Staffing Realties of Opening New Stores in a COVID-19 Environment

Posted by Danielle Yanskey on Jun 16, 2021 5:30:00 AM

Staffing realities during COVID

Stories of the current shortage of workers in the United States are all over the news right now. With the economy starting to reopen, this unusual predicament could be blamed on many things, but many say it is a combination of expanded unemployment benefits and lingering COVID-19 fears making some reluctant to return to the customer-facing workforce.

Business Insider reported in April 2021 that the U.S. economy was down 8.4 million jobs since the pandemic instigated big layoffs, so why hasn’t the recent turnaround for many businesses (and big hiring plans) helped? Even incentives like higher pay aren’t closing the gap (McDonald’s has increased its hourly pay by 10% and is hoping to hire 10,000 workers).

This is obviously troublesome news for existing retailers, restaurant chains and other chain businesses, which are ready to rebound from COVID-19, but cannot hire the staff they need to do so. But if you’re a new or existing business hoping to open a location, it’s hard for you too. There’s the obvious challenge of understanding demand in a post-COVID environment. But the challenges hit long before staffing of locations:

  • Projects are taking much longer to get done due to lumber and building material shortages, lack of available workers to cut lumber, install HVAC, etc.
  • Some clients are even reporting that fixed costs are being (at least temporarily) done away with in favor of clauses in contracts that can result in retailers paying millions in additional cost over the course of a build.
  • This combination of factors results in retailers being reluctant to move forward on projects where they can't control costs, will face labor shortages and then will need to pass these costs on to the consumer through higher prices - all while trying to stay competitive in an uncertain market.

What can you do if you’re wanting to open a location but fearful about being able to staff it?

Here are a few suggestions:

Revisit your assumptions.

If you’ve set aside that new store plan for a while now that you developed pre-COVID, dust it off and review it again. What is happening to the population in the area where you’re considering opening? Is growth slower or faster than you previously assumed? Is your competitive set the same? Evaluate what has changed, including site costs.

Understand your customers and how they have changed.

You absolutely must make an effort to understand the characteristics of your prospective customers. That means knowing where they live, work and shop, of course (and relying on market research to gather their demographics and behaviors), but it’s also important to understand their habits now (and how those might have changed). For example, if you’re a restaurant concept that planned to open a location in an area with a high lunch population of workers in nearby office buildings that you expected to make up the majority of your customer base, you need to understand now how your customer profile has changed. Are more of those customers working from home now?

Evaluate your current stores.

Before you open new stores, it’d be worthwhile to analyze your current locations to get a sense of what’s happening in those areas. You can evaluate your current locations by using SiteSeer's Data Query Tool. The Query tool will allow you to gather data on your current stores and many other SiteSeer Layers. With this tool you can discover commonalities between your best performing and worst performing locations. That gives you the power to evaluate new sites with actionable data from your current locations.

Look at unemployment data and the correlation with your staffing.

Our data partner, AGS, can provide detailed unemployment data on your market. Then, you can assess the correlation between unemployment rates and your staffing challenges (or lack thereof) as well as things like labor costs.

Look at inflation.

You’ve probably noticed in the last year—prices of just about everything have increased as the economy has been recovering. The Bureau of Labor Statistics reported a price increase of 6.6% between May 2020 and May 2021, the biggest jump since 2010 (when they started collecting this data)—see CNN’s article on this. There’s some debate whether these price increases are temporary or permanent, but there’s no question that you need to keep an eye on the interlinked increases of consumer prices and wage costs.

In the past, you might have assumed that if you opened a new location, you would be able to staff it without too much hassle, but we’re in unprecedented times, and this new challenge is one you shouldn’t overlook in your analysis.

As you re-engage in capital planning and consider either infilling your existing market or expanding into new areas, you should do all the usual things:

  • Analyze your customer data
  • Research your competition
  • Understand your market
  • Analyze the potential

But you must look at your data through a post-COVID lens, as much has changed.

SiteSeer can help. As you engage in capital planning going forward, consider our site selection platform that will help you develop a reliable process and choose locations that have great potential (and not those that do not). Schedule a demo to learn more about SiteSeer Pro and how our professional services team can  help! 

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