7 Retail HR Challenges and How to Overcome Them

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7 Retail HR Challenges and How to Overcome Them

The retail industry is experiencing turbulent changes, whether it’s the Great Resignation—partly brought on by the COVID-19 pandemic—or the rapid digital transformation. Retail HR faces unique challenges that HR professionals must address to continue attracting and retaining high-quality, engaged employees. Let’s explore some of the most prevalent retail HR challenges today and how to overcome them.

1. Attracting and retaining employees
2. Employee safety
3. Scheduling and workforce planning
4. Redefining the role of HR within the business
5. Access to earned income
6. Enabling digital employee experience
7. Building a diverse and inclusive workplace

1. Attracting and retaining employees

Attracting and retaining workers has been one of the major retail HR challenges in the past years. According to a report from the U.S. Bureau of Labor Statistics, the retail industry has the second-largest number of vacant positions of all sectors, and openings have reached a high of over 10 million. A survey by Zipline found that a staggering 42% of retail associates are either considering or planning to leave the industry. Zipline’s CEO Melissa Wong suggests this is largely due to a disconnect in communication between HQ and front-line workers on the shop floor, leading to employees feeling unheard, disengaged, and disconnected from the company. 

HR faces the difficult responsibility of addressing these challenges. They need to create innovative ways to attract and retain employees in a volatile industry. This includes:

  • boosting employee engagement,
  • rewarding good work,
  • increasing salaries and benefits,
  • offering consistent schedules and guaranteed hours,
  • and conducting more thorough exit interviews to understand challenges and what employees are actively seeking in an employer. 

Many retailers are already increasing their efforts to attract and retain employees. For example, global athletic apparel and footwear giant Nike offers employees generous benefits such as health insurance, discounts, paid time off, and a retirement plan. U.S. grocery chain Sam’s Club offers stock purchasing plans, parental leave, and assistance with college tuition. Lululemon raised its hourly wage for store and customer service employees to $15-$17 as an “appreciation for its workforce” and to recognize their good work. 

Sense of purpose is key

Increasing wages and benefits are always welcome. Yet, this is no longer enough to set an organization apart from its competitors. Employees are increasingly looking for more from their place of work. 

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A brilliant example of this is when the pandemic forced Build-A-Bear’s stores to close. As a result, the “heart-placing ceremony” that children have come to know and love engaging in as part of the stuffed bear-making process had to cease. However, each morning in the company’s warehouse, employees began to host their own heart ceremony for all the bears that would ship from online orders. It helped create a shared sense of purpose amongst employees. This, combined with an annual “chili cook-off” and a $100,000 employee assistance program, earned them a number 4 spot on the list of Forbes best midsize employers of 2021.    

Health and wellbeing matters

In addition, the pandemic has shone a spotlight on employees’ mental health. The American Psychological Association reports that 78% of workers are experiencing significant stress. This manifests itself in the rise of substance abuse, domestic violence, and suicides driven by the psychological impacts of the pandemic. Many companies are paying attention and beginning to prioritize their employee’s mental health by adding a Director of Wellbeing role and offering health-related benefits to grant relief during challenging times. 

2. Employee safety

The Bureau of Labor Statistics data shows that the retail industry added 135,000 jobs in December 2020 but lost 38,000 jobs in January 2021. In addition to job losses, COVID-19 has brought employee safety into question, with front-line retail workers constantly exposed to the virus. Furthermore, they have had to deal with frustrated customers forced to comply with the latest government guidelines (such as wearing a mask).

Employee safety will remain one of the top-of-mind retail challenges in the years to come. HR has the task of conducting regular research and implementing new and updated safety measures accordingly to protect both employees’ and customers’ health and wellbeing. This includes basic measures such as regularly cleaning all workspaces, ensuring employees have all the cleaning products they need during their shift and operating the business in a way that eliminates or reduces contact.   

3. Scheduling and workforce planning

Although the retail industry is not as seasonally affected as the hospitality industry, it still experiences natural highs and lows in traffic and unexpected surges and dips throughout the year. This makes it difficult to know how many customers will be in any store at any given time. There is the challenge of balancing the number of staff needed to meet demand with business costs. Here, HR can play an integral role. Using data to track customer traffic and knowing how to analyze and understand this data can help the organization plan more effectively and reduce costs without disrupting service. 

A data literate HR team can plan more effectively and make strategic business decisions to manage a workforce. That’s why upskilling in HR is critical to the future success of all businesses.

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For example, based on previous years and forecasts, retail organizations need to determine how many extra workers they need to hire for the holiday season. Before the 2021 holiday season, the US retailer Target determined they needed to hire 100,000 seasonal workers and offer them more hours than in the previous years. What’s more, they offered their existing employees more hours. They have also implemented a new mobile app that allows workers to add or swap shifts to ensure flexibility.

4. Redefining the role of HR within the business

HR teams are becoming an integral part of all organizations and a strategic partner to businesses. However, one of the significant retail HR challenges is that HR business partners (HRBPs) are often quite reactive in their approach, waiting for instructions from the management. Instead, need to work on becoming more proactive by coming up with solutions based on data. For HR professionals to achieve this, they should focus on becoming T-shaped. This means they have mastered the four core HR competencies (digital proficiency, business acumen, people advocacy, and data literacy) with at least one functional HR competency such as talent acquisition or L&D.

Combining these skills will help HR professionals speak the language of the business. That way, they will stay relevant in an ever-evolving business landscape, and help their organization meet business objectives by continually driving value that boosts the bottom line.   

5. Access to earned income

Earned wage access, early wage access, on-demand pay, and daily pay benefit are all varying terms used to describe an employee having immediate access to the pay they’ve earned, rather than waiting for a typical monthly scheduled payday. 

Research shows that approximately 8 out of 10 full-time workers in the US are living from paycheck to paycheck. At the same time, 95% of employees are interested in working for an organization that provides access to earned income. Reports also show that financial stress is a key contributor to health-related issues that affect a worker’s productivity. This costs almost $500 billion each year in the US alone. Therefore, offering workers financial peace of mind will lead to a more positive employee experience and help boost productivity and retention.   

Employers have already found that offering on-demand pay leads to a 50% reduction in turnover, a 49% increase in productivity, and a 26% reduction in absenteeism. In addition, a majority of employees have stated that early wage access has helped reduce their financial stress. It has also eliminated the need for them to take out loans or use their overdraft and motivates them to go to work. This benefit can also lead to an increase in job applicants and shorter time to fill vacancies.

To implement earned wage access, HR must begin to seek technological solutions that allow organizations to offer this to employees.    

6. Enabling digital employee experience

A 2021 workplace survey by YOOBIC found that 76% of retail employees believe digitized processes would increase their productivity. Employees now expect a positive digital employee experience, but HR professionals must be digitally proficient themselves to offer this. 

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To better understand what employees need, HR professionals must actively listen to their workforce and ask this question. This helps employees feel heard, connected to the organization, and valued.   

The retail industry is rapidly changing due to technological advances. The pandemic has forced this change into action more quickly than many expected. Employers must think carefully about what new skills employees will need to undertake different responsibilities and tasks. For example, using scheduling and time management platforms, mobile messaging applications, pay on-demand platforms, and L&D platforms. In addition, offering extensive training and development reassures anxious employees that their future in the company is not at risk.

Kroger—the largest grocery retailer in the U.S.—recently partnered with employee training firm Axonify to launch its personalized training program designed to support employee engagement and retention. Through an easy-to-navigate and engaging app, workers can access training throughout their shift that is tailored to their specific needs.

Consumers want a digital experience too

It’s not just employees who seek a more digital experience in the retail industry. A global survey by IDC found that almost 60% of consumers would shop elsewhere if a retailer failed to offer BOPIS (Buy-Online-Pickup-In-Store). HR plays a key role in ensuring retailers stay on top of these expectations by enabling employees to deliver. 

7. Building a diverse and inclusive workplace

Although retail is one of the most diverse industries, the workplace has struggled to reflect this, particularly at top executive levels. These are still dominated by white males. 

The EEOC reports that just 14% of top-level executive employees in retail are from underrepresented groups. This is almost 10% lower than the accommodation and food services industry. A McKinsey survey found that 39% of participants didn’t take a job because they perceived the organization did not have an inclusive culture. In addition, a survey by Harvard Business Review found that a staggering 75% of participants don’t feel any effects of diversity policies unless there’s a commitment from leadership to drive change.   

One of the biggest retail HR challenges is to move from promising a diverse and inclusive workplace and delivering. Tech-driven HR tools like behavioral assessments and pre-employment testing can be leveraged to evaluate talent and help build a more inclusive environment. Removing personal details within such tests can also help HR professionals make unbiased hiring decisions.  

Retailers have been pushed this year to address inequalities in the workplace, the effects of which can already be seen. For example, Walgreens has witnessed small diversity and inclusion groups pop up in various teams across the company, in addition to its central diversity team. However, it’s essential to be aware that changes implemented today may take years or even decades to come to fruition.

When it comes to addressing the lack of diversity amongst executive teams, the obvious reason is that the talent pipeline feeding into those roles is equally non-diverse. Therefore, HR must focus its efforts on cultivating experienced, diverse candidates within the organization. This will allow a wider range of people to remain in the running for these higher-level roles. Initiatives such as mentoring or coaching and sponsorship programs can help build a more diverse and inclusive workplace where nobody feels like an outsider and everybody feels they belong.  

Are you ready to overcome retail HR challenges in your organization?

Retail HR professionals have to become strategic in attracting and retaining employees. They must understand the business to be taken seriously by leaders and add value to it. By redefining the role of HR within an organization, leveraging technology, and building a safe, inclusive working environment, you can successfully deal with the retail HR challenges and create a positive impact on the bottom line.

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