Productivity in retail miscellaneous shopping goods stores

Monthly Labor Review, Oct, 1995 by Ziaul Ahmed, Patricia S. Wilder

Productivity growth in the miscellaneous shopping goods stores industry is moderate, compared with other retail industries, as reported by the Bureau of Labor Statistics. Among 22 retail industries, 15 had higher productivity rates and 7 had lower rates between 1977 and 1992. As measured by output per hour of all workers, productivity rose at an average annual rate of 1.7 percent between 1977 and 1992. Output grew at 4.5 percent annually and hours of all persons rose by 2.8 percent.(1) (See table 1.

Table 1. Annual percent changes in productivity, output, and hours
of all persons in the miscellaneous shopping goods stores industry,
1977-92

Independent retailers in the miscellaneous shopping goods stores industry have not computerized their retail operations as fully as have the larger stores. These systems are costly and are not always suited for the smaller retailers. However, most small retailers have replaced mechanical cash registers with electronic cash registers, which has saved labor time in accounting and inventory control.

Labor time also has been reduced as retailers rely more on other means of merchandise delivery instead of their own delivery trucks. Manufacturers also are offering prepackaged and prepriced merchandise. The retailer dictates the price to the distribution center and the supplier prints it as part of the packaging, thus eliminating in-store marking and most display work.

Use of computers to analyze sales data has increased recently. Computers promote use of electronic data interchange to capture sales and reorder data at point of sate. Use of universal bar codes also is increasing. Bar code format describes characters that can replace messages contained in typewritten shipping documents. Bar codes ease tracking of parcels in the delivery process, resulting in fewer distribution errors, better scheduling of trucks and warehouse space, and smoothier reordering. More recent bar codes include several hundred characters in a square inch of space.(8)

Automated markdown is another labor saving device that is being introduced and integrated gradually in the retail market. Scanned markdown applications can save 50 percent of the time of manual ticketing.(9)

Location--accessibility and exposure to shopper traffic--is a prime determinant of how well a store's capacity and labor force are used. The rapid expansion in the number of malls and shopping centers in suburban locations contributed to productivity growth. Between 1972 and 1984, the number of shopping centers nearly doubled, increasing by 93 percent. Shopping centers offer greater sales exposure for a retailer than any other type of location.(10)

Employment

The number of workers in shopping goods stores increased from a little more than 624,000 in 1977 to more than 1.0 million in 1992, a 63-percent rise, or 3.3 percent a year on average. Hours of all persons increased at an average annual rate of 2.8 percent. Employment increased faster than hours because of a steady decline in average weekly hours. This is particularly true of nonsupervisory workers, whose average weekly hours declined from 31.9 in 1977 to 28.1 in 1992. The decrease in average weekly hours reflects an increase in part-time salespersons, often of school age, who work weekends and evenings.

Data are available for four categories of workers in the miscellaneous shopping goods stores industry: nonsupervisory workers, supervisory workers, partners and proprietors, and unpaid family workers. Nonsupervisory workers constitute the largest group, which includes salespersons, cashiers, stock workers, and nonsupervisory office workers. Nonsupervisory workers were 68 percent of the industry's work force in 1977 and 69 percent in 1992.

The number of supervisory workers--office supervisors, store managers, and assistant managers--increased from 70,500 in 1977 to 146,400 in 1992. Self-employed and unpaid family workers accounted for 21 percent of the industry's work force in 1977 and 16 percent in 1992.

Miscellaneous shopping goods stores employ a significantly higher proportion of women workers than other retail industries. Women in this industry accounted for 64 percent of all paid employees in 1992, higher than their proportion of 53 percent in total retail trade and 47 percent in all private nonfarm establishments in the same year. Women represented only 33 percent of all employees in manufacturing. In addition to school-age women, young mothers take part-time employment at retail businesses as work schedules in retail operations can be tailored to better meet their needs.(11)

Average hourly earnings for nonsupervisory workers in the industry were 49 percent below average hourly earnings of all private nonfarm employees in 1992 and 62 percent below the average for all manufacturing. Low average hourly earnings is a major factor contributing to the high employee turnover rate in the industry. Some studies show that retail employee turnover is as high as 60 percent. The high turnover rate among nonsupervisory workers hinders productivity gains in the industry because new employees must undergo training and are not as productive during this period.(12)