People Strategy

HR’s Top Challenges in Retail — and How to Solve Them

September 10, 2021
November 7, 2023
Sarah Lindenfeld Hall
Lattice Team

The COVID-19 pandemic upended every industry, but the retail sector might be among those hit the hardest. Many storefronts scaled back operations to comply with local safety measures, addressed erratic supply chain issues, and met the shifting shopping habits of customers who more often clicked ‘Buy’ on e-commerce sites. For some, it was all too much: More than 8,700 retail organizations closed in 2020.

And as sales and business operations endured massive change, so has the labor market for retail workers. In June 2021, some 637,000 retail workers quit their jobs, up from 596,000 the month before, according to the US Bureau of Labor Statistics (BLS). Here are some of Human Resource professionals’ biggest challenges in retail — and practical steps to address them.

1. Staffing Shortages

With so much employee turnover, retail organizations are struggling to fill the gaps. In a recent CNBC/Momentive Small Business Survey, nearly 31% of small business owners said they have open positions they haven’t been able to fill for three months or longer, up from 24% earlier this year and 16% before the pandemic began. 

To lure new hires, Efrem Yates, owner of three Your Pie pizza stores in North Carolina, has increased pay where he can and advertised on different hiring platforms. But there’s only so much in his control.

“It’s really forced me to take a 30,000-foot view of our operations and look at the places where we’ve placed too much emphasis on people and not enough emphasis on systems,” said Yates, whose staff is down by about 40%.

To address the staffing issues and keep morale high, Yates has looked for ways to make his existing employees’ jobs easier. He’s hired a cleaning service so each night’s closing crews have less work to do. He’s streamlining the weekly food ordering process so it’s not so time-consuming. And he plans to bring on an HR firm to outsource tasks that have typically fallen to managers.

“I’m taking those things off of their plate and placing them on the plate of an expert or specialist who can do that a lot better than we can,” Yates said. “In that way, I buy time for them to do other things.”

2. Career Advancement

People often consider retail jobs as temporary positions for young adults who will eventually launch another career elsewhere, said Liz Palmieri, talent optimization consultant with MVP-Results, a talent strategy firm. When employees don’t see opportunities for career advancement they are less likely to be engaged, and businesses lose out as a result. According to an article in Harvard Business Review, just a 0.1% boost in employee engagement at a Best Buy store can result in more than a $100,000 increase to the store’s annual operating income. So a drop in employee engagement can result in a retailer’s bottom line taking a major hit.

To curb attrition and improve the employee experience, retail companies need to demonstrate that career growth is possible and create paths for both leadership and lateral opportunities, Palmieri said.

For employees who want to move into management, spell out the skills required to advance from sales associate to manager to a corporate title. For lateral moves, build opportunities for advancement within a position or let workers specialize in one aspect of the store, Palmieri advised.

Retail organizations can also create career paths based on emerging needs. As more retailers deploy software, for example, they could provide training to employees interested in IT careers.

When career conversations get integrated into everyday work, managers become growth guides for their teams. Learn how Lattice Grow empowers retailers to develop their people.

3. Union Vulnerability 

Efforts to unionize an Amazon warehouse in Alabama in 2021 failed, but it’s a signal that similar attempts are in the offing, said Jack Wiley, PhD, an organizational psychologist and author of The Employee-Centric Manager: 8 Keys to People-Management Effectiveness. HR departments need to have a pulse on employees across the workforce to uncover any discontent, Wiley said.

“If [HR departments] are regularly seeking out employee input on the work experience, they can be tracking how employees are feeling about those very factors that are predictive of discontent and are the very things that might give rise to unionization,” he said.

Have conversations with employees or survey them on issues of fairness of pay, job security, benefits, and treatment by managers, advised Wiley. Once complaints emerge, he continued, retailers should look for ways to make the appropriate corrections.

4. Sexual Harassment

Sexual harassment is a common problem for retail employees — whether it’s customers, managers, or coworkers involved in the inappropriate behavior. A review by independent, nonpartisan policy institute Center for American Progress of private-sector sexual harassment claims filed with the US Equal Employment Opportunity Commission (EEOC) found that the retail trade sector comprised more than 13% of total claims, second only to hospitality.

It’s no surprise, considering who retailers often hire — young women and economically vulnerable women, said Matthew D. Besser, an employment discrimination attorney at Cleveland-based firm Bolek Besser Glesius. “What makes retail fertile ground for harassment is that the employees are often younger or economically dependent on their jobs and so they are afraid to speak out and afraid to report it,” Besser noted.

Employers have a legal obligation to provide safe workspaces and could face employment claims if they allow bad behavior to continue, said Besser. To address issues that emerge and prevent them altogether, employers must have a sexual harassment policy in place and follow it. Sexual harassment policy templates can be found online; employment lawyers can help.

Managers should be regularly trained and understand that any instances of sexual harassment should be reported, Besser stressed. Once problems emerge, the company must be committed to taking real action.

When it comes to reporting, Besser said that retail organizations should provide workers with at least two places to report harassment, such as a centralized Human Resources line, department head, or onsite manager. “If the policy only allows you to report to the general manager, that’s all well and good until the general manager is the one doing the harassing,” he said.

5. Employee Misclassification 

To avoid paying retail workers overtime, it’s not uncommon for employers to “promote” them to assistant manager and move them into a salaried position. Major retailers — from Burlington Stores to Walmart — have paid millions of dollars in employee misclassification cases. 

“Many employers think that all [they] have to do is pay someone a salary or give them the title with ‘manager’ in it and that person is going to be exempt from overtime rules,” Besser said. “It’s just not the case.”

The US Department of Labor has a four-pronged test to determine if someone is a manager exempt from overtime. They must: 

  • Earn at least $684 per week
  • Have the authority, or, at least, provide significant input, to hire or fire employees
  • Work primarily as a manager
  • Direct the work of at least two full-time employees or their equivalent

“Look at the regulations and follow them,” Besser advised.

6. Discrimination and Hiring Bias 

The influence of unconscious bias over hiring decisions is well documented. Studies have repeatedly shown that people with Black-sounding names have a harder time getting job interviews than those with white-sounding names. Retailers are among the prime offenders, according to a 2021 paper published by the National Bureau of Economic Research

“So many retailers, particularly high-end retailers, want to project their brand image,” Besser said. “With inadequate training, it’s easy to understand how a manager onsite is going to hire somebody who looks like them.”

This issue affects other demographics beyond race and includes gender, age, and ability, among other characteristics, he said. To avoid these discrimination claims, retailers must offer equal opportunity training. The US Equal Employment Opportunity Commission offers training tips on their website.

7. Employee Theft 

Dishonest employees steal more from their employers than the typical shoplifter. The 2019 National Retail Security Survey found that the average unscrupulous retail worker stole $1,264, compared to about $550 for a shoplifting incident. And that doesn’t include “time theft,” when employees don’t properly record their work time.

When issues arise, Ashley Cox, PHR, SHRM-CP, founder and CEO of Human Resources consulting firm SproutHR, cautions against acting quickly and urges HR professionals to assume positive intent until they’re able to prove otherwise.

Examine pertinent videos, reports, and other data; interview witnesses and the accused employee; and review all applicable company policies, she recommended. With accusations of time theft, determine whether the employee simply wasn’t trained properly.

“There can be a lot of nuance in employee theft cases, which is why we should always conduct thorough, fair, and unbiased investigations into such claims to ensure we understand the full scope of the situation and determine the appropriate outcome,” Cox said. 

8. Seasonal Demand and Hiring

Retail stores are known to rely on additional, seasonal staff during the holidays and other cyclical peaks in business. The ongoing labor shortage and COVID-19 pandemic only make it more difficult to bulk up retail staff for the holidays. Sign-on bonuses, overtime opportunities, incentive pay for holiday work, and referral bonuses for existing employees can all bring temporary workers your way, said Matthew Burr, MBA, SPHR, SHRM-SCP, founder of Burr Consulting, an HR consulting firm.

But sometimes, the real problem for retailers is waiting too long to hire, Cox noted. It can take time to recruit new hires, extend and receive acceptance offers, conduct pre-hire screenings, and complete the required onboarding and training. Cox recommended working backward to create a staffing plan that will ensure enough time to complete every step.

“These steps may take one company only three weeks to get through, while it may take another company six weeks,” she said. “Make sure you're planning accordingly for your organization, so your seasonal staff is ready to hit the ground running when business ramps up.”

The root cause of many of these Human Resources challenges in retail organizations is having no retail HR leaders onsite, Besser said. Often, they work in a company headquarters, far away from sales floors and warehouses. In some cases, there might be no HR staff at all. The key, Besser said, is training.

“You’re putting the onus on the onsite manager, so that means you have to be committed to training and retraining the managers and make it a priority for them,” he said.

Training is key for frontline workers, too. With the right training for even the newest seasonal hires, workers will be better equipped to handle what comes their way and be more productive and engaged team members, Cox said.

“As a result, customers will experience the direct benefit of well-trained and prepared employees, leading to highly satisfied shoppers who make return visits and tell their friends and family about their great experience,” she said. “A win-win all around.”