High attrition in retail is nothing new: annual turnover among frontline retail workers has been at least 60% for a long time. Retailers regularly face the challenge of replacing more than half of their store staff each year. But that challenge has grown amid record inflation and an ongoing global pandemic: Half of frontline retail workers plan to quit their jobs in the next few months alone. Perhaps worse, 63% of frontline retailers managers plan to quit smoking in the near future. And many of them no longer want to work in retail.
No other American industry is more affected by the “Great Attrition” than retail, simply because it employs more people than any other sector of the American economy. The following six charts show highlights of our research involving more than 1,000 US frontline workers in a range of retail formats, including grocery stores, big box stores, department stores, restaurants, convenience stores and other small formats. These charts illustrate the retail attrition problem in the United States, but also point the way to potentially powerful solutions.
By understanding what frontline workers want from a job, retailers can create a competitive advantage. Our research shows that frontline employees at major retailers are twice as motivated in their day-to-day work and leave half as often. Among the top frontline retail employers, comparison store sales are three percentage points higher than the worst performers. If retailers simply continue business as usual approaches to hiring and retention, they risk chronic staff shortages for the remainder of 2022 and beyond. Attracting, developing and retaining frontline talent must become a top item on the agenda for retail CEOs.
The largest workforce. About 20% of US employees, or about 31 million people, work in the retail and hospitality industry. This is about 9 million more employees than in each of the two largest industries (the public sector and professional and business services). The sheer size of the retail workforce means that the decisions and actions of retail employees affect not only the companies they work for, but the U.S. economy as a whole. Unfortunately, as the following chart shows, the retail industry is struggling to retain frontline workers.
A massive exodus. The retail and hospitality industry faces a much more serious retention challenge than any other industry. The “dropout rate” in retail and hospitality in the United States is the highest of any industry and exceeds the overall dropout rate in the United States by more than 70%. Frontline retail workers are recognizing that they have more job options and more tools to access those options than ever before.
Will they stay or will they go? The exodus shows no signs of slowing down, especially when we zoom in on the front lines of retail. Nearly half of all frontline retail workers, compared to just 38% of all American workers, plan to leave their jobs in the next few months. Perhaps more worryingly, nearly half of frontline retail workers who want to leave their current jobs plan to seek employment outside of the retail industry. Retailers are competing not only with each other for frontline talent, but also with other industries and non-traditional work options.
What workers want. “Not enough workplace flexibility” is the top reason frontline retail workers are considering quitting their jobs. No employee from any other industry ranks lack of flexibility as the top attrition factor. Ironically, the nature of frontline retail work makes offering flexibility quite difficult. Can retailers create a more flexible workplace for store staff? Top frontline retail employers are innovating to do just that, such as offering peer-to-peer shift trading and greater autonomy for employees to decide what role they’d like to play in the store on any given day. Flexibility can take many forms, and different characteristics of flexibility resonate among different talent pools.
Like workplace flexibility, “health and well-being” ranked higher in frontline retail (where it was the third most cited factor) than in any other industry. which we studied. Similarly, employees in only a third of other industries ranked “meaningful work” higher than frontline retail employees (number five).
Rounding out the top five for frontline retail, two factors matter in nearly every industry we studied: career development (number two) and compensation (number four). Two other factors ranked just behind the top five: supportive colleagues and inspiring leaders.
How to support managers. Frontline retail workers are a diverse population, with varying needs and levels of satisfaction. For example, we found a much higher risk of attrition among managers: they are 1.75 times more likely than non-managers to consider leaving their job (63% vs. 36%).
The gap is stark, so we dug into what matters to managers versus non-managers and found some important differences. Flexibility is even more important for managers, for example. Non-managers, on the other hand, over-index career development, compensation, health and well-being, and inspirational leadership, all attributes that managers influence. Retailers will therefore need a significant improvement in manager satisfaction to be able to create the work environment that non-managers want.
Differences between demographic groups. Across age groups, frontline retail workers aged 35 and older are the most likely to consider quitting their jobs in the short term. Just as in our analysis of executives and non-executives, we found key differences in what counts among age groups. The top attrition factor for employees under 35 is lack of career development, which is only the fifth most important factor for employees 45 and older. Meanwhile, the lack of supportive colleagues (which in our research included aspects such as feeling unfairly treated, feeling overworked, or working with unreliable people) is the most important factor for 45-year-olds and more, but only falls to eighth place. for those under 35.
In frontline U.S. retail, women are as likely as men to consider leaving their jobs in the coming months, but cite different reasons. Women are more likely to cite a lack of inspirational leadership as a reason for leaving, while men more often cite poor career development. Flexibility is important for both men and women.
This research complements our experience working alongside leading frontline retail employers. Our findings suggest four imperatives for retailers:
- Understand your frontline talent pools and create a distinctive employee value proposition. The frontline retail workforce is large and includes a diverse set of workers with a wide range of needs. Retailers need to identify the talent pools that best fit their business, determine what matters to those segments of workers, and develop an employee value proposition tailored to the unique needs of those employee segments.
- Innovate to offer differentiated flexibility. While office workers have seen an increase in flexible working, flexibility remains the most pressing issue for frontline retail workers. Seeking greater flexibility, many have left traditional frontline jobs to take on on-demand work. Retailers need to think more creatively about how to provide flexibility on the front line, such as giving employees the option to increase or decrease their hours to fit in with their other part-time jobs, their allowing them to work in other stores on certain days, and giving them more control over how their work is done.
- Simplify frontline retail jobs and make them more attractive. A lack of meaningful work (boring or repetitive work, work with little social impact, or work unrelated to the organization’s mission) is one of the top five drivers of frontline retail attrition. The most innovative frontline retail employers are investing in technology to automate activities, freeing up time and energy for more meaningful roles in the store. Retail leaders should assess the more mundane activities of frontline employees and look for ways to simplify them, which can improve productivity and help make work more attractive.
- Invest to train strong managers and a culture of development. Managers aren’t satisfied — they’re likely to leave their front-line retail jobs at a 75% higher rate than non-managers. Yet managers are the foundation for any improvement in frontline retail attrition. Manager control factors, such as inspirational leadership and career development, matter a lot to non-managers. Managers can provide on-the-ground perspective to help retailers design a new employee experience. Retailers must also rely on managers to lead the execution of any new employee strategy. Clearly, the importance of investing in the role of manager cannot be overstated; this will have a cascading impact on the rest of the organization.
We expect competition for frontline talent in retail to remain intense, driving a wave of innovation in the employee experience. Top retail employers will create a new competitive advantage: a highly engaged frontline workforce that dramatically improves customer experience and financial performance. More than 30 million retail workers are ready to benefit.