Harvard Business School says better jobs can boost retail profitability

Why the HBS case matters at Big Lots

A store can look busy and still be losing ground if the labor model underneath it is broken. Harvard Business School’s look at Costco and the Good Jobs Institute makes that point plainly: higher wages, better benefits, stronger training, and steadier staffing can raise productivity and profitability instead of dragging them down.

That matters at Big Lots because store execution is not an abstract management phrase. It is the difference between a floor that gets zoned, stocked, and recovered and a floor that stays chaotic because everyone is rushing from one unfinished task to the next. When labor is treated only as a cost to cut, workers are more likely to be undertrained, underpaid, and stuck with unpredictable schedules, which feeds low morale, higher turnover, and more mistakes.

What a good job strategy looks like in practice

The Good Jobs Institute describes its approach as combining investment in people with operations and job design choices that raise productivity, contribution, and motivation. The organization says that companies using the model have improved productivity, customer service, sales, and turnover, and that it has worked with more than 30 companies since it was founded in 2017.

For a Big Lots associate, that translates into visible day-to-day signals. A healthier store usually has enough coverage to keep customers from waiting forever, enough training for new hires to know the routines, and enough coaching to fix problems before they become habits. A bare-bones store often does the opposite: one person is left covering too many tasks, training gets squeezed into a few rushed shifts, and every shift becomes a scramble instead of a system.

Signs of a stronger labor model are easy to recognize on the floor:

• Schedules are predictable enough to plan a week around them.
• Training is clear, repeatable, and tied to real store tasks.
• Managers coach before mistakes pile up.
• There is enough coverage to recover the floor, answer the phone, and help customers without constant triage.
• New hires stay long enough to build skill, which makes the whole store calmer.

Those are not soft benefits. They affect shrink control, cash handling, customer service, and whether a shopper leaves with a cart full of merchandise or walks out because the store feels understaffed and disorganized.

Why Big Lots makes the lesson more urgent

Big Lots entered Chapter 11 bankruptcy protection on September 9, 2024, and said it planned to sell the company’s assets and ongoing business in a court-supervised process. By late December 2024, the company had announced a rescue arrangement with Gordon Brothers Retail Partners meant to facilitate the transfer of Big Lots’ brand, stores, and distribution centers to other operators.

Bloomberg reported on December 30, 2024, that the rescue deal proposed transferring roughly 200 to 400 Big Lots locations to Variety Wholesalers. That kind of footprint shift shows how unstable the chain had become, and it raises the stakes for store-level execution. When a retailer is fighting to preserve locations, every clean aisle, every accurate count, and every customer interaction matters more, not less.

The same month, Bloomberg reported that Big Lots no longer expected to complete its earlier asset sale to Nexus Capital Management and would begin selling stores to protect real-estate value. Then in February 2025, Bloomberg reported that Big Lots lacked enough cash to pay suppliers for all the goods shipped during the failed store-saving effort, leaving suppliers exposed to tens of millions of dollars in losses. That backdrop makes the labor discussion concrete: when a chain is under financial pressure, weak staffing and weak execution do not stay contained. They can speed up the decline.

Costco, Sam’s Club, and QuikTrip as the clearer contrast

Harvard Business School used Costco as the sharpest example of the theory. The school reported that Costco pays workers an average of $26 an hour, compared with about $17 an hour at other retailers, using Costco and Bureau of Labor Statistics data. In the same frame, HBS points to Costco, Sam’s Club, and QuikTrip as examples showing that higher wages and better benefits can support productivity and profitability.

That comparison is useful because it shifts the argument away from pure labor cost and toward output. A company that pays more may still win if the store runs better, turnover falls, and managers spend less time replacing people and more time coaching them. For workers, that means the question is not only whether the paycheck is bigger. It is whether the job design gives people enough time, stability, and skill development to make the store function.

This is where a healthy store often feels different from a stressed one. At a better-run operation, workers are more likely to know what good looks like, because the company has made the standard visible and repeatable. At a leaner operation, the standard may exist on paper, but the shift is so thin that nobody has the time or support to meet it consistently.

What the research says about turnover and the cost of churn

The Good Jobs Institute’s case-study materials add a concrete example outside retail. In the Quest Diagnostics case, the institute says 60 percent of reps left in their first year after consolidation, costing the company up to $10.5 million a year. That number matters because it shows how expensive churn becomes when a company relies on a thin operating model and then loses people faster than it can train replacements.

For Big Lots workers, the lesson is practical: high turnover is not just a hiring headache for management. It changes every part of the store experience. New employees learn slower, experienced workers spend more time covering gaps, and customers feel the uncertainty in the aisles and at the register. The result is a store that feels reactive instead of organized.

That is why the HBS argument fits Big Lots so closely. When a retailer treats labor as a capability to build, it tends to get faster shelves, cleaner stores, fewer errors, and better customer interactions. When it treats labor as a line item to squeeze, the whole operation gets noisier, and the store becomes harder to run just as the company can least afford that problem.

The takeaway for Big Lots workers

The clearest sign of a strong store is not just how hard people work. It is whether the work is designed so effort turns into results. If staffing is stable, training is real, and schedules are predictable, associates can build skill and the store can build consistency. If the operation is perpetually short-handed and constantly changing, even good workers spend their shifts fighting fires.

Big Lots’ financial stress makes that distinction more important than ever. The companies that survive difficult retail conditions are usually the ones that understand a simple truth: better jobs are not charity. They are how a store becomes faster, steadier, and more profitable.