Retail Is Dying? Tell That to Fast-Food Chains Losing Top Talent

(Bloomberg) -- Customers cussed at him and threw ice cream at him. Finally, Don-Wesley Andrews had enough. He quit McDonald's in Sacramento, California, for a job at Wal-Mart. 

Like many other Americans, 22-year-old Andrews improved his life just by moving to retail from fast food. Longer lunch break, paid time off, even a quarterly bonus -- and no french fry fragrance clinging to his clothes.

“Wal-Mart's not perfect, but compared to fast food, it's much, much, much better,” Andrews said.

There's plenty of talk about the retail industry dying, with malls closing and the slump stressing iconic chains like Sears Holdings Corp. and J. Crew, but healthier big-box giants such as Wal-Mart Stores Inc. and Costco Wholesale Corp. are still chronically in need of employees, at least for now. The number of U.S. retail jobs was about the same last year compared with 2015, according to the Bureau of Labor Statistics. What's really bedeviling retailers is annual turnover -- at 65 percent, it's the highest since before the Great Recession -- making it necessary to keep hiring. The chains are so hungry for good help they're poaching workers from fast-food restaurants.

“Those jobs tend to be more transitional, they tend to be more fluid, and as a result there tends to be higher turnover,” said Michael Harms of Dallas-based researcher TDn2K. “Even though you hear headlines like retail is dying and the robots are coming, there's still a lot of things that need human touch points. It's a dogfight over good employees.”

When it comes to pay, stores have the edge. U.S. retail sales workers earn a median $10.37 an hour, while food workers, including those at fast food, make $9.35, according to new data from the BLS. 

Andrews said he earns $12.12 an hour at his new job. Perhaps not coincidentally, Wal-Mart, the largest U.S. private employer, added about 200,000 American jobs over the last decade.

Worker Retention

Italian fast-casual chain Fazoli's is trying to fend off retail, according to Dave Craig, vice president of human resources.

“It's a free-for-all right now,” Craig said.

While the company is paying 20 cents to 30 cents more than last year, its employees still make $9.20 an hour, on average. That's less than the minimum of $10 an hour Wal-Mart started giving people last year.

Fazoli's is trying to retain employees. The chain might nix cotton T-shirt uniforms for a Dri-Fit option that employees don't have to tuck in. Black jeans, instead of slacks, are a possibility, too. And workers may get paid more often -- the company is testing a program that gives employees some of their earnings at the end of each shift in a debit card.

Boston Market Corp. is buttering up employees, too. It's handing out as much as $100 to those who get the best customer-survey scores. The chicken chain is spending more to advertise jobs on Facebook Inc., Glassdoor Inc. and Twitter Inc. and is giving raises. Workers now earn $10.01 an hour, on average -- about 75 cents more than last year.

Pay increases in fast food are fueled by more than just the competition from retail. Higher minimum wages across the U.S., a better economy and a smaller labor pool to draw from -- due to fewer immigrants from Mexico -- also have an impact.

“You have big distribution centers, you have retailers, you have other restaurant concepts, you have grocery stores, and they're all looking for great people,” said Jason Lessman, Boston Market's vice president of human resources. “It's just as tough as I've seen it in my 12 years of doing recruiting. It's definitely a war for talent.”

‘Make A Statement'

In 2014, Starbucks Corp. upended its workers' dress code to include looser rules for tattoos, along with colored ties and scarves and black denim. It further loosened the rules last year inviting employees to “make a statement with hair color.” McDonald's Corp. said last month it was upgrading its uniforms in the U.S. to be more modern and comfortable -- an effort to retain workers.

“You're going to see the labor market further tighten,” Chief Executive Officer Steve Easterbrook said in an April earnings call.

At the same time, the domestic dining industry is struggling. March same-store sales dropped 0.6 percent, marking the fourth-straight month of declines, according to data from researcher MillerPulse. Profit is being hurt by the extra costs to attract and keep staff to flip burgers, assemble sandwiches and bake pizzas.

That's definitely the case in Sacramento, where many of Andrews's Wal-Mart colleagues used to serve burritos and chalupas.

“There was this joke that they literally stole half the Taco Bell crew,” he said. “There's a lot of people that used to do fast food that made their way to the retail side.”

To contact the reporter on this story: Leslie Patton in Chicago at lpatton5@bloomberg.net.

To contact the editors responsible for this story: Nick Turner at nturner7@bloomberg.net, Bob Ivry