Business Report

EMPLOYMENT SQUEEZE

Having trouble recruiting employees? No wonder. Manpower Inc. says demand for new workers in the July-September quarter will be at a 20-year high.

Of the more than 15,600 firms surveyed by the staffing services company, 32% said they expected to add new employees, 59% said they planned to maintain their present staffing level, and only 5% intended to decrease their work force. Among retailers and wholesalers, even more – 36% – have hiring plans, and only 4% envision layoffs.

One sign of the hot hiring market: According to U.S. News & World Report, demand for college graduates is so strong that recruiters from about 50 companies flew to Daytona Beach, Fla., during spring break this year. They actually recruited on the beach.

Turnover rates are also alarmingly high, suggesting that in this tight labor market employers are poaching talent from the competition. A recent survey by the Bureau of National Affairs, a Washington, D.C., research and publishing firm, shows the turnover rate soared to 13.2% of the work force per year in 1997, up from 8.4% in ’92.

CASE STUDY: WHEN EMPLOYEES STEAL

Smith Jewelers has been a family-owned and -operated store for decades. With business increasing, the owner decided to hire his first non-family employee.

After numerous interviews, Smith (not his real name) chose Nathan, who quickly fit into the daily routine. A few months after congratulating himself on his ability to judge character, Smith noticed that jewelry was disappearing from the store on a regular basis. Suspecting theft, he contacted the police, who suggested he do a secret inventory. It showed a significant shortage.

Family members were shocked, and couldn’t believe Nathan had stolen from them. Unable to stay silent any longer, the owner confronted Nathan, who admitted to the theft.

Nathan fled the store, and the owner called the police. Unfortunately, by the time they arrived, Nathan was long gone – along with the jewelry, valued at $50,000.

Would this loss be covered by insurance? Jewelers Block policies, which cover inventory, don’t provide compensation for losses due to employee theft or dishonesty. Many jewelers choose an endorsement to their standard business owner’s policy that adds this coverage for an additional premium.

Employee theft is an uncomfortable issue, and it can be difficult to prove. Here are some steps to reduce the likelihood of such losses:

  • If you believe an employee is stealing, ask your attorney whether you should suspend him or her with pay during an investigation, whether you should contact the police, and when to contact your insurance company. It’s important to take action immediately to prevent additional losses, protect the safety of other employees, and improve the odds of retrieving stolen goods.

  • Ask every job candidate to complete a written application that includes a work history and list of references. If you see gaps between jobs, ask for an explanation. Once you’ve decided whom you’d like to hire, do a background investigation yourself or, if the position merits the investment, go through a private investigation agency. Remember that it’s much easier to hire the right employee than to fire one who’s dishonest.

  • Call the employment references. Verify work history, and ask previous employers whether they’d rehire the individual – why or why not. Also, confirm all degrees and certifications, and check personal references.

Credit checks may be important, given that someone who is heavily in debt may be more inclined to steal. Criminal records checks can be conducted if an employer can convince law-enforcement agencies of a genuine need for this information. Such a need arises when an employee’s position could jeopardize the company’s financial position or public image.

Drug tests are another screen to consider, especially when other local employers do them. If you don’t screen and other employers do, guess who’s going to fill your applicant pool.

Written permission for the credit check, criminal records test, and drug test may be required, depending on state law (consult with your attorney). When the request for permission appears on the job application form, there’s an added benefit: It tends to scare off undesirable candidates.

  • Include an ethics policy in your employee handbook. It should be required reading for all employees and should include a definition of employee theft, your expectations for integrity and honesty, procedures for reporting employee theft, and consequences for those who commit this crime. Let employees know dishonesty won’t be tolerated. Discuss your expectations regarding the ethics policy and internal theft when training new employees and as part of staff meetings.

  • Internal safeguards and documentation are critical. Make periodic inventory spot checks to note any losses. Make sure your video surveillance footage captures the entire showroom floor. Keep videotapes for several weeks, longer if you suspect theft.

This is one of a series of case studies prepared by Ronald R. Harder, president and CEO of Jewelers Mutual Insurance Co.

PURSE STRING TUG-OF-WAR

Maybe it’s a sign of the times. More men than women feel they need to check with their spouse before they make high-value purchases, according to a survey by Yankelovich Partners on behalf of the Lutheran Brotherhood, a Minneapolis insurance and financial products firm.

In general, most husbands and wives say they discuss purchases in advance: 67% of married Americans say they confer with their spouse before making a purchase that exceeds a particular dollar amount. The average spending threshold is $350.

However, jewelers may find it useful to know that husbands put this spending threshold at $299, while wives say it is $400. Even for purchases below $100, 44% of men say they talk to their spouse before spending, compared with 28% of women.

Despite their different perspectives on whether to discuss purchases in advance, more than a quarter (28%) of those polled said they never disagree about financial issues.

The survey was conducted in February and was based on telephone interviews of 1,004 randomly selected adult Americans.

GRANDPARENT POWER

It’s no secret that the over-55 generation is a rapidly growing, increasingly affluent target market. They account for 40% of the United States’ discretionary income and 77% of its personal wealth, according to the U.S. Census Bureau.

There’s no single way to approach this potentially lucrative, diverse market, which accounts for more than a third of the U.S. population. But you can narrow your marketing and merchandising focus on particularly promising segments. One example: grandparents who in increasing numbers lavish gifts on their progeny.

According to research conducted by Roper Starch Worldwide of New York, annual spending by grandparents on their grandchildren has more than doubled in the past decade, with the average gift rising from $250 in 1988 to $505 today. Much of this growth has occurred at the higher end: The proportion spending more than $800 has jumped from 14% in 1988 to 23% today. Another promising statistic: About 55% of grandparents (30 million people) said they had purchased a gift for a grandchild in the previous month – up 8% from 1988.

“Don’t be afraid of grandparent marketing,” counsels Candace Corlett, a partner with WSL Strategic, a New York marketing and consulting firm. “They’re some of the wealthiest gift-givers in the country, and their favorite target is grandchildren. But they’re baffled about what to give. They’re not comfortable with technology or toys. They never know if content on videos or CDs is okay for families. Jewelry is the perfect gift.”

Corlett recommends that retailers and wholesalers develop marketing materials and in-store displays aimed specifically at grandparents that could stimulate present-buying for confirmations, Bar and Bat Mitzvahs, graduations, and weddings. “Lots of grandparents are living to see their grandchildren married,” Corlett notes. “They would welcome a collection of things displayed in a retail setting that would show them what kind of jewelry their grandchildren would like.”

ARE YOU OVERLOOKING THESE SHOPPERS?

In a boom market when unemployment is at a quarter-century low, why hasn’t consumer spending increased virtually across the board as it did in the 1980s? According to a recent study titled “The Consumer Paradox” by WSL Strategic, a New York marketing and consulting firm, the answer can be found in changing demographics and consumer values.

“It used to be that a strong or a weak economy had a predictable impact across all retail sectors,” says Candace Corlett, a partner with WSL Strategic. “But you can no longer look at your customer base as a homogeneous group of people motivated by the strength or weakness of the economy.”

Instead, Corlett says, a new majority has emerged, composed of former “niche” markets that have grown into such large segments of the population that they’re affecting overall shopping trends.

One group, consumers over 55, is shopping considerably less. Their numbers have increased to a third of the population, up from less than a fifth just a decade ago. Another group – the growing, diverse ethnic minorities – is shopping considerably more. Together, the groups represent about half the population. “These two segments are so large, and their shopping behavior is so different, that they are creating a new paradigm for American retailing,” says Corlett.

Red flag. Though the very top end of retailers are untouched by these trends, she says, the middle tier of retailers, department stores, and mass merchants are feeling the heat. “What this says for retailers is that they have to start micro-marketing. It’s a red flag. If your business is flat to declining in a booming economy, then you better start fixing it, because imagine what would happen if we went into a recession.”

Of all of the retail product categories tracked by WSL Strategic, fashion accessories (which included jewelry, though not very high-end, luxury-caliber pieces), fared the worst. Almost a third (29%) of the 600 female adult shoppers interviewed by the firm said they’d reduced purchases of fashion accessories over the past two years.

But this number was actually skewed by the over-55 population, 45% of whom said they’d cut back on accessories. Among minority respondents, only 13% were buying less.

To begin recovering these “lost” customers, Corlett says, “jewelers must market to grandparents [see story on page 64]. People over 55 basically have what they think they need. But they’ve shown an enormous willingness to spend if you intrigue them. The industries that have done that successfully are travel, food (particularly supermarkets), and financial services. They have reached out to older Americans and are reaping the rewards.”

To micro-market to minority customers more effectively, Corlett counsels, “Jewelers need to get out of their ivory tower of choosing jewelry at shows and catalogs. They need to learn more about the composition of the population in their selling radius and find out what those micro-markets want. At the very least, they need to walk around their community and see what people are wearing. They have to be in tune with their customers. That’s the difference between successful and unsuccessful marketers.”

Customer values. The other factor in the paradoxical behavior of consumers today, according to WSL Strategic, is consumers’ changing definition of value. For the first time since 1989, the firm’s research showed that selection was the No. 1 reason consumers chose a specific outlet. In the early 1990s, price drove this choice, supplanted by convenience, which was the top factor in outlet selection in ’95.

“Retailers have already responded to consumers’ demand for competitive prices and convenient hours and locations,” says Corlett. “So what consumers do then is ‘up’ the bar. They expect low price and convenience everywhere, so now they also want selection – which means unique and interesting merchandise that’s in stock.”

She adds, “Four out of five consumers said they were ‘sale shoppers.’ That doesn’t mean they buy everything on sale, but that they view themselves as ‘value shoppers’ who evaluate every purchase and shopping experience to determine whether or not they got their money’s worth.”

WSL’s analysis is drawn from telephone interviews with a statistically representative sample of 600 women.