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5 Challenges for HR in the Retail Industry

By Betterworks
5 minute read
Updated on June 13, 2022
5 Challenges for HR in the Retail Industry

Every industry has its own set of challenges, issues that impede growth and prevent organizations from reaching their potential. The retail industry is no different in this respect, faced with distinct HR challenges that weigh on the entire sector and the majority of brands within it.

As part of an ongoing series that examines the problems and solutions plaguing specific industries, Betterworks Engage is presenting the five biggest challenges for HR in the retail sector along with a few best practices for guidance. Although none of the issues discussed are exclusive to the retail sector, they are particularly harmful to retailers and their constant fight for market share and customers in an extremely competitive industry.

Betterworks Engage’s intention with this series is to arm HR departments, in this case within the retail space, with the information and ideas to successfully navigate a rapidly changing playing field with continually shifting customer affinities and inconsistent supply of talent. Although not a salve to cure all of the industry’s woes, you’ll see the people data provided by Betterworks Engage’s technology-driven feedback and engagement platform can play a pivotal role in addressing many of these ongoing challenges for HR in retail.

1. High Turnover Rates

Turnover is an equal opportunity perpetrator in modern industry, but is especially insidious in the retail sector. To prove our point, retail turnover rates nearly triple that of the average across all industries in the UK, are over 5% higher than industrial averages in India and much of Asia, and are approaching 5% per month in the American retail sector. In a more illuminating light, that monthly rate in American retail equates to a nearly 60% turnover rate every year. Naturally, the debilitating effects of employee turnover are especially prevalent in retail and pose a significant problem for HR departments within the industry.

turnover rate

Technology can play a pivotal role in reducing high turnover rates in the retail sector through predictive analytics and feedback platforms. With predictive analytics, retailers can enhance their pre-selection strategy in hiring, using algorithm-based software to make the entire process more efficient and effective by identifying candidates that are a better fit for the organization and, therefore, less likely to leave.

Feedback can provide management a constant pulse on the opinions and thoughts of the workforce, finding trends that could lead to rampant attrition if not quickly addressed. Between predictive analytics and feedback, retailers can rely on a better-aligned workforce while creating policies and procedures to keep employees satisfied and, thus, more likely to stay with the organization.

2. Employee Engagement

Although we’ve spoken of employee engagement in a more general context in the past, it is an especially important concept for retailers. Since the bricks-and-mortar side of the industry is reliant on excellent customer service in a face-to-face environment, a disengaged workforce directly impacts the impression left on a customer. A single poor experience can be extremely detrimental to maintaining brand loyalty and growth, particularly when there’s never a lack of competitors willing to fill any void in the marketplace.

understand deficiencies

From an HR perspective, although the task of improving engagement can seem overwhelming at first glance, a procedural approach can yield significant benefits. First, take the time to understand deficiencies in culture and policy through, once again, a feedback system that uses surveys, polls, and other tools to better understand the authentic thoughts and expectations of team members.

Once equipped with that critical people data, transform it into action and demonstrate to employees that their voice and concerns matter. From there, incremental steps in improving culture and the employee experience will naturally increase engagement and, with diligence, positively impact on the bottom line.

3. Employee Theft

Unfortunately, the very nature of the retail industry makes it susceptible to theft. To that point, employee theft is the largest source of inventory shrinkage in the American retail industry and third largest in the UK. On a global basis, the average instance of employee theft is over four times greater in value than the average case of shoplifting. Obviously, theft is another serious problem facing HR for retailers across the globe.

employee theft

While it’s impossible to eliminate the threat of employee theft in the retail environment, improved workplace conditions, frequent training on the personal and organizational repercussions of theft, and an improved hiring and onboarding process can all lessen the frequency and severity of employee theft. Like most of the challenges on this list, reducing employee theft is a collective effort that occurs over time and with sufficient attention and resources devoted to the issue.

4. Safety

Retail is a fast-moving environment that lends itself to assorted gaffes that can endanger employees and customers alike. This ever-present issue is another of the biggest challenges facing HR in the retail industry, needing to find effective ways to create a safer workplace where team members can concentrate on the task at hand rather worrying about safety.

gaffes and safety

Aside from the obvious solutions like fire extinguishers, first-aid kits, and other safety measures that should be a part of every workplace and in every industry, ongoing training and education is another powerful tool in minimizing safety issues in a retail environment. From an HR perspective, such proactive measures and standards not only help keep team members and customers safe, but can also help with liability issues in case of a lawsuit. As part of an ongoing effort, HR can even quiz employees on the organization’s safety standards and policies to make sure the information is remembered and understood.

5. Seasonal Demand

As the holidays and other busy times of the year approaches, retailers often open for extended hours and require more work shifts to meet consumer demand and simple foot traffic within a storefront. Of course, this notion brings a unique challenge to HR departments as work shift scheduling and seasonal hiring can place additional stress on an already stretched HR team.

seasonal recruiting

While operations management software can be extremely helpful with scheduling efforts to meet increased demand as well as tracking performance and budgetary metrics to monitor the bottom line, a proactive and well-prepared approach to seasonal recruiting provides the team members needed during an often stressful and busy period. Start seasonal recruiting cycles early, ahead of the typical holiday rush to ensure you have access to the most high-quality candidates.

Also, utilize traditional recruiting channels as well as social media and other influential sources to make your efforts as efficient and effective as possible. As labor markets continue to be tight and unforgiving from an employer’s perspective, retail HR departments must be especially cognizant of both the market dynamics and tools available to meet the upswings in the seasonal demand for additional team members.

The retail industry is under tremendous pressure to provide positive results to stakeholders, no matter the challenges it faces. HR departments within the sector should take these five challenges to heart and assemble strategies to counteract any possible negative impact. With the guidance provided by Betterworks Engage’s feedback platform to draw critical insights from the workforce, retailers can plan for these challenges with the people data needed to find success.