Coles and Woolworths edge towards permanent staff

Some retailers are reversing the trend to casuals and lifting the permanent headcount.

Coles has drastically changed its employment practices.

Australian retailers are adopting vastly different staffing strategies as they attempt to traverse the minefield of slow consumer spending and minimise corporate costs.

The lead has been taken by Wesfarmers’ Coles unit which has the advantage of sales momentum, having beaten archrival Woolworths for the past 23 consecutive quarters.

Over the past five years Coles has drastically changed employment practices from 70 per cent casual and part-time to 70 per cent permanent.

“If someone wants to come to work with Coles we owe it to them to offer more than a living,” says Archie Norman, Wesfarmers’ retail adviser.

Ian Moir, chief executive of South Africa’s Woolworths Holdings, owners of David Jones, Country Road and Witchery, has a similar view. He says that if you want someone to represent you well on the shop floor you need to look after them.

“With permanent fulltime staff, you are getting people who are more engaged and more motivated, and who you can give more training and more product knowledge. That makes a big difference,” he says.

Australia’s Woolworths, too, is edging towards more permanent staff at its supermarkets, though the numbers are not as dramatic as at Coles. Over the past five years fulltime staff numbers at its supermarkets have edged up 3 per cent to just over 75 per cent. But Woolies have always had more fulltime supermarket staff than Coles.

At Myer, the company’s new chief executive Richard Umbers has a very different view, arguing that he needs more flexibility to ensure staff numbers are maximised when stores are full.

In 2008, as many as 95 per cent of Myer staff were permanent, either fulltime or part-time. Umbers wants to increase flexibility by lifting the proportion of casual staff. A voluntary redundancy program to reduce the number of fulltime staff at Myer closed last month.

There are three classes of employee in Umbers’ plan: casuals, permanent staff who work more than 36 hours and permanent part-time staff who work 10 to 36 hours.

The second step in his plan is to reduce the part-time staff hours by 20 per cent to give store managers more flexibility.

He says, “I am not drawing a distinction between casual and permanent, it’s important we invest in our staff,” he says. Umbers says that the kind of training that people get is what determines whether customers have a good experience on the shop floor.

Umbers’ strategy makes perfect sense for the department store chain, even if it runs counter to the prevailing wisdom in the retail trade.