Toys R Us mass closures highlight retail workforce challenges
- Bankrupt retailer Toys R Us struggled to compete for workers, according to CNN Money. Workforces issues were among the toy retailer's challenges potentially because it paid at or near minimum wage, unlike competitors such as Costco and Walmart, which have boosted wages to attract and retain workers.
- The closure of Toys R Us stores will affect more than 31,000 U.S. employees, CNN Money reports. Bankruptcy laws prevent workers from receiving a severance package, but they will receive health coverage, the company's 401k contributions and 60 days' pay.
- The company asked the U.S. Bankruptcy Court for permission to hold off paying vendors until after it attempts to liquidate its inventory, reports Reuters. However, vendors aren't optimistic about getting paid, according to Reuters.
The U.S. lost 60,000 retail jobs in the first three months of 2017, but early 2018 numbers could show an improvement. And while the industry stands to lose as many as 7.5 million in the future to automation, the current need for workers remains high, especially in today's tight labor market. As retail options for consumers expand, many companies have bet on strong customer service to differentiate themselves in the market — a strategy that requires talented workers.
Competitive retailers, including Target and Walmart, have raised their minimum wage to better retain employees. Others began offering educational opportunities, expanded their benefit offerings and made work schedules more flexible to attract candidates. All of these changes show that employers becoming more cognizant of both their internal and external brands and how the two intersect.
Competition in an industry still often associated with low pay and high turnover rates has become stiffer. And even though wages remained relatively stagnant during the past several quarters, retail workers who have lost their jobs — and that's quite a few thanks to the Toys R Us closures — may provide a substantial talent pool for the retailer's competitors.