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Key Challenges of HR in the Retail Sector

Key Challenges of HR in the Retail Sector

Key Challenges of HR in the Retail Sector

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Human resources are, broadly speaking, the people who make up a company. In the retail sector, these human beings who make up a company play a massive part in securing sales.

Therefore, HR departments are essential in retail. HR deals with employees, helping to ensure they're satisfied with the work they're doing. At the same time, HR is often the point of communication between the employees and the company. In this respect, HR is responsible for communicating the company's workflow to new hires, managing and retaining current employees, and providing an avenue for employees to express constructive criticism.

This article will discuss some of the biggest challenges HR faces in retail companies. Through this analysis, HR departments will improve their negotiation of employee relations.

What is the role of HR in retail?

Human resources departments play a multifaceted role in the retail industry. Because retail is eminently customer-facing, human resource management must consider the customer experience. Due to high turnover rates (discussed in detail below) and a pressing need for employee engagement and productivity, HR in retail faces many unique challenges.

Hiring and Training
Hiring and training talent is likely the most significant of HR's roles in the retail sector. According to the US Bureau of Labor Statistics, there was a net loss of employees between the first quarter of 2020 and 2021. This might have been expected considering certain world events, but what may surprise you is that the retail sector has been netting negative for employees gained since 2016 - long before the pandemic.

It's becoming more challenging to find employees in 2022. The hiring shortage has been a known conversation piece since 2021, and it seems to be intensifying. What does this mean for hiring and training in the HR sector?

HR departments have to work overtime resort to job boards, advertisements, and other strategies. After hiring a new employee, HR departments need to train them to give them ownership over their work in the company and motivate them to be an active participant in the work.

Tracking and Accessing Productivity

Uncovering ways to manage employee productivity is an integral part of an HR department's job. According to a recent HR course, productivity is described as the commerce rate for a business.

The retail sector, often more than other sectors, is constantly changing and adapting, measuring its success against the success of its competitors. By evaluating employee productivity and ultimately improving it, HR departments can help the company expand.

Improving productivity, therefore, can positively influence seemingly unrelated aspects of employee management, such as hiring and engagement.

HR in Retail sector


If an employee exhibits a high level of engagement, spillover effects like increased productivity and higher morale are likely to occur.

Many HR departments in the retail sector bear the most significant burden of keeping employees engaged. It is often HR managers who offer incentives, plan extracurricular group exercises, and stage workforce development events.

Turnover Assessment and Prevention

One of the common ways to assess productivity is to measure employee turnover rates. Turnovers tend to cost a company unwanted money, as the hours spent hiring, onboarding, and further training an employee are lost with every employee who departs.

HR departments are responsible for tracking, assessing, and preventing turnovers.

Unique Challenges in Retail

What is the biggest challenge in retail?

There are a lot of serious challenges retail businesses as a whole face. HR departments are rarely the only ones dealing with these challenges, though all of them will influence HR.

One of the biggest challenges in the retail store market today is the industry's competitiveness. On the one hand, many of the traditional brick-and-mortar businesses keep growing. Household names like H&M, J. Crew, and others are more accessible than ever with online shopping.

On the other hand, it's easier than ever to build a retail business and begin selling wares online. This means that retail organizations must constantly reassess their lead generation tactics to get customers to engage with the brand.

Once customers begin to engage with a brand, they want a profoundly satisfying, easy, and seamless experience. If they interact with employees, they want to feel that employees are interested in the business, helpful, and friendly.

In other words, HR professionals intersect with retail challenges at the moment of hiring. The HR department can be instrumental in helping to develop confident and satisfied employees. These employees, then, can make a difference in the highly competitive retail market.

Retail sector HR challenges

What are the key HR challenges?

The retail sector faces several HR challenges, and they are always related to the role of HR teams discussed above.

HR's challenges in retail are often common to all customer-facing operations, though the retail sector can face the brunt of them.

At their worst, HR challenges in the retail sector may impede your company's growth by interfering with customer relations objectives and quarterly sales timelines in case you are not consistent with your sales intelligence. Here are some of the significant challenges the retail industry faces a year in and year out.

Attracting and Keeping Top Talent

Attracting and keeping talent is likely the greatest HR challenge in retail. In 2021, retail turnover was slightly over 60%, about 3% higher than in 2020 and about 15% (!) higher than in 2016-2019.

The ever-increasing turnover rate should be a significant concern for any retail HR department. We mention this above, but HR uses a few common strategies to attract top talent.

Job Boards

Posting jobs on job boards is one of the most effective ways to spread the word about a job opening. Helpfully, these job postings often appear on Google searches, a boon for HR departments everywhere.


Implementing advertisement campaigns is crucial in hiring top talent, mainly when seasonal demand is high and staffing is a high priority. These advertisements can be physical (for example, on the storefront, billboard, or in the subway). However, much of the advertising dollars are spent on social media sites like Instagram, Facebook, Twitter, and Google.

Advertising for a job isn't always just about letting people know that the job exists. Many HR departments try to make the job as appealing as possible, showing, for example, pictures of retail workers having fun while they're working.

Key Challenges for HR in retail

Retaining Talent

Once an HR department has scored its talent, the challenge becomes retaining that talent.

The Harvard Business Review uses "the 5 R's" for employee retention. These are responsibility, respect, revenue-sharing, reward, and relaxation time.

  • Responsibility is a way to show employees that you trust them. Giving someone responsibility is about giving them ownership over the work they do.
  • Respect is an essential courtesy for employers and HR departments owe their employees. By conscientiously focusing on respect, HR departments can go a long way in preventing turnover.
  • Revenue-sharing is about tying employee earnings to company performance. Many retailers offer small commissions for their employees.
  • Rewards go beyond compensation. Company parties, workforce development, and other strategies are included in rewards.
  • Relaxation time seems counter-intuitive to the "more is more" mentality in many workplaces. Allowing employees time for themselves will enable them to engage more with the work when they're "on." It also allows them to have energy when they're on the floor.

Balancing Hiring and Training

Rapidly training new hires allows your HR department to focus on hiring. Especially in the time of great resignation, rapid training is more important than ever.

There are plenty of great ideas circulating to help you rapidly train new hires. Forbes published a recent article with some excellent training ideas. Navigating Evolving Technology
As the world becomes increasingly global and digital, HR departments split their time between online initiatives and classic brick-and-mortar strategies.

Nowadays, HR departments are using online platforms, like flair, to easily access and store employee data and allow employees to engage with their schedules quickly. For more about scheduling retail staff, check out our blog post here.

Furthermore, new technologies allow HR departments to increase and expand their hiring efforts via paid advertisements. HR departments need to keep up with online best practices to ensure their employees have a seamless and user-friendly way to interact with the company.

Managing and Securing HR Documents Across Retail Locations

Managing HR documents across retail locations is much easier than it once was. Many HR document management systems can operate online and traverse any retail location. Check out our Employee HUB and book a demo with us!

There are many reasons why managing and securing your HR documents are necessary, not least of which is the legal requirement. Businesses must maintain certain employee documents, such as specific records and tax documents.

Creating Meaningful Employee Experiences

Today, the workforce development industry is dramatically expanding, and part-time jobs are more readily available than ever. A central reason for this is related to all of the critical roles of HR that we've discussed above. When looking at hiring, training, and retaining talent, creating meaningful employee experiences is a significant concern of HR in the retail sector.

According to The Department of Labor, creating meaningful employee experiences in terms of workforce development is key to employee retention and education. Recruitment and on-the-job upskilling can also be aspects of workforce development. However, some HR initiatives aimed at employee satisfaction are not specific to the skills required for the job.

Employee enrichment at, for example, Capital One looks to develop the social and professional lives of its employees. In addition to, for example, helping with education, Capital One offers on-site yoga classes for its employees. The Richmond campus also features a basketball court for physical exercise after lunch.

Other Main HR Challenges in retail business

Besides the challenge of retaining employees and keeping them happy, the high turnover rate of retail employees can sometimes mean interaction with dishonest or otherwise untrustworthy employees.

Probably more than any sector, HR departments in retail need to face the realities of employee theft. Like many other sectors, HR departments should address the possibilities of employee misconduct.

Employee Theft and Misconduct

There are many theories about preventing employee theft, one of the more popular ones now being an increase in employee salary.

Using the 5 R's of employee retention, HR departments in the retail sector can also help themselves prevent employee theft and misconduct. The 5 R's of employee retention are, after all, about empowering employees with ownership over the work they're doing. You won't steal from something you feel you're a part of. Disenfranchisement is a crucial requirement for theft to occur.

Misconduct is broad and includes theft. However, it has minor infractions, too. Being disrespectful to a particularly challenging customer, for example, ranks very low on the list of employee misconduct. However, HR departments still need to give their employees tools to prevent misconduct.

Retail mannequins

Fixing HR challenges in the retail industry

The most common HR challenges in the retail industry aren't apparent solutions. For the most part, HR needs to constantly be on its toes, researching best practices and rethinking how best to empower employees.

As we mentioned above, part of what makes the HR challenges in the retail industry so distinct is the high turnover rate for employees.

The most important of the 5 R's of employee retention deserve repeating here. Responsibility and respect: if you give employees responsibility and treat them with respect, you can avoid many of the employee relations pitfalls of retail.

Beyond employee relations, there are other HR challenges like managing and securing HR documents. HR should be well-organized and stay up-to-date on the current thinking from the big brains in HR. Best practices guides are available online and are regularly published.

Retail shop shelves


In this article, we've discussed the most prominent challenges HR faces in the retail sector. The key takeaway should be empowerment. If an employee feels some ownership of their work and feels respected at their workplace, HR can circumnavigate many of those common problems to all retail. Respect, responsibility, and internal organization all play essential parts in empowerment.


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