Most companies continued to open stores without hiring new people, while some, such as French-held Carrefour, cut the number of employees even though the number of stores increased fourfold.
Modern retail, a business of EUR8 billion a year, included last year more than 1,200 stores, triple compared to 2008 numbers, as retailers focused mainly on small formats – supermarkets, convenience and discount stores. Modern retail space increased by about 77%, but the number of employees by only 37%.
“In their quest for profit, modern retail chains had to see about cost efficiency during the crisis, as consumer spending did not show any signs of rebound. The number of employees per 1,000 square meters is a relevant parameter in analyzing how the store chains adjusted their costs,” said Marcelo Mihai, senior consultant with management consultant Geva & Company.
He explained that small stores, such as the convenience stores, many of which opened in the last few years, have personnel numbers that match their size. Each employee can do more jobs and can handle receiving merchandise, working the cash register or putting products on shelves.
“They are sometimes better paid than an employee who only does one thing, but eventually costs are lower.”
Moreover, some retailers have contracts in place with producers, which stipulate the latter send their own employees to arrange the products on shelves for their customers. “You can see them in store, wearing clothes with the producers’ logos. Such people are contract workers, temporary and part time employees.”
The decision to optimize costs comes at a time when sales per square meter are down to almost half, from almost EUR7,000 during the boom years to EUR4,000 last year. Figures show that the new store openings in the last few years of consumer spending decline managed to keep sales of modern retailers slightly up, but sales per square meter have been dwindling constantly. The 12 store chains have invested EUR1.5 billion to EUR2.5 billion to increase retail area by some 77% in the last few years, according to a ZF analysis.
Modern retailers are among the largest employers in the economy, each of which with more than 3,000 employees. Kaufland, the market leader by sales is the largest employer in the retail sector and one of the three largest private sector employers, with more than 12,500 people.
Most of these employees, however, are checkout operators or merchandise handlers, who are often paid no more than the minimum wage. A checkout operator of a hypermarket or supermarket in a small city in Romania makes 20% to 30% less than an employee on a similar position in Bucharest, because of the cost difference and the supply and demand in that location, retailers and recruitment companies say.
Still, food prices are the same throughout the entire country, regardless of wages and food spending is among the most important for Romanian consumers, who use more than 25% of their income for it.
Under the circumstances, personnel turnover for such positions as checkout operator and merchandise handler may be as high as 80% a year. The crisis prompted retailers to stop hiring to fill vacancies or relocate personnel from one store to another. Real hypermarket chain reduced the number of employees by about 2,600 even though it expanded by six stores during the crisis. Only Profi and Lidl increased their headcount per 1,000 square meters by 80% and 15% during the crisis.
(English version by Loredana Fratila-Cristescu)