5 HR challenges in the retail industry and how to overcome them

What are the top 5 HR challenges in the retail industry?

The top 5 HR challenges in the retail industry are:

1. Retail talent acquisition and recruitment 
2. Lack of effective retail training and development 
3. Promoting retail employee experience and engagement 
4. Effective retail workforce management and planning 
5. Ensuring retail compliance and safety 

People Manager, Meg Weedon at Access customer N Brown Group, recently discussed some retail challenges in HR at the Festival of Work 2023:

1. Retail talent acquisition and recruitment

Retail has typically experienced a high turnover of staff compared with other industries, likely due to a number of factors such as low wages, long hours, lack of job security, as well as limited benefits and opportunities for advancement or career progression.

This view of the industry is born from its competitive nature and the need to have low operating costs to support its equally low margins. Therefore, retail jobs can often be seen as entry level roles, usually for young people who are looking to gain experience in the workforce, or for part-time workers looking for a degree of flexibility to support children and other home commitments. As a result, the retail industry generally has a high turnover of staff which can be costly for employers and HR departments who must respond by continuously recruiting, hiring, and training new employees.

To reduce turnover in retail, HR departments are increasingly looking to invest in both the right people and the right operating systems. Although this could be challenging for retailers with limited budgets or those facing stiff competition for talent, a well-rounded offering for employees is key to making retail careers more attractive, as well as provide the basis for an effective retail talent acquisition strategy. HR departments could consider the following when it comes to retail talent recruitment and retention:

• Provide opportunities for career growth by offering retail training courses and other development opportunities and promoting personal and professional development enabling staff to develop and progress internally as the business matures. “LinkedIn’s Workforce Learning Report revealed that 93% of employees would stay at a company longer if it invested in their careers.”
• Recognise and reward employees for hard work and dedication through performance reviews and 1-2-1’s, bonuses, promotions, and digital tools that support employee engagement in the retail sector.
• Offer a competitive living wage salary and competitive compensation packages such as flexible employee benefits that suit their lifestyle, this could consist of health insurance, flexible working, enhanced pension contributions and on-demand pay.
• Invest in technology that could help automate tasks, increasing efficiency of staff, reducing frustration and in turn improving overall customer experience in retail.
• Offer competitive compensation packages to support retail talent recruitment strategies, along with a positive work environment and opportunities for career growth.

2. Lack of effective training and development 

Due to the high turnover rate of employees in the retail industry, training and development can often be overlooked. Many retailers hire employees on a part-time or seasonal basis, and as a result, these employees may not be given the same level of training as full-time staff. Whilst the retail industry is highly competitive, and many stores often focus on cutting costs to remain profitable, the benefits and ROI that come with investing in training and development can outweigh the initial upfront costs. Take a look at our article ‘How much does a learning management system cost’ for more detail.

Improving your training and development opportunities could ensure staff grow and develop to match business needs, regardless of their role. Paired with a consistent programme, you can support your brand by ensuring clarity and control over how the business is presented to consumers. Great consistent high level customer service has been proven to increase customer advocacy.

Successful training and development implementation can be achieved on any budget by:

• Developing a comprehensive training programme that covers all aspects of the retail business, from customer service to product knowledge to sales techniques.
• Invest in managed and self-directed eLearning tools to help ensure employees complete mandatory training required of them, but also provide them with access to courses to help them progress in their role and career. Offer incentives to employees who complete training courses or demonstrate mastery of certain skills.
• Provide feedback to employees on their performance and progress in training.

3. Promoting employee experience and engagement

Employee engagement in the retail sector remains a big challenge for HR departments.  

Retail employees often deal with long hours, low pay, and difficult customers which can lead to low morale and a lack of motivation. Combined with limited training, they often do not feel equipped to provide the best customer service, which can lead to customer challenges and difficulty remaining competitive.  

Another key area often overlooked and that causes de-motivation is lack of recognition. Even if you have great colleagues that can deliver a great service, they soon become withdrawn if they are not recognised and are undervalued for their efforts. 

How to engage retail employees

Practical solutions for improving employee engagement in the retail sector and the wider employee experience could include:

• Recognising employees for their hard work and accomplishments. Offer rewards and recognition programmes.
• Improving communication between management and employees. Encourage open dialogue and feedback. This is most effective when employee feedback is acted upon – ignoring this can be more harmful than not collecting the views in the first place.
• Creating a positive work environment by providing employees with the necessary resources and support. From training and development and clear objectives to maintain their engagement, through to automated HR systems to make their day-to-day tasks simpler.
• Use internal communication tools to reinforce company news, showcase exceptional work and update key milestones on larger company projects, this will create a collaborative and empowered workforce.

4. Effective retail workforce management and planning

Accurately forecasting customer demand and staffing needs can be a challenge for the retail industry, particularly for retailers with a diverse workforce. It requires an understanding of customer behaviour, the ability to anticipate changes in demand and access to up-to-date employee availability.

In an industry that is very much seasonal, has employees on multiple contract types and often requires specialist skills to support health and safety and compliance regulations – how can you use your data efficiently to improve your approach to retail workforce management?

• Technology: The most effective way to support workforce planning is to implement HR software that helps streamline and automate your retail workforce management and scheduling processes. An end-to-end HR system like PeopleXD can provide detailed reports about workforce costs and productivity levels, as well as help identify any staffing and skills gaps that may exist.  

• Communication: Although technology will support the practicalities of workforce scheduling and planning for the business, to be truly efficient you need to ensure the benefits of such a platform is understood by employees and supports them also. A good workforce planning system like PeopleXD will help employee self-serve and manage their own schedules, enabling them to view and swap shifts from a mobile app, as well as provide them with a clear communication channel between them and their manager.

By balancing automated technology with effective communication channels, businesses can ensure that they have the right number of employees scheduled, at the right times, in the right roles to provide the best customer service and the most efficient operations.

5. Ensuring safety and compliance in retail

Maintaining effective safety protocols can be a major HR challenge in the retail industry, but is vital to protecting employees, customers, and the business itself. With your employees being your number one defence against risk, well communicated compliance and health and safety protocols help ensure that all employees are following the necessary internal safety and data sharing procedures and that the environment is safe and secure for customers.

However, compliance and safety are not just limited to the management of risk within the retail industry. New regulations require companies to regularly report and review their risk mitigation procedures to reduce the risk of potential workplace accidents, including data protection and system breaches. If these safety and compliance breaches aren’t managed effectively, they can lead to costly legal fees, lost productivity, and reputational damage.

With such an array of compliance and safety factors to consider, retail businesses need robust solutions to manage these challenges:

• Create clear policies and procedures that are regularly reviewed and updated with best practices and up to date information. Align these procedures with mandatory training programmes that are tailored to the unique needs of your organisation and ensure employees understand their specific roles related to compliance and health and safety.
• Continual monitoring and auditing of employees and the business in general should be implemented to ensure compliance and safety standards are being met.
• Utilise technology with multi factor authentication and automated processes to make data compliance simpler and enable restricted access to key staff members to reduce the potential of cyber breaches. End-to-end HR and payroll software for retail with a single source of truth for all company information and data, will help increase visibility in the retail operations and where perceived risks may lie.
• Establish an incident response plan to quickly and efficiently deal with any compliance or safety incidents that may arise. Appoint dedicated colleagues within the HR team who are better equipped to manage employee co-ordination and communications in the event of an incident. Make sure all employees know the plan and how to respond.
• Utilise learning and development training platforms to create a single library of training and development materials that all employees can access from anywhere at any time, and L&D and HR managers can set up as automated workflows for employees to complete mandatory compliance training which can be more efficiently monitored and reported on.

Key takeaways

How individual organisations respond to these specific HR challenges in the retail industry will play a major role in the future productivity and engagement of the retail workforce, whilst also ensuring that the necessary legal and compliance requirements are met consistently. Talent acquisition and retention are key to ensuring success across any business, but with increasing competition in the retail industry, proactive strategies should be implemented to attract and retain skilled staff.  

Training and development is important to ensure that employees are kept up to date on HR trends in the retail industry and new technologies, whilst also providing them with the necessary skills to carry out their jobs effectively and access career progression opportunities. Compensation and benefits play an important role in motivating employees and ensuring that their work is adequately rewarded. Finally, regulatory compliance is critical for protecting retail businesses and their employees, and companies must ensure they adhere to all relevant regulations. 

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