Competition from new store formats including supercenters, warehouse clubs, and mass merchandisers has emerged as a major threat to traditional grocery chains. A primary objective of this paper is to understand how the store-level performance is related to the workforce composition of full-time and part-time employees chosen by the food retailer along with benefits and incentives provided to employees. The elasticity of complementarity for food retailers measures how changes in store size affect use of full-time and part-time employees. Larger store size increases the marginal value of labor, and firm hiring decisions shift to expanded use of part-time employees.