The job market in the United States may have grown stronger in the past few months, but a closer look at the data suggests retailers face difficulties. As of May 2024, there were about 2.5 million more job vacancies than job seekers. That spells trouble for retail executives, who continue to see higher-than-average attrition rates within their frontline workforces.
Based on responses from more than 1,000 US frontline retail workers, our 2022 research outlined what workers want from their jobs and how retailers can meet those expectations. We’ve reexamined the problem with fresh survey data to see how workers’ needs and employers’ interventions have changed.
Attrition factors, or the circumstances that motivate employees to leave their jobs, have shifted: a lack of career development and uncompetitive compensation are now the two most important factors contributing to retail employee departures, followed by a lack of inspiring leadership. The following six charts help illustrate the state of frontline retail employment in the United States. They provide retail leaders with insights on how to improve engagement among frontline employees and managers, which has a quantifiable impact on both customer satisfaction and financial performance.
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.
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.
In our August 2022 article, we suggested that retail executives consider several actions, including understanding frontline talent pools and building distinctive employee value propositions. New data underscores the importance of those actions. Every retailer should have a clear answer to each of the following four questions, which address today’s frontline labor dynamics:
- What’s the value at stake? Frontline issues have typically been a focus for HR and operational field leadership, but they do not often get their fair share of investment and attention from the executive team. One of the root causes we have observed is a lack of well-developed business cases associated with addressing frontline attrition. The significant impact at stake, however, suggests that more resources should be allocated to frontline excellence. The benefits are manifold, from improved employee motivation to better CX and significant cost savings. Few other initiatives offer such a clear example of holistic impact. Every retailer should quantify the potential impact from investing in its front line, understand the sources of value, and ensure the management team treats frontline initiatives as a priority.
- Who are our priority talent pools—and what matters to them? Most retailers use internal surveys to get a sense of employee satisfaction and what their workers care about; few analyze the data with the same rigor they would apply to consumer research. By segmenting current and future employees using a wide range of data inputs (such as attitudes and personal goals), retailers can identify priority talent pools and create differentiated employee value propositions to attract workers who will thrive. The best employers also apply an equally data-based approach to screening frontline candidates and training new workers, reducing the number of new hires who quit within the first few months while ensuring no biases come into play.
- What is our plan to build strong frontline managers and a development culture? High-performing and engaged frontline managers have a downstream positive impact on the broader frontline organization. Retailers should start with a clear understanding of what makes a great frontline manager in their organizations and then design tailored career pathways and development programs that build a robust manager pipeline. The best frontline employers empower managers (and future managers) through a diverse set of on-the-job experiences and continuous field-and-forum learning focused on important skills. Recurring feedback and development conversations should supplement these programs. A differentiated manager development program will require investment, but the return can be high when done right.
- How will we reimagine frontline work to be more impactful for our employees and customers? Some frontline retail workers may leave their roles because they cannot see the impact of their tasks. Retail leaders can use new technology, such as generative AI, to simplify mundane frontline work and redirect employee energy to higher-level tasks. Digitized task management, automated ordering, production planning, micro-training, and a myriad of other recent innovations can improve the frontline experience. Scheduling is an evergreen problem and could be alleviated with new staffing solutions, such as flexible work platforms that pair qualified workers with retail managers who need to fill shifts. When deployed appropriately, these solutions can improve productivity and allow workers to shift their time to more meaningful work, which for many include engaging customers or leading their colleagues. Retailers should not underestimate the frontline capability building that such a shift would require.
Four years after the pandemic began, frontline work remains a challenge for the retail sector. Amid the prolonged high-attrition rates, there’s a clear opportunity for retailers to improve EX and performance. Not only will their employees benefit, but their customers will too.
