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January 14, 2025
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.
Discussion Questions
What are some ways that retailers can improve frontline worker retention beyond the obvious (pay increases, etc.)?
What are the largest errors that corporate offices may be making in their dealings with frontline management and nonmanagement employees?
Will retailers feel pressure to improve conditions, including pay and amenities, to remaining frontline workers who take on additional roles and responsibilities after extensive cross-training?
Poll
Loading …BrainTrust
Anil Patel
Founder & CEO, HotWax Commerce
John Hennessy
Retail and Brand Technology Tailor
Georganne Bender
Principal, KIZER & BENDER Speaking
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Working on the front line in retail is hard. It’s often physical and tiring, and dealing with the public can, occasionally, be unpleasant and risky. Good store management and training go a long way to driving satisfaction, as does proper investment in retail basics so associates can do their jobs properly. Pay and benefits need to be reasonable, and it’s important to offer advancement for those that want it. Many retailers don’t do enough on some or all of these fronts.
Mic drop, Neil. I agree with you 100%. Front line store associates are the face of the brand. They work hard and do not receive the respect or recognition they deserve from the retailers that employ them. We can and need to do better.
And what makes it even worse? Yes…understaffing: Neil noted on a Twitter post this week that macy*s is more-or-less ending the era of downtown department stores – closing fully half of the small number they have left – but just as depressing as the closures themselves is how deserted they are; the Downtown LA store, if the layoff notices are a guide, has 98 employees; the (even larger) Downtown Sacramento store has 71. These are 250-350K gsf stores..they can’t be meaningfully staffed with these kind of headcounts.
Came to make this point as well, and with the example of Macy’s in Rosedale Center MN. Better coverage of the floor at Pacsun or even H&M when I shopped there with my daughter last weekend. Garments thrown about in every department, no effort made to tidy up. Cosmetics was the only area well-covered. The new Dick’s Sporting Goods location looked & felt more like a traditional department store, and Von Maur was 100% textbook perfectly staffed & organized.
Aren’t cosmetics usually a concession? Those smiling helpful people may not even be part of macy*s.
Retailers need to stop treating frontline workers as disposable. Beyond pay, they need to provide clear career paths, consistent schedules, and genuine recognition for hard work.
The biggest mistake corporate offices make is ignoring feedback from those on the ground. They create policies that make sense on paper but fail in practice. If workers are cross-trained to take on extra roles, retailers must compensate them fairly and not just pile on more work without support.
I think that retailers will feel immense pressure to improve conditions, because if they don’t, they’ll lose talent to industries who actually know how to value their employees.
At the store manager or department manager level, how about recognizing the breadth of skills necessary for the job vs the breadth of skills most people will bring to the job? Does the training program recognize who can and can’t train sales people? Who can and can’t execute VM? Who can and can’t help corporate understand why assortments are right or wrong for that location? It’s not just $$$. It’s training for fit with the Brand Promise. It’s training for confidence about the ability to succeed. It’s the confidence about success that makes it a “want to” job versus a “have to” job.
At the sales level, how about differentiating between ‘sales’ jobs and ‘cashier’ jobs? And understanding the skill set difference between the two? It’s been a very long time since I ran into a sales person on the floor in a department store. And in most specialty stores I am greeted by a sales person somewhere near the entrance and if I buy something there is somebody else behind the register. Put the right people in the right job, pay a market competitive wage, and provide upward mobility.
So many excellent comments. In addition to offering the training and opportunity to move up, the right people need to be in the right roles. Just because you were good at your job doesn’t mean you will be a good manager of others doing that job. Training and mentoring help but retailers need to be aware that a poor manager is very disruptive. Don’t just fill roles to tick a box. Evaluate managers and how their teams are doing. Great leaders develop the loyalty you are seeking.
Retail workers are often stretched thin, juggling too many tasks without the right tools. Beyond pay and career growth, giving them the tech they need to simplify their day-to-day can make a huge difference in job satisfaction. Even simple tools can streamline things like task management, communication, and order fulfillment. While it’s not a complete solution to all the challenges they face, it’s a step toward a more supportive work environment.
Too many of these positions are treated as entry level, disposable, placements, and therein lies the problem. These jobs are the face of the company, and too often suffer from high churn.
For improvement there are a lot of potential levers. How about we start with incentives for store managers to keep staff?
Start by reading the first paragraph of this article, and you’ll understand the why there’s a problem. That said, there are retailers who are doing well enough that there is a “waiting list” of applicants to work for them. What are they doing differently compared to others? They simply do the opposite of that first paragraph. As pointed out by McKinsey and Company, there is a large cost to replacing employees. That information should be the fuel needed to decide to pay more, offer fair benefits, and treat employees like they deserve to be treated.
Frontline retail associates are the face of your brand experience, and yet many retailers vastly underinvest. In a world of eeking out single digit margins, the temptation is to cut further, without recognizing the tremendous holistic costs of record attrition. Yes more pay and more career advancement are key. But there are also a variety of technologies that bring better structure, motivation and public recognition to the jobs they do now. The costs of implementing these frontline technologies seems high until you compare it to the cost of constantly re-recruiting your workforce every 6-12 months.