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The retail industry continues to face significant recruitment and retention challenges as we move into Q4. The competitive nature of the job market and the evolution of work expectations have all contributed to a dynamic and often difficult hiring landscape.
In this article, we dive into the top hiring challenges, turnover rates, and the reasons behind the high quit rates, providing a comprehensive overview of the critical issues facing the retail workforce today.
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Key Statistics to Know
- 45% of retail recruiters identified retaining top talent as their primary challenge in 2023 - this remains the leading concern in 2024.
- The turnover rate for hourly in-store positions increased to 75.8% in 2022 from 68% in 2021.
- The percentage of respondents citing a lack of qualified candidates surged from 21% in 2023 to 31% in 2024.
- Lack of workplace flexibility is the leading reason frontline retail workers are considering leaving their jobs (34%).
- As of April 2024, the average total retail separations rate was 4%, compared to 3.4% across all sectors.
Retail Hiring Challenges
The retail sector is facing significant hiring challenges, both from recent experiences and anticipated future difficulties. These challenges are critical to address, as they directly impact the ability of retailers to maintain a stable and effective workforce. According to the Retail 2024 Hiring Insights Report by GoodTime, these are the highlighted challenges.
Hiring challenges [2023]
- Retaining top talent: Identified by 45% as the primary challenge, reflecting the competitive nature of the job market, where experienced and skilled employees are in high demand.
- Hybrid work challenges: Affected 28%, as retailers adapted to remote and flexible work arrangements while maintaining productivity and cohesion within their teams.
- Candidate no-shows and skill mismatches: Each affected 23%, highlighting difficulties in the hiring process, from initial recruitment to ensuring candidates are truthful and reliable.
- Other notable challenges: Remote work compensation expectations (21%), limitations of current hiring technology (21%), lack of qualified candidates (21%), and unrealistic compensation expectations (20%).
Hiring challenges [2024]
- Retaining top talent: Remains the leading concern, though slightly decreased to 42%. This persistent issue emphasizes the ongoing struggle to maintain a stable and skilled workforce in the retail sector.
- Lack of qualified candidates: Surged to 31%, indicating a growing gap between job requirements and available talent. This increase suggests that finding the right fit for retail positions has become more challenging over the years.
- Hybrid work challenges: Continued to impact 29%. As the retail industry further adapts to hybrid models, the complexities of managing in-person and remote staff remain prevalent.
- Remote work compensation expectations (28%) and skill mismatches (27%) persisted. These challenges reflect the evolving nature of work expectations and the importance of accurate skill representation.
- New challenges: Changes in hiring processes (26%) and candidates dropping out (25%). These challenges highlight the need for retailers to continuously refine their hiring practices and address issues that cause candidates to disengage.
Retail Turnover Rates
Recent data from Korn Ferry highlights a significant increase in turnover rates across various positions in the retail sector from 2021 to 2022. The following table presents a detailed comparison of these rates, showcasing the growing challenges faced by the industry in retaining staff.
| Position | 2021 Turnover Rate | 2022 Turnover Rate | YoY Change |
|---|---|---|---|
| Hourly In-Store Positions | 68% | 75.8% | +7.8% |
| Store Managers | 14.6% | 17.7% | +3.1% |
| Assistant Store Managers | 22% | 29.2% | +7.2% |
| Part-Time Hourly Store Employees | 85% | 85% | 0% |
| Corporate Retail Employees | 13.7% | 17.4% | +3.7% |
| Salaried Distribution Center Workers | 14.3% | 18.6% | +4.3% |
This upward trend in turnover rates underscores the pressing need for retail employers to address retention strategies and improve working conditions across all levels of employment.
Increasing retail turnover rates
According to McKinsey, "Lack of workplace flexibility" is the leading reason frontline retail workers are considering leaving their jobs (34%). No other industry cites “lack of flexibility” as the main cause of employee attrition.
In addition to flexibility, other significant factors include:
- Health and well-being: Ranked higher in frontline retail (29%) than in other sectors.
- Meaningful work: Ranked higher by frontline retail employees (27%) compared to other sectors.
- Career development (32%) and compensation (29%) are important across nearly every sector.
Retail quit rates
Note: total US economy average quit rate = 1.00 (monthly quit rate is calculated based on the average of monthly quit rates over 12 months between May 2023 and April 2024)
The chart above, sourced from the Job Openings and Labor Turnover [Apr 2024] report, provides a comprehensive view of quit rates across various sectors over the 12 months ending April 2024. Here are some key insights specific to the retail industry:
- Retail industry quit rate: The quit rate for the retail sector is significantly high at 1.35, indicating a substantial challenge in retaining employees. This rate is second only to the leisure and hospitality sector, which has the highest quit rate at 2.01.
- Comparison with other sectors: Retail's quit rate is higher than several other sectors, including professional and business services (1.18), transportation, warehousing, and utilities (1.09), and healthcare and social assistance (1.04). This suggests that the retail sector faces unique challenges in maintaining workforce stability.
Retail separations rate
As of April 2024, the average total separations rate for the retail industry was 4%, compared to 3.4% across all sectors, according to the U.S. Bureau of Labor Statistics.
The separations rate measures the percentage of employees who leave a company within a specified period, encompassing voluntary quits, layoffs, and other forms of departure. This elevated rate highlights significant challenges within the retail sector regarding employee retention and turnover. Addressing these issues is crucial for fostering a more stable and efficient retail workforce.
Conclusion
The retail sector's struggle with hiring and retention is a multifaceted issue that demands urgent attention. From the increasing turnover rates to the persistent challenge of retaining top talent, retailers must adopt strategic measures to create a more stable and attractive work environment.
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