Top HR challenges and trends in retail
From recruitment to retention, there has always been a unique mix of Human Resources (HR) challenges in the retail industry.
However, since COVID-19 hit these HR issues in retailing have intensified. With a record number of stores closing during and after the pandemic and employees leaving, it’s clear that retail has been struggling to respond to the complexities of the retail industry and changing customer and employee needs. If organisations are going to grow and fulfil their potential, HR needs to lead the response. But what does this involve?
We’ve pulled together the top HR challenges retail is facing and some key trends that can help overcome them.
What are the top retail HR challenges?
Every industry has its own set of challenges – some of which are more urgent than others. Here are the 6 key HR challenges that retail businesses need to focus on:
Staffing shortages
Retail employee turnover in the retail industry is higher than in most industries in the UK. The British Retail Consortium reports a rate exceeding 50%, compared to a 35% average across all sectors. Quinyx’s 2024 State of the Frontline Workforce report reveals that 56% of retail workers are considering leaving their jobs, an increase from 49% in 2023. With such high turnover, retail organisations are struggling to fill job vacancies. In a small business survey done after the pandemic in 2021, nearly 31% of small business owners said they have open positions they haven’t been able to fill for three months or longer. And, of course, this is having debilitating effects on retail businesses and creates many problems for HR departments.
Career advancement
Retail jobs tend to be seen as temporary positions for younger people focused on longer-term career goals in other industries. The effects of this misconception are far-reaching. If people don’t see opportunities for career progression, they’re less likely to be engaged. This impacts everything, from team morale to the brand experience. Ultimately, it stops retail from meeting (let alone exceeding) customer expectations and businesses from achieving their full potential.
Retail Union vulnerability
The first half of 2022 saw a spike in worker union petitioning. HR needs to stay up to date with the mood of employees across the workforce to uncover and respond to any discontent before it escalates. They should regularly seek employee input on the work experience. That might involve having conversations with employees or surveying them on specific issues such as fairness of pay, job security and treatment by managers. If complaints emerge, HR needs to respond with appropriate corrections.
Sexual harassment
Whether it’s customers, managers or co-workers, inappropriate behaviour is a common problem for retail employees.
According to the U.S. Equal Employment Opportunity Commission (EEOC), approximately 13.44% of sexual harassment claims filed with the EEOC came from retail workers, making it the second-worst industry for such claims. Retailers often hire young and economically vulnerable women, who tend to be afraid to speak out. It’s HR’s responsibility to create policies, processes and cultures that enable people to report these incidents without fear of repercussions.
Retail employee misclassification
It’s not uncommon for US employers to “promote” retail workers to salaried assistant manager positions to avoid paying overtime. However, the US Department of Labor has a robust test to determine if someone really is a manager who should be exempt from overtime. This has resulted in a number of major retailers, including Walmart, paying millions of dollars in employee misclassification cases. HR need to understand these regulations and ensure they are followed.
Discrimination and hiring bias in retail
The influence of unconscious bias over hiring decisions is well documented. Retailers want to project their brand image and managers can subconsciously believe hiring somebody who looks like them will achieve this. This issue affects all demographics – race, gender, age, and ability, among other characteristics. And this means businesses are not getting the benefits that a diverse and inclusive retail workforce brings – innovation, engagement and better customer experiences. For some updated trends on inclusion and diversity in the retail industry check out our blog ‘Diversity, Equity, and Inclusion Retail Trends in 2024’.
Globalisation in HR
Globalisation in retail HR despite having undeniable advantages, also presents some challenges. Some of the complexities that the globalisation process introduces are communication barriers, legal compliance issues in different countries, and cultural integration. HR departments need to put in place effective strategies and understand local customs for successful international operations and maintain company culture across different regions.
Talent management and acquisition
Following the disruptions and upheavals of the pandemic, talent acquisition and retention have become challenging tasks for retail HR. It’s not just a matter of staff shortages but also about finding and attracting individuals with the right qualities and skills and meet the new employees’ expectations.
Now more than ever retail workers need more flexible work arrangements and seek a better work-life balance. These challenges are exacerbated by seasonal fluctuations, limited advancement opportunities, and issues related to workplace culture and employee satisfaction, which can lead to lower engagement levels among retail workers. Addressing these issues requires a strategic and inclusive approach to talent management.
What are the top retail HR trends?
If retail businesses are going to overcome these challenges, HR needs to take the lead. Here are 6 top retail HR trends that could help:
Focus on employee wellbeing
Mental health issues in retail can severely affect an employee’s ability to carry out their job effectively. Considering that 80% of UK retail employees have felt more stressed in the past year of working, wellbeing in retail should clearly be an area of focus. HR professionals need to create a safe space where employees feel that they can open up about issues. Managers need to be trained to look out for signs of concern and provide support, where it’s needed. This might involve monitoring attendance and sick leave using HR management software.
Target recruitment to improve retention
As well as creating employee engagement initiatives and worker retention plans, HR needs to take a proactive and well-prepared approach to recruitment. This means not just hiring entry-level retail workers, but getting the right retail talent in manager, store director and district manager roles. Having strong management is essential for maintaining and growing businesses. Combining traditional recruiting channels, social media and other influential sources enables effective targeting and makes efforts as efficient and effective as possible.
New performance bonuses to counter pay gaps
The majority of UK workers have never had their salaries explained to them. It’s this lack of transparency that’s allowed the gender pay gap to remain unknown and unquestioned by many employees. Although the retail sector has reduced its gender pay gap, there’s lots more HR can do. As well as introducing a transparent salary framework or banding system, regular pay reviews and bonuses connected to achieving objectives ensures pay relates to performance.
Flexible working conditions
With 50% of employees working part time, the retail industry has always had some flexibility in its working conditions. But, as older generations of retail employees approach retirement, HR teams need to focus on attracting and retaining employees. Increased competition for skilled workers makes it even more important to offer the working conditions people want. This could be providing increased flexibility around working hours or other opportunities, such as working abroad.
Create a brand experience
In a changing retail landscape, memorable brand experiences are invaluable – not just for customers but also for employees. By embedding brand values in everything they do, retail organisations show they are authentic. This creates better employee engagement, particularly with millennials and Gen Z who are interested in corporate social and environmental responsibility.
Multilingual communication
Creating that competitive edge and enabling global scaling, speaking all your customers’ languages has plenty of benefits. Building a multilingual team starts during the hiring process by getting an understanding of candidates’ language skills. Although it might not be a prerequisite of the job role, empowering employees to use their skills will create better engagement.
Want to find out more about HR’s role in creating a positive retail work environment? Check out our article on how retail HR can promote diversity & inclusion in the workplace.
Innovative employee rewards and recognition culture
As employee engagement increases productivity and profitability, it’s important for HR to develop innovative employee rewards for retail teams to keep the workers motivated and engaged. Although monetary incentives are important, 82% of employees believe that recognition also plays a crucial role in their happiness at work. From annual retail awards to shout-outs or personalised gifts, think beyond financial incentives and build a recognition culture to foster a sense of belonging and appreciation.
Final thoughts
Facing staff shortages, career development misconceptions, unionization and legal cases, retail businesses need to overcome several issues to grow to their full potential. One of HR’s many key roles and responsibilities is to lead the response to these challenges. This includes process related actions, such as targeting recruitment, introducing performance related pay and exploring flexible working options. It also focuses on fostering a culture of authenticity and support that engages employees and allows them to reach their full potential.
Find out more about the latest HR trends in retail at our annual HR Summit. Register today!
