across Asia are becoming more sophisticated and more discerning. As incomes of the middle class increase, consumption choices will become more diversified—including a desire for higher quality, and potentially tailored, goods and services.69

Arguably, Australia’s position in Asia is a drawcard, not only for international businesses but also for tourists, who will be looking to holiday here and spend money on goods and services.

Africa is also an emerging consumer and manufacturing force and ‘the continent will gradually emerge as a serious player on the global economic scene’.70 Retailers are also increasingly procuring goods from a range of countries including Turkey, Bangladesh, as well as markets in Asia, South America, Europe and USA.

The opportunities are immense, but there are also risks and challenges for Australian retailers. Australian consumers are seeking reassurance about practices in all parts of the supply chain. This is particularly relevant for the procurement of goods and services from manufacturers. The public backlash to the recent tragedy in Savar, Bangladesh—when a garment factory building collapsed with a reported death toll of more than 1,120 and many more injuries—highlighted the need for retailers and brands to take more responsibility in this regard.

International retailers attracted to Australia’s geographic position and relative economic strength continue to establish outlets within Australia. According to Colliers International, there is likely to be an even greater influx of international retailers over the next five years, mainly from the fashion and general apparel sectors. They report, for example, that Zara is planning to expand its current 6 stores to 20, Top Shop from 2 to 15 and Gap from 3 to 15. They identify a number of new entrants to the Australian market including Uniqlo from Japan, Point Zero from Canada and H&M from Sweden. In total they identify plans for approximately 200 new international retail outlets in Australia in the next five years.71

The impacts of globalisation will bring further challenges. Other countries have different legislative regimes in areas of trade practices, employment law, consumer rights and so on which Australian retailers seeking to expand need to fully understand.

Similarly, cultural differences between countries will demand different types of customer service, language proficiency and particular preferences for goods and services all of which will impact on the merchandise and marketing strategies and particularly on the skills of the workforce.

68 Henry K, 2013, ‘The view on: Australia’s economic future’, The Conversation, 18 June, www.theconversation.com/the-view- on-australias-economic-future-with-dr-ken-henry-15303. 69 Department of the Prime Minister and Cabinet, 2012, Australia in the Asian century issues paper, Commonwealth of Australia, Canberra. 70 Juma C, 2013, ‘Africa’s economic growth prospects,’ Harvard Kennedy School – Technology and Policy Innovation at Work, www.technologyandpolicy.org/2013/02/15/africas-economic-growth-prospects/#.Ua_l-KW9ilI. 71 Farren N, 2013, ‘International retailers Australia is hot property,’ Colliers International White Paper, Sydney.

Retail workforce issues paper 27 Australian retailers will need access to knowledge and capability to negotiate the complexity of international relations, to identify opportunities within the global market, to provide appropriate goods and service to an international customer, and to compete with large international retailers who have economies of scale.

▶ In what ways, as you are aware, has the Australian retail industry been affected by globalisation?

What skills and knowledge do you feel Australian retailers are lacking to take full advantage of these changes? Are there any other barriers?

2.3. Restructuring of the economy and emerging industries

Retail spending overall grew quite strongly in dollar terms through to the 2008 global financial crisis. While it has since recovered, the rate of growth of nominal retail turnover (at just over 3 per cent in 2012) remains somewhat below the rate of the first half of the last decade.

In volume terms, retail sales have increased substantially over the last two decades as a share of household spending. In nominal terms however, the movement has been exactly opposite, with retail turnover falling as a share of household consumption.72 The difference between these two measures reflects the fact that the price of Australian produced services has been rising faster than retailed goods. The prices of retail goods have risen less quickly than services because the opportunities for productivity gains through technology have generally proved greater in the goods sector than in services. In addition, tariff cuts, a stronger Australian currency, the shift of manufacturing to China and other low cost producers, and vigorous global competition, have all led to the price of many retail goods increasing markedly less than the price level as a whole.73

Nevertheless, both the volume and the value measures of the increase in retail sales are important. The volume of sales is related to industry size and the number of employees. The relatively slower growth in the nominal value of sales may largely reflect lower wholesale costs, for the reasons given above, but to the extent that it reflects changing retail margins, the nominal sales value will have a more direct influence on profits and the ability of retail businesses to sustain debt.

There are also a number of other spending pattern changes to consider in order to understand the impact of the slowdown in consumption on retail. The cost of living and households that are ‘doing it tough’ has been a constant feature in public debate in recent years. NATSEM analyses household income and expenditure patterns and has developed indexes for common households types to account for varying income levels, family type, age and other defining characteristics. NATSEM found discretionary purchases as a proportion of household income increased between 1984 and 2011 for households in all income quintiles. This is also true for the period from 2003 to 2011.74

However analysing household spending on basic necessities, relative necessities and discretionary goods does not provide a full picture of what is happening in the retail sector. The retail sector, amongst others, sells products across all three categories. Some products may even move between categories over time. For example, computers and mobile phones were considered discretionary in the 1980s but

72 Australian Bureau of Statistics, 2013, Retail Trade, Australia, May, cat. no. 8501.0, ABS Canberra. 73 Productivity Commission, 2011, Economic structure and performance of the Australian retail industry, Productivity Commission Inquiry Report No. 56, Commonwealth of Australia, Canberra. 74 Phillips B, et al., 2012, Prices these days! The cost of living in Australia, AMP.NATSEM Income and Wealth Report, Issue 31, Canberra. 28 are now classified as relative necessities.75 A further complexity is that the composition of consumption is changing over time across all three spending categories.

Deloitte Access Economics found that over the last six years the composition of consumption in general has also changed. Australians are spending less on, furniture, appliances, fixed line telecommunications, home computers, books and magazines, tobacco and toiletries and cosmetics. Over the same period, spending has increased on rent and mortgage interest payments, health insurance and medicines, private school fees, child care, pay TV fees, internet charges, overseas holidays and other services.76

The composition of retail sales is also changing. Fresh food sales have continued to trend up quite strongly, as has spending on eating out and on ‘other retail’ (including for example, stores selling mobile phones). For some years, however, spending in department stores, and spending on clothing, footwear and household goods has been growing only slowly. This is true in volume terms, and even more apparent in dollar terms.77

Another more recent change in consumption patterns is the ability to purchase products in more disaggregated forms. This has been predominantly driven by technology. For example, Lonely Planet sells individual chapters of their popular guide books directly through their site and iTunes has been selling individual songs for some time.

The Productivity Commission notes that prices often differ across retailers, even among the same retailer-type (online, bricks and mortar, etc.). There are a number of underlying costs that determine the prices retailers charge such as wages and storage costs. Other factors contributing to price differentials are fluctuating exchange rates and international price discrimination. International price discrimination occurs when a seller offers different prices for the same product to buyers in different countries. This can happen at the retail level and also at the wholesale level, which affects the cost of doing business for Australian retailers. The internet has increased the amount of information available to consumers and in theory, the prices should converge.78

What shifts in consumer spending patterns have you observed?

What are the implications of these changes for workforce development?

2.4 Technology

Perhaps more noticeably than many other industries, retail is experiencing the impact of various technology innovations across every aspect of their operations, in all retail enterprise types.

Online retail

The most obvious and publicised innovation is the growth of online retailing, through pure play sites (dedicated online platforms such as Amazon) and online sales coupled with bricks and mortar sites

75 Phillips B, et al., 2012, Prices these days! The cost of living in Australia, AMP.NATSEM Income and Wealth Report, Issue 31, Canberra. 76 Deloitte Access Economics, 2012, ‘Consumer spending patterns and retail implications,’ www.deloitte.com/view/en_AU/au/industries/consumerbusinessandtransport/21374d79832c5310VgnVCM3000001c56f00aRC RD.htm. 77 Productivity Commission, 2011, Economic structure and performance of the Australian retail industry, Productivity Commission Inquiry Report No. 56, Commonwealth of Australia, Canberra. 78 Productivity Commission, 2011, Economic structure and performance of the Australian retail industry, Productivity Commission Inquiry Report No. 56, Commonwealth of Australia, Canberra.

Retail workforce issues paper 29 (omni-channel). Online sales currently account for 6 per cent of total retail sales and they are anticipated to grow to 9 per cent by 2016.79

While 88 per cent of retailers have access to the internet, only 44 per cent have an online presence even though Australia has the fifth highest internet penetration in the world. According to a recent Telstra survey, two-thirds of consumers are using the internet for shopping. Omni-channel retailing is becoming the norm and this creates significant pressure for all retail enterprises to develop an online presence. 80

Other technologies

Online selling is not the only technology challenge for retailers. According to interviewees in Retail futures81 there is a suite of options emerging for in-store selling, supply chain management, inventory management and marketing. Retailers need a holistic strategy to integrate their technologies across the enterprise.

Data is being analysed to understand individual customer preferences, their needs and unarticulated wishes. ‘Big Data’ involves high volumes and a large variety of information about individuals. It requires new forms of technology to capture and organise the data, coupled with sophisticated analytical skills to interpret it. It can provide deep insights into the individual customer to inform business decisions about business models, marketing, logistics, supply chain operations, management, finances and, importantly, in-store services and online design.82

The choice of technologies available to respond to customer preferences and behaviours is constantly expanding. Retailers such as Woolworths and Co-Op Bookshop have installed interactive screens in convenient locations such as train stations, so shoppers can purchase goods while waiting for the train and then have them home delivered.

Other retailers, such as Amazon and iTunes, offer ‘Anywhere, Anytime, Any Device’ shopping, which allows the customer to buy with the press of a button. For example, a marketing announcement for an item provides the option to press the button and buy immediately, using credit details which have been stored.

Even more conveniently for customers, automated everyday shopping using smart home technologies allows for automatic messages to replace items as they run out. For example, the smart fridge uses RFID83 technology to automatically alert you or even a designated shop for replacement goods, such as eggs, milk or butter.

Customers expect sales staff to have access to more product information than is available to the general public. Therefore some retailers are providing smart devices in-store so that sales staff can process a transaction, look for alternate products in stock, and have ready access to the same or better

79 Pricewaterhousecoopers and Frost & Sullivan, 2012, Australian online shopping market and digital insights, www.pwc.com.au/industry/retail-consumer/assets/Digital-Media-Research-Jul12.pdf. 80 Pricewaterhousecoopers and Frost & Sullivan, 2012, Australian online shopping market and digital insights, www.pwc.com.au/industry/retail-consumer/assets/Digital-Media-Research-Jul12.pdf; Jude G et al., 2012, How you can join the omnichannel shopper in transforming Australian retail, Telstra, Australia. 81Service Skills Australia, 2012, Retail futures – Progress report – Stage one, SSA, Sydney. 82 Love D, 2013, ‘How to use big data to make a fortune in the retail industry,’ Business Insider Australia, http://au.businessinsider.com/big-data-in-retail-2013-6. 83 RFID—Radio Frequency Identification: a method for tracking goods by means of tags which transmit a radio signal (as defined in the Oxford dictionary). 30 information as the customer. It allows staff to be mobile and to directly engage with the customer without a counter. Apple stores provide a model of this counter-less sales concept.

Many retailers are looking for ways to address the impact of ‘Showrooming’ which allows customers to check out items in a physical store, and then using barcode scanners, find the cheapest products on line. Retailers are using a number of strategies such as loyalty incentives and additional services to attract customers to physical shops.84

Sportsgirl has recently introduced connected fitting rooms with interactive mirrors, so that customers can share images with friends through social media. This is not only attractive to the connected customer, but also a marketing opportunity for the enterprise, as customers become champions of their brand online.

Retailers are recognising the power of social media not only for marketing but also for recruitment. Employers find it fast, extensive and effective in finding people who fit the brand through sites such as Facebook and LinkedIn.

Technology will facilitate direct interactions between producers and consumers, in some cases bypassing retail and wholesale altogether. ‘Disintermediation’ (bypassing the middleman) is enabled by the internet and is increasingly creating new channels for producers.85 Many organisations sell customised products to individuals by online orders only, bypassing traditional retail channels. Dell Computers is a well-known example. Traditional retailers need to be able to add real value to attract customers to their outlets and products.

The wealth of available technology in all areas of the retail business has created the need for specialist skills to analyse and research customer preferences, to access, design and implement new technology solutions. The retail workforce overall needs adaptive capacity to utilise technologies whatever their role.

What are the barriers to implementing technology innovation in your enterprise?

What workforce strategies could assist enterprises to successfully adopt technology?

2.5 The need for sustainable practices

Another challenge identified by retailers in Retail futures is finding ways to use less energy, create less waste and provide products and services which are not only cost-effective for the business but are also in tune with customers’ values.86 Consumers are increasingly selecting goods on the basis of information about their environmental impact and the ethics of the manufacturing processes. Additionally, consumers have an expectation of environmentally-friendly practices within retail outlets.

This suggests a need for enhanced product knowledge to answer customer queries about where products come from, how they’re produced and in-store practices. Given the increasing procurement

84 Wilson D, 2013, ‘Drop that mobile! The retailers are fighting back against showrooming,’ Sydney Morning Herald, January 15, www.smh.com.au/small-business/managing/drop-that-mobile-the-retailers-fighting-back-against-showrooming-20130115- 2cqki.html. 85 Barrington J, 2012, ‘21st century disintermediation,’ Barrington Consulting Group, www.barrington.com.au/news/article/09122012-11/21st-century-disintermediation.aspx. 86 Service Skills Australia, 2012, Retail futures – Progress report – Stage one, SSA, Sydney.

Retail workforce issues paper 31 opportunities from global producers discussed previously, this is an even more important skill area for both managers and sales staff.

How important is each of the following to your retail business? If they are important, what skills do you need to address them?

(a) environmental sustainability (b) ethics in relation to the procurement of goods and services?

2.6 Current trends in retail business practices

In response to the changes underway, a number of retailers are reviewing their practices and transforming the way they operate to meet changing consumer demand, technologies, competition and economic conditions.

According to the research undertaken in Retail futures a number of new business practices are emerging. Retailers recognise the importance of providing excellence in customer service to provide deep product knowledge, value adding services and engaged relationships to create loyalty and to compete with the convenience of online shopping. Some are providing new in-store attractions such as entertainment, cafes, bars, and related services, such as make-up advice in cosmetics stores. There is also a suite of online attractions apart from just sales, such as chat rooms, book clubs, information sessions and product-training sessions for customers.87

There are also changes in marketing practice, with a shift from retail-centred activities such as direct marketing and discount sales, to customer-focussed marketing providing individual deals for the consumer and using social media to create conversations on line.

The rise of social media has sparked seismic shifts in consumer behaviour and is rewriting the rules for retailers looking to deepen customer relationships. This signals a powerful opportunity for retailers to build customer relationships via social media.

Social media is increasingly linked to reputation management and marketing and this is often misunderstood by brands and businesses.88

Increasingly brands are controlling the whole supply chain, so that the brand manufactures and sells products through select channels and integrates online and in-store to suit consumer needs. This is also evident in supermarkets that are progressively replacing a wide array of brands with their own specialised brands.

Shopping centres are also looking at their role. Whereas their primary focus has traditionally been retail, they are looking to a broader concept that incorporates entertainment, restaurants, as well as community services such as medical and dental practices.

Many shopping centres are considering repositioning themselves through a name change to reflect the growing income from the sale of services:

87 Service Skills Australia, 2012, Retail futures – Progress report – Stage one, SSA, Sydney. 88 Kale N, 2013, ‘Sensis report: Social media stakes rise for Australian businesses,’ Power Retail, www.powerretail.com.au/insights/sensis-report-social-media-stakes-rise-for-australian-businesses/. 32 At least half the income from these centres was generated by less traditional retail areas such as cinemas, food courts, medical centres and other leisure activities, landlords said. This has led some in the industry to call for a name change for shopping centres, to reflect the increased theme park orientation of the malls.89

Have you responded to the changing retail landscape with a renewed focus on customer service? How have you done this, and how has the use of your staff changed as a result?

Have you witnessed a shift from traditional retail to a greater breadth in service provision? Has your business created new in-store attractions?

2.7 Current issues in workforce development

There has been a lot of research into the use of technology and economic trends within the retail sector. However, there is not a lot of research into the issues of finding and developing a suitable workforce.

Attraction and retention

While for most retailers it is not difficult to find casual and part-time staff to fill short-term vacancies, interviewees in the Retail futures study identified that finding and keeping the ‘right’ staff is a significant issue, however, the definition of ‘right’ varied. To some it was suitability for the brand, to others it was selling skills, and for others it was depth of product knowledge.

Our biggest challenge is finding good staff, young people with innovation in them. Many have poor job-seeking skills and are poorly educated.

Finding and retaining workforce is an ongoing challenge. It’s particularly difficult to recruit young men.

The issue of attracting and retaining quality staff applies both at the shop floor and in the back office.

We have no issues attracting people at the lower level, but it’s hard to attract people who want a career.

We struggle to get the right people in back office jobs … we have to compete with other industries.90

The Australian Centre for Retail Studies in a recent report into attitudes among high school students, university students and shop floor employees found a prevailing belief that retail is a short-term career, is not a post-university career and it is hard work for little reward.91

What is your experience of recruitment and retention in the retail industry?

Do you believe the industry genuinely provides opportunities for shop floor workers to progress to management or back office roles?

89 Cummins C, 2013, ‘Big malls ahead of the game,’ Sydney Morning Herald, Business Day, March 20, www.smh.com.au/business/big-malls-ahead-of-the-game-20130319-2gdeh.html. 90 Service Skills Australia, 2012, Retail futures – Progress report – Stage one, SSA, Sydney. 91 Australian Centre for Retail Studies, 2011, The war for talent, Monash University, Melbourne.

Retail workforce issues paper 33 What do you think can be done to attract quality staff to retail as a career, for example through recruitment practice, training and education options?

What can retail enterprises do to improve the retention of quality staff?

Training and development

Retailers interviewed for Retail futures cited a range of training and development strategies in use. These include: in-house essential skills development and product knowledge training; online and self- paced programs supported by supervisor coaching; in-house formal training; and to a lesser extent, accredited training. The most important consideration for retailers was that the training was relevant to their day-to-day needs and provided practical application.

A small number of interviewees who used the formal training system, were satisfied with the outcomes and saw the benefits in terms of productivity and retention. Those retailers who didn’t use the formal training system explained that they found it overly bureaucratic, inflexible and costly in terms of providing release for students and providing on-the-job training.

Among small to medium enterprises there is little evidence of the use of formal training. SMEs in retail are often non-employing or have only a small number of employees within an outlet, with few resources to spare for release, and/or on-the-job supervision.

Overall there was a sense that training was difficult to organise in small organisations, be it a stand- alone SMEs, a franchisee or small outlets which are part of a bigger chain of outlets. Interviewees commented:

Training is a huge challenge—providing the necessary supervision when managers have multiple stores to manage… they don’t have the time.

We’ve tried training—unsuccessfully. Our biggest problem is getting people to invest the time and making it relevant—the training does not reflect the current situation.

There’s too much paperwork in formal training. It’s based on the lowest common denominator, which is not adequate for retail more generally.92

Do you find accredited training to be relevant to meeting your practical workplace needs? If not, what could be different that would improve this?

What are the barriers to using accredited training?

Management development

Of particular concern for the industry is management and leadership development, to enable both effective day-to-day operations and strategic change and transformation. Interviewees suggested that in recent years this has become a particular problem, as there had been a decline in investment on the part of employers in workforce development. This has particularly impacted on the quality of higher- level operational positions.

92 Service Skills Australia, 2012, Retail futures – Progress report – Stage one, SSA, Sydney. 34 Managers are typically employed without a formal qualification and promoted internally on the basis of hard work, with minimal development. Interviewees suggested that this has created significant skill deficits among managers, for example, in learning skills, in basic financial management skills, in people management and in strategic thinking:

(Managers need) an understanding of the complexities of the retail environment, particularly in different countries, (and) how to manage the workforce, merchandising, fit out, planning.

Managers need better understanding of customers, greater analysis skills, true leadership, not just checklist style management.

To be successful as a retail manager you have to work your way up, even if you’ve got a retail degree, and that’s not attractive to many young professionals.

While there are some retail specific management programs, they are generally not well subscribed and attitudes toward the need for retail specific qualifications were mixed:

We need much stronger professional qualifications, like the UK.

A retail management degree would be limiting, it would be a waste of money … you can get a general business degree and get retail skills on the job.

There are few people with retail specific qualifications, but we would value them if they came along.

How can the need for shop floor experience be reconciled with the advantages of external management qualifications and experience, in order to attract high quality candidates to management positions?

Back office skills

Many in the back office come with a professional qualification in their area of expertise, for example in accounting, human resources, marketing or ICT.

Retail specific back office jobs, such as merchandising and buying are not well served by training and education programs. Mostly employees in these positions are qualified in a related field, such as design or fashion, and make the transition into the position through on-the-job experience. Others work their way up and end up in the position. There is a Diploma in Merchandising but enrolments are low. 93 Increasingly, retailers suggested that they were accessing back office retail specific skills from international sources, because there is a shortage locally:

Retail planners are really, really weak here … there are very few people who understand it and it’s a fantastic job for people who like numbers.

Hard to find home grown talent in design, planning, buying … we’re looking overseas. Poaching of merchandise planners is a becoming a problem because of the shortage.

We have problems finding buyers … short of quality candidates. There’s a high turnover in buying, merchandising and ICT.

93 NCVER, 2012, Students and Courses, NCVER, Adelaide.

Retail workforce issues paper 35 Given the technology demands in all areas of the retail workforce there is a particular demand for ICT skills, digital marketing, analytics and web design. However, retailers have difficulty in attracting and retaining these staff because there seem to be few available locally and therefore there is a high demand in other industries as well.94

How can back office staff with generic qualifications acquire retail competency so that they can apply their skills meaningfully in a retail environment?

How can retail specific back office staff be trained and developed locally to meet the needs of the industry?

Internal workforce development practices

The larger enterprises that were interviewed identified well developed workforce development strategies, such as formal training, talent development programs, leadership training as well as performance management, job design, coaching and mentoring.

Some retailers are working with training and education providers offering university internships and work placement in management and retail specific back office positions.

Another retailer is trialling a program that provides the opportunity to work as a part-time sales assistant and complete university study so that on graduation they can take up a higher-level permanent role within the company.

Some organisations have undergone an internal workforce skills analysis to ensure that jobs are designed to make best use of skills.

Other retailers noted that they had personalised development plans for managers using a combination of on-the-job training, coaching and some external training.

Many interviewees identified management internship programs as a potentially successful strategy for developing the workforce. They regretted the demise of programs that used to be run by department stores that provided a pool of capable managers, leaders and retail-specific staff.

There are also some examples of management work-based programs using the Certificate IV in Management and or higher education programs that have been effective, according to employers who have used them.

However the high staff turnover rate is a disincentive for many employers to invest in development. This goes at least some way to explain why there is a low transition rate from part-time and casual employees to a full-time career in retail. Interviewees suggested that the investment in staff had fallen away in the past few years, and strategies are needed to encourage greater investment in workforce development.

It would be beneficial therefore to draw on the experience of other countries, particularly the United Kingdom to find models for workforce development practices that may be adapted for local use. However, despite the reputation of the UK training and education process, the research suggests that they are facing many of the same challenges as the Australian industry.

94 Service Skills Australia, 2012, Retail futures – Progress report – Stage one, SSA, Sydney. 36 How can industry improve workforce development practices?

What particular support could be provided to SMEs who have few staff and resources but need to adopt internal practices to enable change and sustainable business practice?

Would industry-wide management programs help to provide a pool of suitably qualified staff? How could they be run and managed?

2.8 Retail from an international perspective

Until quite recently Australian retail was relatively immune to the forces of international retail because of its distance from Europe and USA, and as a consequence has been slow to adopt practices that have enabled international retailers to transform in response to technology and other drivers of change.

However, now with proximity to Asia, the seemingly sudden impact of international retailers has highlighted some of the deficiencies within the industry.

For example there is evidence that compared to other countries Australian customer service standards are poor. The 2012 American Express (AMEX) Global Customer Service Barometer found that while Australians value good customer service, a large proportion (36 per cent, the highest among the 10 countries surveyed) ‘think that companies are paying less attention to customer service in the current economy’ and 42 per cent believe companies ‘are helpful but don’t do anything to keep their business’. At the same time, 64 per cent of consumers are ‘more likely to tell others about their poor customer service experiences all the time.’95

Some interviewees in Retail futures suggested that Australian retail looks to the UK to find suitably trained staff in many of the retail-specific back office positions, for example retail buyers.96

The bulk of the literature concerning international models of skills development comes from the UK, with the situation broadly comparable to the Australian experience. These similarities can be distilled into three main themes.

Retail specific qualifications

According to research into international retail, there is a relative lack of demand for retail-specific qualifications, with employers placing more emphasis on soft skills. Evidence of this trend was particularly pronounced in a 2011 survey of retailers from the Greater Manchester area, which revealed that when it came to selecting front-line retail staff a majority of employers rated the importance of ‘personality’ and ‘appearance’ above formal retail qualifications. According to the researchers who conducted this study, there have only been ‘piecemeal and incremental’ attempts in the UK to incorporate soft skills training into government employability initiatives. Some of these attempts include a program from Learndirect, a not-for-profit organisation created by the UK government which offers various courses focusing on the soft skills required for customer care, and a Retail Academy in Glasgow that facilitates work placements for individuals seeking a retail career by offering short, pre-employment training programs focusing on soft skills.97

95 Echo Research, 2012, 2012 global customer service barometer, A research report prepared for American Express (AMEX). 96 Service Skills Australia, 2012, Retail futures – Progress report – Stage one, SSA, Sydney. 97 Nickson D and Warhurst C, 2011, ‘Soft skills and employability: Evidence from UK retail,’ Economic and Industrial Democracy, Vol. 33, No. 1, p. 79.

Retail workforce issues paper 37 Nevertheless, these programs appear to be the exception rather than the rule and there is a general consensus among UK retailers that existing qualifications are ‘not appropriate to the needs of the current retail trainee’.98

In-house versus accredited training

The second theme centres on a preference for in-house training.99 According to the literature, this preference stems from the view that in-house training is of a higher quality than training offered by public and private training providers.100 Additionally, there are reports that employers are ‘becoming increasingly confused by the variety of qualifications on offer’.101 One example of best practice in-house training comes from the Japanese fashion retailer, Uniqlo. New managers undertake a six month induction program in Japan, where they are exposed to every in-store role and immersed in the company’s customer-centric culture, which insists that every manager should constantly ask his or her team to ‘tell me something you did this week that was good for a customer’.102 In Australia, non- accredited in-house training rarely attracts Government funding. There is a view that this type of employer specific training should be funded as part of normal business operations. Accredited training, whether external or in-house, is easier to justify as the Government is buying an ‘externality’ or something in addition to the training—namely the credential. The credentials awarded though accredited training can be of benefit to the employee and to the next employer as a signal of the candidates experience and skills.

Training investment

Finally, there is a discrepancy in the level of training investment between large operators and SMEs. In the UK, large retailers invest significantly in training, but smaller operators do not. According to a Skillsmart study, the UK retail industry spent between 1/4 and 1/3 of a billion pounds on training in 2004. However a significant portion of this was spent on programs with legislative requirements, such as workplace health and safety.103

Across the Atlantic, US retailers have shown how appropriately designed and effectively executed training strategies can lead to business growth. At QuickTrip, a US convenience store chain, part-time employees receive 40 hours of training and full-time employees receive two weeks—not only in point- of-sale systems, but across several operational areas. This means that during periods of low customer traffic, employees can focus on other tasks. The QuickTrip ‘cross-training’ approach has also been used effectively by Spanish supermarket retailer, Mercadona, and given that sales per employee are 18 per cent higher than its competitors, such a strategy appears to be successful.104

Can you identify international examples of retail workforce development models and tools that could be beneficial to Australia’s retail sector?

98 Hart C and Stachow G, 2007, ‘Employer perceptions of skills gaps in retail: Issues and implications for UK retailers’ International Journal of Retail and Distribution Management, Vol. 35, No. 4, p. 281. 99 Mosley P, et al., 2012, ‘Wholesale and retail: Sector skills assessment’ UK Commission for Employment and Skills. 100 Harris F and Church C, 2002, An assessment of skills needs in the retail and related industries, Department of Education and Skills, London. 101 Hart C and Stachow G, 2007, ‘Employer perceptions of skills gaps in retail: Issues and implications for UK retailers’ International Journal of Retail and Distribution Management, Vol. 35, No. 4, p. 280. 102 Mehmedovic S, 2013, ‘Attracting and retaining shop-floor employees,’ Retail Therapy, Australian Centre for Retail Studies Monash University, Melbourne. 103 Huddleston P and Hirst C, 2004, Are you being served? Skills gaps and training needs within the retail sector, Research paper 53, Centre for Education and Industry, University of Warwick, UK. 104 Ton Z, 2012, ‘Why “good jobs” are good for retailers,’ Harvard Business Review, January-February, p.131. 38 Retail workforce issues paper 39 Part Three Addressing workforce development challenges

Workforce development approaches can be taken at both the industry and the firm level. A workforce development approach at industry level would see strategies developed to improve career opportunities and pathways into and within the industry and to communicate them more effectively to the public. Another priority is to review the skill needs of retail occupations. Education and training options also need reviewing to ensure they reflect skill needs and are attractive and accessible to potential participants. Industry support is needed for firms with limited capacity for workforce development such as SMEs.

At the firm level, better knowledge of good practice workforce development could result in increased attention to recruitment strategies and job redesign. For instance, skills audits could help identify the training needs of existing staff. Similarly, improved leadership and management capability would enhance retention through better employee engagement.

The section that follows considers these possibilities in more detail.

3.1 Improving career opportunities and pathways

The retail industry suffers from the perception that it is low skilled and without career prospects. It is often seen as a short-term, stopgap employment option. An Australian Centre for Retail Studies study found that respondents (from schools, universities and existing employees) felt that the retail industry is undesirable as a long-term career, because of the belief that there are few opportunities for career progression. There was little awareness of retail’s corporate support functions such as marketing, merchandising, finance and IT among respondents. While the industry was perceived to be appealing because of the social nature of the work, less than 5 per cent of retail employee respondents indicated satisfaction with retail as a long-term career option. Retail was not considered a high prestige career option:

I don’t think retail is ever a career of choice... it is something you definitely just fall into. I don’t know anyone who says, ‘I want to work in retail when I grow up’.105

In her study ‘Attracting and retaining shop–floor employees’, Mehmedovic suggests that this distorted view of retail stems from a lack of understanding of job roles and opportunities.106

A number of characteristics of the retail industry are likely to fuel these negative perceptions. Higher than average employment of part-time and casual workers is coupled with a higher than average staff turnover. In February 2010, 24 per cent of retail employees had been with their current employer for less than 12 months, compared to 18 per cent across all industries and 15 per cent had been with their current employer or business for ten years or more, which compared with 24 per cent across all industries.107

Further, while there is a career progression framework outlined in the industry training package and higher education offerings, it is poorly understood and underutilised, leaving the impression that working in retail means working for a short period as a casual sales assistant.

105 Australian Centre for Retail Studies, 2011, The war for talent, Monash University, Melbourne. 106 Mehmedovic S, 2013, ‘Attracting and retaining shop-floor employees,’ Retail Therapy, Australian Centre for Retail Studies Monash University, Melbourne. 107 Australian Bureau of Statistics, 2010, Labour Mobility, Australia, February, cat. no. 6209.0, ABS, Canberra. 40 Another factor is retail’s visibility within the community. Its ‘everydayness’ makes it commonplace, creating the impression that anyone can do it. The skills of a highly proficient sales person, while they might be casually acknowledged, are not valued and the processes for developing them are not well understood.108

The Australian Centre for Retail Studies study found that the problem is not attracting talented people, but encouraging them to adopt a retail career.109

The factors which attract people to retail include the availability of employment, flexible working hours, working with and helping people, a passion for customer service or brand, the lack of a requirement for a qualification, and as a means to re-enter the workforce.

Factors which would enable progression include training and development (both internal and external), the ability to expand retail job roles to a wider variety of tasks, development of leadership potential, networking opportunities with head office staff, structured career paths, consistent recognition of high performance and employment tenure.

Disincentives were found to include the limited opportunity to progress, dissatisfaction with the employer, corporate stress, personal preference to move out not up, feeling that they were too old and a feeling that being female created limitations for advancement and career progression.110

Mehmedovic finds that that the main reason people leave retail is due to the feeling of being ‘undervalued.’ She concludes that to assist in attracting and retaining staff, more attention should be given to work-life balance, work-life culture and management styles.111

In order to address the core issue of the attractiveness of the retail industry as a career choice, the following actions could be considered:

 make the career opportunities within the industry visible, allowing for movement between firms and within firms

 review processes for identifying and developing talent among part-time and casual workers

 design and implement strategies that create a retail culture which values employees, engages them and provides real development opportunities

 promote the career opportunities within the retail sector through a variety of channels and methods, for example marketing campaigns, web sites and industry champions

 develop collaboration structures among retailers to promote sharing of resources, knowledge and staff thereby creating more employment security while maintaining flexibility.

Do you agree with the suggestions above?

What strategies could be used to promote the retail industry as a rewarding career?

108 Smith E and Teicher J, 2011, Ways of seeing: Reconceptualising skills, Service Skills Australia, University of Ballarat. 109 Australian Centre for Retail Studies, 2011, The war for talent, Monash University, Melbourne. 110 Australian Centre for Retail Studies, 2011, The war for talent, Monash University, Melbourne. 111 Mehmedovic S, 2013, ‘Attracting and retaining shop-floor employees,’ Retail Therapy, Australian Centre for Retail Studies Monash University, Melbourne.

Retail workforce issues paper 41 Would initiatives such as industry champions work? How could this be implemented?

Should a marketing campaign be considered? How would it be funded?

How do we balance the issue of an industry with a largely unqualified workforce with the desire for more highly qualified workers?

What other strategies for communicating retail career opportunities would you suggest?

3.2 Reviewing the skill needs of retail occupations

Given the changing skill needs in the industry as discussed in this report, a review of the skills needs of current occupations in light of new and emerging requirements may be called for.

Sales staff skills

Now more than ever, bricks and mortar retail needs to offer customers an experience that cannot be provided online. This implies the need for greater product knowledge, more sophisticated interpersonal skills, and a unique and compelling experience. There is also evidence that there will be a need for higher level technology skills. In the future it is projected that there will be a more mature workforce that may be well suited to providing these more sophisticated interpersonal skills.

Currently the sales assistant role does not formally require a high level of skill. Sales assistants, general clerks and retail managers rank in the top three of four occupations that currently have no post-school qualifications.112 According to the Productivity Commission, ‘the retail industry is characterised by relatively low skilled workers and it is probable that the training requirement for retail personnel is lower in a formal sense than that required by workers in other industries’.113

Recent research from Service Skills Australia reflecting on the underpinning assumptions behind the perception of skill levels, found sales and customer service skills are generally perceived to be ‘everyday’ soft skills, which do not rate highly in traditional skills frameworks.114 The perception of retail as low- skilled and low-paid also contributes to the challenges of attracting and retaining staff.

Employers know that high-quality sales staff who understand retail, the customer and the product are invaluable. They are the direct interface with the customer. Given the changes in customer expectations, the skill levels of sales staff will become increasingly important:

Customers’ behaviour is changing …they are really discerning, but still crave the good old fashioned retail experience…we’re all getting into the technology, but 96 per cent of sales is still bricks and mortar. There’s a big opportunity to deliver a favourable experience…it’s not just sales, it’s the look of the store, the merchandising. Customers are demanding more which is why we need trained people who understand that.115

The sales position is fundamental to the perception of the industry and is often the entry point to the industry. A contemporary assessment of sales competencies may indicate a need for renewed job

112 AWPA, 2012, Future focus: Australia’s skills and workforce development needs, Commonwealth of Australia, Canberra. 113 Productivity Commission, 2011, Economic structure and performance of the Australian retail industry, Productivity Commission Inquiry Report No. 56, Commonwealth of Australia, Canberra. 114 Smith E and Teicher J, 2011, Ways of seeing: Reconceptualising skills, Service Skills Australia, Sydney. 115 Service Skills Australia, 2012, Retail futures – Progress report – Stage one, SSA, Sydney. 42 design, recruitment practices, ways of utilising skills, content training and greater focus on facilitating career progression.

Does the role of the sales assistant require higher skills?

Are there other jobs within retail that require higher-level skills? What are they?

How could the role be redesigned to better accommodate the needs of a more mature worker?

What strategies would you recommend to provide these higher-level skills?

Back office support skills

The evolution of the new retail environment is creating a demand for non-store-based staff who can develop and guide enterprises into the future. This provides great opportunities for both the retail workforce and also for external professionals looking for challenging and interesting work. However as previously discussed the opportunities for employment or internal progression within the retail industry seem poorly understood.

When interviewed for Retail futures in 2013, Dr Steve Ogden-Barnes noted that there is a range of emerging positions required to address the new consumer environment and new technologies:

We need illuminated thinking about online category manager, the reality of multi-channel distribution, the search behaviour of consumers, the psychology of buying across channels-what gets me online, what makes me click, what makes me commit, what makes me buy from overseas as opposed to here.

We need to understand the psychology of in-store buying, consumer motivation, the science of product alignment and position, the science of pricing. None of these are covered with authority at the strategic level. There are lots of seminars, reports and conferences, but it needs to be translated into practical outcomes. It needs to be based on contemporary evidence not merely generic, traditional principles.

Many of these roles have yet to be properly defined. There is some evidence that retailers are employing generalists, mathematicians and psychologists to apply their learning to the retail environment. However, increasingly there will be a need for retail specialists in these emerging areas, and their roles and associated skills need better definition.

Foundation skills

As identified in Future focus, foundation skills are a key issue underpinning labour force participation. Around 50 per cent of Australians have been assessed as having literacy and/or numeracy scores below the minimum standard required to undertake many aspects of life and work. There are challenges for those with literacy and numeracy needs to obtain higher level qualifications and they are more likely to be unemployed or not in the labour force. There is a very strong relationship between numeracy and having a job.116

For the retail industry, the picture is no better. The 2006 Adult Literacy and Life Skills Survey (ALLS) revealed that literacy and numeracy skills within the retail industry are below the industry average. The

116 AWPA, 2012, Future focus: Australia’s skills and workforce development needs –discussion paper, Commonwealth of Australia, Canberra.

Retail workforce issues paper 43 majority of retail employees are at prose and document literacy levels 2 and 3 and numeracy and problem-solving skills are less developed. Level 3 is identified as the minimum level required by individuals to meet the complex requirements of daily life and work .117

In the retail industry, there also appear to be barriers to the adoption of new technologies. Improving businesses’ technology skills and boosting the qualification and language, literacy and numeracy levels of the retail workforce could impact positively on the industry’s productivity and innovation performance.118

ICT skills

The increasing deployment of technology in retail enterprises requires ICT skills in almost all roles. For example, in-store sales staff need to be able to adapt to the range of new in-store technologies including cashless transactions, the connected consumer and the endless counter. Similarly, retail managers need technology skills to understand social media marketing, supply chain management, social media recruitment, real time auditing and finances. Further, online stores need visual merchandise designers, user interface designers, delivery and warehouse personnel and customer service assistants.

Leaders and professionals need to keep up to date with the range of emerging technologies as well as strategies for customising them to their enterprises.

Which roles in retail do you think need to be better defined?

How can the training system best deliver these skills?

What ICT training is available to SMEs?

How could ICT skills be effectively delivered to SMEs?

Skills to boost productivity and innovation

Retail productivity growth has been relatively strong but there is a need to continue innovating in order to be resilient in the face of ongoing change.

The 2006–07 to 2010–11 average annual multifactor productivity growth for the retail industry was 2.4 per cent, compared with an average of sixteen industry sectors of 1 per cent.119

New technology, new and improved work practices and new business models, coupled with appropriate leadership, are some of the means for increasing the productive power of the workforce.120

In order to adapt and adopt new technologies and practices, a suitable culture is necessary. Retail enterprises need big picture leadership that prioritises doing different things as well as doing things differently; a culture which encourages collaboration, experimentation and an openness to find

117 Australian Bureau of Statistics, 2006, Adult literacy and life skills survey (ALLS), cat. no. 4228.0, ABS, Canberra. 118 Cited in Service Skills Australia, 2013, Retail, wholesale and floristry environmental scan, SSA, Sydney. 119 Shah C and Long M, 2012, ‘A review of AWPA’s Future focus: Australia’s skills and workforce development needs discussion paper.’ 120 Kennedy S, 2013, ‘Productivity in Australia–innovation and skills,’ Speech delivered at ANU Crawford School of Public Policy and Harvard Kennedy School Conference, Canberra, 19 March. 44 appropriate new practices and technologies; skills and tools which create adaptive capacity within the workforce; and systems which embed innovative practices within day to day work.

Ernst and Young find the sector is reticent in adopting online technologies. The company’s Productivity Pulse survey, conducted in 2011, found that technology wastage accounted for 10 per cent of downtime per week in the retail sector. Retail also scored poorly when asked about the success of implementing new technology, at 42 per cent. It is unsurprising then that only 34 per cent of retail respondents indicated that new technology had improved their productivity over the past 12 months.121

Innovation capacity is closely linked to high performing workplaces and good practice in workforce development and skills utilisation. The Society of Knowledge Economics found that high performing workplaces have profit margins three times higher than low performing workplaces. They also have higher levels of innovation outputs (25.3 per cent), they generate more new ideas (28.1 per cent) and are more successful at transforming ideas into new products and services (17.4 per cent).122 The role of management is critical in this context.

Management skills

Effective managers have been shown to reward workplaces with improved efficiency, innovativeness and profitability.123 Yet developing human capital, such as leadership and management skills, to add value to an organisation does not appear to be a priority for many Australian organisations.124 Management and leadership skills play an important role in generating innovation and labour productivity. Incorporating best practice in these areas into business operations is likely to result in improved business productivity.125

Front-line managers tend to have the greatest impact on employees’ behaviours and attitudes.126 These managers are often promoted up the rank and are unlikely to have formal management qualifications. Nevertheless they are expected to perform tasks ranging from financial to people management.127 In the retail sector especially managers will increasingly need to be equipped with skills to operate in international markets and to adapt to new technologies as they emerge.

Improving leadership and management skills will be very important in the Asian century. Managers will be required to develop new business models and designs that are tailored for the Asian business, social and cultural environments.

The issue of management skills also needs to be revisited to reconcile complex demands such as practical retail experience and financial management skills.

121 Ernst & Young, 2011, ‘Australian productivity survey -Wastage adds up despite motivated workers,’ www.ey.com/AU/en/Services/Advisory/Australian-Productivity-Pulse. 122 Boedker C, et al., 2011, Leadership, culture and management practices of high performing workplaces in Australia: The high performing workplace index, Society of Knowledge Economics, Sydney. 123 Bloom N, et al., 2007, ‘Management practice and productivity: Why they matter,’ Management Matters, November, p. 10, www.stanford.edu/~nbloom/ManagementReport.pdf. 124 Cutler T, et al., 2008, Venturous Australia: Building strength in innovation, Cutler and Company, Melbourne; Watson I, 2008, ‘Skills in use: Labour market and workplace trends in skills use in Australia,’ paper presented to the Jobs Australia National Conference, Brisbane, 8–10 September. 125 Green R, et al., 2009, Management matters in Australia: Just how productive are we? DIISRTE, Canberra. 126 Advisory, Conciliation and Arbitration Service, 2009, Front line manager’s advisory booklet, www.acas.org.uk/CHttpHandler.ashx?id=308&p=0. 127 Chartered Institute of Personnel and Development, 2012, Role of front line managers in HR, www.cipd.co.uk/hr- resources/factsheets/role-line-managers-hr.aspx.

Retail workforce issues paper 45 Specific management skills are also needed for SMEs and franchisees, as well as functional managers within larger business entities.

What skills do business owners need to adapt to the changing nature of retail and strategically plan for the future of their industry and business?

How do businesses identify and train for the skills that will be required in the future?

3.3 Reviewing training and education options

Improving pathways from school

Given that the retail industry is a major employer of young people and that there will be increasing competition for a diminishing pool of young people, due to the changing demographic, it is important that VETiS programs can attract students and provide them with quality training and viable employment options. There are industry concerns about the success of VETiS programs in terms of employment outcomes which might be partially attributable to the fact that many do not include work-based application.

Service Skills Australia notes some disquiet about institutional delivery without work-based experience:

There is some concern in the industry that institutional delivery of retail qualifications without work based experience is detrimental to the quality of the graduates as well as the reputation of the industry, as the learning does not reflect the full complexity of the workplace context, and graduates do not have the depth of skill and knowledge required by a retail enterprise ... a number of providers do not meet training package requirements for training facilities, authentic work and assessment.128

The attraction of school age employees to a career within retail is an important area for further investigation for the retail industry, but would also need to be part of a broader study of options for improving VETiS programs across industry.

How could school-based programs more effectively address the needs of retail employers?

Improving the quality of VET training offerings

The quality of VET training is contingent on a number of factors including the ease of accessing the system and the quality and relevance of the off-the-job training. But also important for quality is employer support for on-the-job training.

Retailers interviewed in Retail futures who used the training system were generally satisfied and believed it impacted positively on both productivity and retention. Those who didn’t use the training system believed that it was too bureaucratic, not sufficiently flexible or relevant for their specific needs. Some interviewees commented that they didn’t have the internal resources and/or expertise to provide on-the-job training, which is part of most accredited training. They felt that the demands on small to medium enterprises in terms of the resources needed for work-based delivery and training release were often too arduous.

128 Service Skills Australia, 2013, Retail, wholesale and floristry environmental scan, SSA, Sydney. 46 Those retailers who had used VET training stressed that the skills and retail experience of the trainer and the quality of the Registered Training Organisation (RTO) were critical.129

Service Skills Australia has implemented a quality implementation framework to address concerns about the quality of learning and assessment within the services industry. It consists of two parts:

Training Package User Guides

These stipulate assessment and learning requirements, assessor and trainer qualifications, professional development requirements, work placement requirements, guidelines for selecting and recruiting students, equipment and facility requirements and minimum duration for qualifications.

The Right Way Program

This is a national industry accreditation system for quality training providers delivering training in Service Skills Australia’s Training Package areas. The program focuses on three key areas: quality training and assessment facilities; quality trainers and assessors; and quality learning resources. Through the Right Way program, Service Skills Australia seeks to facilitate industry recognition of facilities, trainers, assessors and learning resources. Participants in the program must adhere to strict standards and provide evidence of quality through an application and assessment process operated by Service Skills Australia and its network of agencies.130

Making training accessible and attractive for retail employees

Substantial changes are occurring in the VET system across the states and territories as a result of the COAG reforms under the National Agreement for Skills and Workforce Development and the new National Partnership on Skills Reform. A key plank of these reforms is the move to a student demand- driven system. However, with each state and territory able to adopt their own mechanisms to achieve this and the ability for a student demand system to put pressure on already constrained state budgets, many states have reduced the subsidies or put caps in place for certain courses. Retail qualifications have been affected in this way in some states, and furthermore, there has been a change of policy on training commencement incentives for retail qualifications announced in recent budgets.

Service Skills Australia believes that:

This will ultimately lead to a decline in the number of students undertaking service industry training package qualifications, particularly those funded through industry co-investment models, such as the National Workforce Development Fund. This is because cheaper generic business qualifications, with fewer units of competence will be favoured. The demand for skill sets is also a response to this change. A greater focus on price also has the effect of driving down incentives from quality.131

At a time when retail needs to build the reputation of the industry as an employer, it is important that it focuses on the unique competencies required, rather than be submerged into the generalised training for any business.

129 Service Skills Australia, 2012, Retail futures – Progress report – Stage one, SSA, Sydney. 130 For more information on the Right Way program see www.serviceskills.com.au/rightway. 131 Service Skills Australia, 2012, Retail futures – Progress report – Stage one, SSA, Sydney.

Retail workforce issues paper 47 Across all industries there is a tendency for part-time staff to participate less in work-related training than full-time staff (62 per cent and 79 per cent respectively), and the participation of casual workers is less again.132 It is important that the retail industry include part-time and casual staff in development opportunities and offer opportunities for progression so that potential students see the value in undertaking retail-specific training.

In your opinion what constitutes quality in training for the retail sector?

What options should be considered to make training more accessible and relevant, particularly for SMEs?

What other strategies would ensure the quality of training delivery?

What would encourage people to choose retail as a training option and a career?

3.4 Supporting employers to implement relevant workforce development strategies

Formal training

Employers in retail are less likely to use the VET system for their training needs than employers in other industries (38 per cent used the system compared to 54 per cent for all industries in 2011).133

As discussed previously, they are also more likely to use unaccredited training or informal training than training provided by the VET system. The Productivity Commission inquiry into the economic structure and performance of the Australian retail industry found that:

Employers in the retail industry do not perceive that having a VET qualification is as important to meeting their industry skill needs as do employers in some other industries—most notably employers in industries requiring higher formal skills such as construction, manufacturing and mining. Employees in these industries are more likely to need technical training to acquire specific skills as part of their duties such as operating light and heavy machinery with precision and safety. Retail workers require training in tasks such as customer service, stock control and operating point of sale equipment.134

However, according to interviewees in Retail futures who used formal training:

Traineeships are a good retention strategy.

There is an advantage in having national qualifications … positive reinforcement for employees, a good foundational platform.135

There is some evidence that the provision of accredited training boosts retention and inspires greater commitment to retail as a career. In 2011, Service Skills Australia commissioned University of Melbourne’s Centre for Research on Education Systems to investigate the pathways people take on

132 Australian Bureau of Statistics, 2010, Education and training experience, March 2009, cat. no. 6278.0, ABS, Canberra. 133 NCVER, 2011, Australian vocational education and training statistics: Employers’ use and views of the VET system, NCVER, Adelaide. 134 Productivity Commission, 2011, Economic structure and performance of the Australian retail industry, Productivity Commission Inquiry Report No. 56, Commonwealth of Australia, Canberra. 135 Service Skills Australia, 2012, Retail futures – Progress report – Stage one, SSA, Sydney. 48 completion of a retail qualification. It found that the retail graduates had very high levels of satisfaction (97 per cent satisfied or very satisfied), and that on completion of the course 70 per cent had a retail job that was permanent or ongoing. When asked about their future, 60 per cent of graduates who were working in a retail-related job expected to continue in the same job or industry. Additionally 60 per cent of graduates who were working in a retail job while studying found their employers very supportive and encouraged them to complete the course.136

So while the current cohort of retail workers is predominantly without qualifications of any kind it needs to be an ambition to increase the qualification level to provide the adaptive capacity to meet emerging needs and to address issues of retention and attraction. A key factor in the take-up of qualifications may be having employers that value qualifications and to encourage employers to participate in training and use qualifications in the recruitment and progression systems.

What support is required for employers to encourage them to engage with and value the training system and qualifications?

Improving workforce development practices

When organisations commit to strategies to better utilise the existing skills of their workforce, there are rewards for both employer and employee.137 Job redesign and employee autonomy are two important strategies that organisations can implement to improve skills use.

Job redesign looks at how tasks are organised, changed or realigned to enable the best use of employees’ skills. It can involve increasing the variety of tasks and functions that employees undertake, or changing how work is organised to include teamwork, flexible job descriptions, multi-skilling and flexible work arrangements.138 Its benefits can include more motivated and satisfied employees. This can lead to increased productivity for the business and can also improve staff retention and loyalty,139 one of the key workforce development issues highlighted in this paper. The retail industry is also well placed to benefit from the increased flexibility that job redesign can offer.

Another strategy that provides opportunities for staff to use their skills more effectively is improved employee autonomy. Autonomy is associated with ‘the need to think about, as well as to do work’. It includes enabling employees to make decisions affecting their work, being able to use and improve their skills as well as being able to exercise control over their job.

Workers who have no autonomy in their jobs, and who are just following very detailed job descriptions, can become like robots... Equally, employees have a need to be able to develop their potential to operate effectively in whatever sphere they are working. Those whose potential and skills are underused become alienated, and are likely to register low levels of wellbeing.140

136 Service Skills Australia, 2013, Retail, wholesale and floristry environmental scan, SSA, Sydney. 137 AWPA, 2013, Future focus: 2013 National Workforce Development Strategy, Commonwealth of Australia, Canberra. 138 Guest D et al., 2003, ‘Human resource management and corporate performance in the UK,’ British Journal of Industrial Relations, Vol. 41, No. 2, p.299. 139 Skills Australia, 2012, Better use of skills, better outcomes: A research report on skills utilisation in Australia, Commonwealth of Australia, Canberra. 140 Green F, et al., 2010, ‘Measuring the dynamics of organisations and work: Employee level survey,’ The Meadow Guidelines, Grigny, CEE (Centre d’Etudes de l’Emploi), European Commission, p.164.

Retail workforce issues paper 49 As with job design, autonomy also creates positive outcomes for organisations and their employees. Many of these go hand-in-hand, such as increased employee satisfaction leading to better retention rates. Similarly, greater autonomy for employees often results in more innovative work practices.141

Other workforce development strategies include performance management, talent management, coaching and mentoring.

This is a variety of workforce development plans and tools available to assist businesses to undertake workforce development. While larger firms may have many of these in place, it is the large number of SMEs who need the most support.

Supporting SMEs in workforce development

SMEs face greater challenges in undertaking workforce development activities as they are much less likely to have the support of human resources or other corporate services than larger organisations. During consultations in developing Future focus, stakeholders raised this issue and suggested support such as funding assistance for workforce development activities.

Skills Connect currently provides enterprises with access to government assistance, funding and resources targeted at workforce development and planning. Enterprise Connect offers comprehensive, confidential advice and support to eligible Australian SMEs to help them transform and reach their full potential.

In Future focus, AWPA recommended extending Enterprise Connect services to provide greater support for organisations in labour intensive industries such as retail. The report also highlighted the potential for greater alignment between business improvement and skills programs (Enterprise Connect and Skills Connect) to support workforce development for SMEs. This would provide the opportunity to work with clients on issues relating to skills and workforce development and planning, not only to provide a better, more holistic service to clients but also to more effectively harness the skills and resources available within a business.142

What workforce development tools are being used by the retail industry?

What strategies are the most successful for providing support, for example, online materials, printed books, workshops, collaborative networks among retailers?

3.5 Building leadership capability within the industry

Leadership skills are critical in any industry, but most particularly for those undergoing significant transformation. However, there are reportedly few systems in place to develop the necessary skills of managers and leaders within the retail industry.

The type of person we want working for us has changed significantly. Rather than hard work and dedication, we want genuine leaders, inspirers, good business people. They are more likely to be graduates than those who’ve worked their way up … they’re educated rather than self-made.143

141 Skills Australia, 2012, Better use of skills, better outcomes: A research report on skills utilisation in Australia, Commonwealth of Australia, Canberra. 142 AWPA, 2013, Future focus: 2013 National Workforce Development Strategy, Commonwealth of Australia, Canberra. 143 Service Skills Australia, 2012, Retail futures – Progress report – Stage one, SSA, Sydney. 50 In large organisations retail leaders, such as managers, are typically internally developed and promoted based on work performance, time and hard work. While there are benefits in terms of loyalty and engagement, this practice creates significant problems. Not only do retail outlets suffer in terms of the day-to-day business, but because of a lack of external focus, it impacts on the enterprise’s ability to innovate, increase productivity and compete in a complex environment.

We need to bring fresh people in at all levels. We have great internal opportunities but it means that all the skills and experience are in-bred; we need fresh perspectives, to know what is going on worldwide.144

Executive leadership skills have also been identified as an area of need. Currently there are some costly leadership programs that are only open and affordable to few. Retailers reported that executive leaders were often recruited internationally because of the deficit of suitable people locally.

Is there a need for a pre-requisite professional qualification for retail managers?

Are existing retail management training package qualifications fit for purpose?

What strategies would assist retail managers and leaders to develop their capabilities for both managing for today and leading change for tomorrow?

What strategies could be implemented to attract talented leaders from other professions into the retail industry?

144 Service Skills Australia, 2012, Retail futures – Progress report – Stage one, SSA, Sydney.

Retail workforce issues paper 51 Part Four Consultations and submissions Stakeholder consultations

Consultations will be held in early August. Further details and information on how to register for a focus group session can be found on the Service Skills Australia website. Submitting your feedback

Throughout the Issues Paper we have included a number of questions designed to prompt thought and feedback on specific issues. Many of these questions have been included in this submission document. Addressing some or all of these questions in your submission is optional. Please note, the boxes in the template below are meant as a guide only. For your convenience a separate submission template can be found on the AWPA website.

You are asked to provide feedback to this paper by 4 October 2013. Please forward responses to: [email protected].

The submissions we receive will be posted on the AWPA website and may be quoted. If you do not wish for your responses to be published, please indicate this below.

 I do not consent to have my responses published on the AWPA website.

Contact information

Organisation

Contact name

Please type your response in the space provided after each question, save as a Word document and email the completed form to: [email protected] or post to: Workforce Development Policy Section Australian Workforce and Productivity Agency GPO Box 9839 CANBERRA ACT 2601

52 SUBMISSION QUESTIONS Demographic changes (section 2.1)

Research shows that the age profile of the retail workforce has changed over recent years. What has been your experience in recruiting and employing younger and mature aged workers? What would make it easier to recruit and employ younger workers and/or mature workers?

Opportunities arising from the global market place (section 2.2)

How has the retail industry been affected by globalisation (in particular the growth of Asian economies)? Your feedback may include what new skills and knowledge are required by retailers and the barriers the industry faces in a more globalised world.

Restructuring of the economy and emerging industries (section 2.3)

How have shifts in consumer spending patterns and changing industry structures affected the industry (or your business)? Your feedback could include the implications you see for workforce development.

Technology (section 2.4)

What are the challenges in adapting to new technologies? Your feedback could include barriers faced by organisations and suggested strategies to assist enterprises successfully adapt to new technology.

The need for sustainable practices (section 2.5)

How important are environmental sustainability and ethical procurement practices in retail? Are specific skills required to address these issues?

Current trends in retail business practices (section 2.6)

The Issues Paper discusses changes that are occurring in the retail industry which are causing retailers to review their practices. Have you responded to the changing retail landscape with a renewed focus on customer service? How have you done this, and how has the use of your staff changed as a result?

Have you witnessed a shift from traditional retail to a greater breadth in service provision? Has your business created new in-store attractions?

Current issues in workforce development (section 2.7)

Retail workforce issues paper 53 What are the challenges the retail industry faces in relation to: attraction and retention of suitably qualified staff, training and development, career structures and the special needs of small to medium enterprises?

Improving career opportunities and pathways (section 3.1)

It has been suggested that the retail industry suffers from a perception that it is low-skilled and without career prospects. How can industry and enterprises collaborate on developing a strategy to develop career opportunities and pathways? How do we balance the issue of an industry with a largely unqualified workforce with the desire for more highly qualified workers? Would the following suggestions provide a useful framework?

 make career opportunities within the industry more visible, allowing for movement between firms and within firms  review processes for identifying and developing talent among part-time and casual workers  design and implement strategies that create a retail culture which values employees, engages them and provides real development opportunities  promote career opportunities within the retail sector through a variety of channels and methods, for example marketing campaigns, web sites and industry champions  develop structures for collaboration among retailers to promote sharing of resources, knowledge and staff thereby creating more employment security while maintaining flexibility  promote career opportunities in human resources, marketing, IT and accounting that are available in retail.

Reviewing the skill needs of retail occupations (section 3.2)

As identified in the Issues Paper, the skills needs of the retail industry are changing. In your experience, what are the emerging occupations in the retail industry? How are skills needs changing in relation to:

 Sales staff skills

 Back office support skills

 Foundation skills

 ICT skills

 Management skills

 Online customer service skills

Reviewing training and education options (section 3.3)

How can the Vocational Education and Training system more effectively address the needs of the retail industry? What support is required for employers to encourage them to engage with and value the

54 training system? What are the barriers to using accredited training? Your feedback may include discussion on training quality, delivery mechanisms and strategies to encourage school students to undertake training for a career in retail.

Supporting employers to implement relevant workforce development strategies (section 3.4)

Improving workforce development is important to all businesses and a number of tools are currently available. Can you identify effective workforce development tools that you have used, or that you know of? What other tools would be useful for enterprises?

Building leadership capability within the industry (section 3.5)

As an industry undergoing significant transformation, building leadership skills in retail is important. What strategies would assist retail managers and leaders to develop their capabilities both for managing for today and leading change for tomorrow? You may wish to comment on whether there is a need for pre-requisite professional qualification for retail managers or if the existing retail management training package qualifications are fit for purpose.

International best practice (section 2.8)

Can you identify international examples of retail workforce development models and tools that could be beneficial to Australia’s retail sector?

Do you have any other comments on this Issues Paper?

Attachment 1 Retail Classifications: Division, subdivisions and groups (ANZSIC 2006)

Motor vehicle and motor vehicle parts retailing

 Motor vehicle retailing

 Motor vehicle parts and tyre retailing

Fuel retailing

Food retailing

Retail workforce issues paper 55  Supermarket and grocery stores and non-petrol sales (convenience stores) of selected fuel retailing

 Specialised food retailing (including liquor)

Other store-based retailing

 Furniture, floor coverings, houseware and textile goods retailing

 Electrical and electronic goods retailing

 Hardware, building & garden supplies retailing

 Recreational goods retailing

 Clothing, footwear and personal accessory retailing

 Department stores

 Pharmaceutical and other store-based retailing

Non-store retailing and retail commission-based buying and/or selling

 Non-store retailing

 Retail commission-based buying and/or selling

56 Attachment 2 Types of Retail Businesses

There is a wide variety of retail businesses including:

 Department stores—large stores, offering an assortment of goods including fashion, food, furniture, white goods

 Boutiques—a small outlet, either stand alone or part of a chain or franchise specialising in fashion goods

 Specialty stores—a small retail outlet either stand alone or part of a chain of franchise, offering specialty goods which may be pets, books,

 Discount stores—compete on price, offer a variety of goods

 Market stalls—part of a market place offers products for a restricted period of time on a dismountable counter and display

 Franchises—the practice of using another firm’s business model. A franchisee has access to trademarks and distributes the franchisor’s goods. Examples include 7 Eleven, McDonalds

 Pure Play—sells goods purely through the internet with no physical store, for example Amazon

 Omni channel—a retail establishment that has both a physical bricks and mortar store and an online outlet

 Door to Door sales—goods are sold in the home, for example energy companies, some fashion companies

 Big Box—is characterized by a large amount of floor space (generally more than 50,000 square feet), a wide array of items available for sale, and its location in suburban areas. Big-box stores often can offer lower prices because they buy products in high volume.

 Supermarket—a large self-service store offering a variety of grocery products and limited non- food items.

 General store—a local store that supplies the main needs for the local community

 Retail chains—are retail outlets that share a brand and central management, and usually have standardized business methods and practices

 Micro-retailers—or ‘mum and dad stores’, owned and operated by a family, a couple or a single person, they don’t employ any one and are categorized as a micro business (under 5 employees).

Retail workforce issues paper 57 58