HR Practices and Challenges in Retail

The function of HR in retail

The retail industry is fast-paced, relentless, and competitive, which is why human resource practices focus on solving the problems this sector brings with it.

Economic uncertainty, staffing issues, and high turnover costs pose some of the biggest challenges for hr teams within the retail sector.

Without HR management practices, the brick-and-mortar retail industry would not be able to overcome the strategic hurdles the 21st-century presents.

How does HR management differ in retail?

Due to its unique strategic challenges, retail companies require HR skills such as the ability to work in a fast-paced environment and confidence in handling large volumes of recruitment. HR professionals in this branch must be incredibly flexible and fast-thinking in order to keep up with the pace of this rigorous industry.

The importance of HR in retail

Human resource management is more important in retail organizations than in any other firm. Take, for example, manufacturing companies; they are capital intensive, meaning that they require machines and equipment to manage merchandise. On the other hand, retail companies are labor-intensive, therefore requiring more trained employees for development.

A poorly functioning human resources department will likely result in employee conflict, inadequate training, and an unfavorable work environment.

The 5 Main Challenges for HR in the Retail Sector

With events like the pandemic and the evolution of technology, the landscape of work as we know is shifting. Especially in the retail sector, these changes can be felt, and the HR teams are faced with distinct challenges, which we are going to take a closer look at now.

1. Retention and high turnover rates

Every year, attracting and keeping top talent remains one of the top challenges for HR professionals. Employee retention became one of the major buzzwords in HR during Covid.

In retail, high turnover is costly, and according to National Retail Federation in the US, the national average employee turnover rate in the retail industry is slightly above 60%, which translates into more than 230 million days of lost productivity and $19 billion in costs associated with recruiting, hiring and training.

Of course, the cost of turnover also varies from position to position:

• for associate-level positions, employers can predict to pay 16% of an annual salary to replace an employee
• for executive-level positions, organizations will pay around 213% of an annual salary

2. Training and recruiting new employees

Training and recruiting new hires is not a new HR practice.

However:

• the constant influx of new employees
• the shift to more remote learning
• and the logistics of the retail sector

all entail significant new HR challenges.

For example, companies have to train retail employees across time zones and countries and prepare them for different departments ranging from department store workers to sales departments.

3. Employee Engagement and Experience

Employee engagement is a crucial concept for retailers. Since the retail industry relies on excellent customer service in a face-to-face environment, disengaged employees directly impact the impression left on customers.

So, a successful business is driven by an engaged workforce, which hinges on creating a meaningful employee experience.

This is essential because one single poor experience can be highly harmful to maintaining brand loyalty and growth, particularly when there’s never a lack of competitors willing to fill your spot in the marketplace.

4. Employee Theft and Misconduct

Retail stores often employ part-time and temporary workers, and this transient nature of the retail business makes it very susceptible to theft.

In fact, it's the largest source of inventory shrinkage in the American retail industry and the third-largest in the UK.

Not only do companies lose billions of dollars each year, but they also often face potential lawsuits in cases of employee misconduct such as sexual harassment, discrimination, and safety issues.

5. Regulatory compliance

HRM in retail faces heavy demands for regulatory compliance. Laws such as child labor or wage and hour rules vary across countries. Labor costs already represent a significant amount of a retailer's operating expenses, nearly 60 percent, and it does not look like they will decrease.

To counterbalance higher wages, retailers may be forced to increase their use of part-time workers, whose benefits packages generally cost less, and cut out hours for full-timers.

So, businesses with higher concentrations of minimum-wage employees, such as supermarkets, will be hit the hardest. This may lead to layoffs, staff reductions, and price increases.

5 Tips to an effective HR management in the Retail Industry

Now that we have taken a closer look at the HR challenges, in the following I will discuss several tips on how to cleverly use software and other tools, in order to solve issues that typically arise within the organized retail sector.

1. Embrace technology systems.

Getting held up with employee paperwork can make it difficult for HR teams to positively impact their businesses, which is why welcoming software that automates essential processes is the key to freeing up human resources professionals to focus on the projects that matter the most.

For example, flair allows HR departments to act more professionally by creating processes that are more effortless and efficient at the same time, such as tracking time and absences and innovative payroll systems that help create a smooth-running operation.

2. Predictive analytics and Feedback platforms.

This point goes hand in hand with the first point, however, it is important to emphasize the pivotal role of technology within HR processes.

Predictive analytics provide retailers with an enhanced pre-selection process in hiring. Algorithm-based software makes entire procedures run more efficiently by identifying candidates that are a better fit for the firm and, therefore, less likely to leave.

Feedback provides management with a constant stream of opinions and ideas, enabling companies to:

• identify trends that could lead to rampant attrition if not quickly addressed
• making their workforce feel taken seriously

3. Make training innovative.

The need for training has increased as new technologies are introduced and as customers become more familiar. These aspects force retail HR professionals to become resourceful regarding the design and the implementation of training.

Firms should provide information in a way that resonates with their employees, information that is easily understandable and accessible. For example, peers teaching classes interactively with employees may make them feel more comfortable asking questions.

• maintain the new employee's interest
• give them access to the tools without overwhelming them
• create an inclusive and comfortable environment

4. Create an employee culture.

An HR department needs to develop a culture within the business, even if the employee base is mainly online because excellent management is key to creating and retaining great employees.

Take the time to get to know your employees and their backgrounds by pushing forward initiatives, such as a feedback system that uses surveys, polls, and other tools to better understand team members' authentic thoughts and expectations.
Incentives like establishing an employer brand that appeals to younger generations can also alleviate employee satisfaction and help make them feel heard.

5. Highlight workplace policies.

Also, HR teams should devote time to workplace training to ensure that the expectations around safety, sexual harassment, and safety compliance are fully communicated and understood.

Conclusion

HR in retail can often seem very complex and overwhelming, but if companies are able to draw critical insights from the workforce, with guidance provided by feedback platforms, retailers can use this data to their advantage and overcome the challenges within their sector.

Be it high turnover costs or employee theft; HR managers are forced to be very flexible and multitask a dozen tasks, which is why it is so important to implement solutions, which help reduce the workload significantly.

Flair allows employers to create a clear overview of HR processes, from shift planning to a structured employee database, enabling them to focus on the more noteworthy problems at hand. These types of software can come in handy in the dynamic and rapid world of retail.