Retail Hiring and Firing in Flux: How Can Retailers Improve Frontline Worker Retention?

Frontline retail work can often be an arduous affair. Relatively low pay, unreliable work hours and uncertain shift schedules, an increasingly belligerent or impatient customer base and unforgiving management are common complaints among members of this cohort.

However, as Retail Dive indicated, the very face of retail could be undergoing something of a shift. Hirings and firings are in flux, according to data cited by the outlet as originating from Challenger, Gray & Christmas.

Layoffs Spike 2,800% in December, Year-Over-Year, Despite Slowing Layoffs in Retail Throughout 2024

The Challenger report illuminated several key data points that may be representative of a sea change in the retail business writ large. Some of its key findings included:

• Retail job cuts rose by more than 2,800% (2,885%) in December, from 110 positions in 2023 to 3,283 in 2024.
• However, overall job cuts in the retail sector slowed in 2024, down from 78,840 in 2023 to 41,686 in 2024.
• Hiring numbers also boosted year-over-year. In 2023, retailers sought to hire 440,893 individuals. In 2024, that number swelled to 536,600.
• Despite an apparent hiring increase, retailers still slowed the practice in October and November of this year, regardless of an approaching holiday season.

While the numbers above seem slightly at odds, this may represent a general confusion within the segment as to which path to proceed down next. Aggravating factors add to this potential confusion, including the necessity of today's frontline retail worker to possess a broader skillset — Retail Dive mentioned that 81% of retailers surveyed by UKG in October were cross-training existing employees rather than hiring new workers to fill gaps — as well as the nascent addition of Gen AI to the mix.

What skills will be required on the front lines of retail sales in 2025? Which skills will become obsolete, and by extension, which positions will find themselves "worked out" or "managed out" of payrolls in the years to come? And how can retailers ensure they are retaining top talent, or employees satisfied and motivated to take on the challenges of an increasingly competitive and straining retail sector?

Retail Employees Are Reluctant To Return to the Business Once They Leave

One thing to note before turning to the topic of retention: Retail workers are leaving the business entirely after quitting their gigs, according to McKinsey & Company research.

In fact, 72% of retail employees who had decided to leave their jobs — as surveyed in May 2023 by McKinsey & Company — had left the industry altogether.

The two most prominent reasons for attrition in the retail sector, as illuminated by survey data, had shifted to rest on a lack of overall career development opportunities as well as uncompetitive compensation. Rounding out the top three reasons that frontline workers are quitting their posts? A lack of inspiring leadership.

One interesting subset of data concerning this last attrition trigger is that frontline retail managers cited a lack of inspiring leadership as being more pressing of an issue than any other — 11 points higher than nonmanagers. This gestures towards a notion that while in-store managers may be pulling their weight when it comes to supporting their staff as best they can, the same cannot be said for corporate offering meaningful support and leadership to said frontline managers.

Frontline retail employment levels have lagged behind other industries after suffering a dramatic plunge during the COVID-19 pandemic, and as of mid-2024, said levels still lagged behind other U.S. segments by 5%.

Speaking to the importance of retail employee retention — largely speaking to the positive correlative relationship between a healthy employee experience as related to a satisfied customer experience — McKinsey & Company drew the conclusion that retailers must refocus and rebolster efforts to improve their relationships with frontline workers.

"Losing a single frontline retail employee costs a retailer nearly $10,000 on average, with variations based on employee wage levels, the cost of covering the vacant shifts, the time it takes to hire another worker, and the time it takes for a new worker to reach peak performance. Multiplied over thousands of employees and several years, the drag on a retailer’s bottom line can be significant," McKinsey & Company wrote.

"In our experience, most retailers have not quantified the impact potential, which can be comparable with the size of other major commercial or operational initiatives that are easier to quantify. Retail leaders, and their investors, will benefit from treating employee attrition issues with the same intensity as they do other customer-facing opportunities," the report concluded.