7 Reasons for Employee Turnover in Retail

Retailers often struggle to keep their staff.

According to the Convenience Store News 2016 HR & Labour Study for example, the turnover rate for the convenience store industry was 54%.

Another survey found that turnover is at its highest among hourly store employees: 65% for part-time retail employees, an 8% increase compared to 2015 when turnover was at 57%.

For retail distribution centres the turnover was at 23% in 2016, compared to 21% the previous year, according to the same survey. When you know that it costs companies on average about 3328 dollars to replace an hourly store employee you can see how the costs of unwanted turnover add up easily.

So the question is: why is employee turnover in retail so high? And more importantly: what can you do about it? Here are 7 reasons for employee turnover in retail and their respective solutions.

1. A highly competitive job market

When asked why they leave, most retail employees say they’ve simply found a better job or a promotion opportunity at another company. Although it’s impossible to completely avoid this from happening, there are a few things you can do to get people to stay with you.

First of all, make sure you hire the right candidate from the start. Easier said than done of course. But what we mean to say is: hire someone who’s fit for the job and not under- or overqualified. An under-qualified applicant will struggle to keep up with the pace of work. And as good as an overly competent applicant might seem, they’re also more likely to leave prematurely because they’ve reached their ceiling.

Secondly, determine an individual career path together with your employees. That way, each of your staff members knows what their personal trajectory is within your company. They’ll also know when they’ll be promoted (if they perform well) and will therefore be less inclined to go elsewhere.

Thirdly, but closely knit with the career path suggestion, sit down with your individual employees regularly and talk to them. Ask them what’s up, if something’s bothering them, how they feel they’re doing etc. This is a good opportunity for you to sense how happy your staff is and undercut issues before it’s too late.

2. Relatively low wages

Another common reason for retail employees to leave is money. Money isn’t everything of course, but depending on the (lack of) increase it can be a good reason to resign eventually. Especially in retail, an industry known for its generally not-so-high wages and fierce competition.

If you know you can’t compete with your direct competitors on the salary front, you should make sure you’ve got everything else sorted out.

‘Everything’ else being: a great ambiance from an engaged team and some pretty hot company perks, among other things. If you don’t have the cash to pay above industry standards, compensate with stuff like a team holiday or free snacks to munch during breaks. Anything that would make it worthwhile for people to stay with you, even when they know they could earn more if they’d leave. You can even ask them what perks they’d like to have!

Perks and bonuses are a great way to keep employees motivated, 
even when you’re restricted in terms of what salary you can offer them. 

Again, as we mentioned earlier, have regular one-to-ones with your team to hear about potential issues – and equally as important, to talk money with them. Keep them informed about when they’ll get a pay rise or what their bonus will be when they hit their sales target.

3. (Mis)management of expectations

Mismanagement of expectations is another prominent reason for high turnover rates. For applicants, working for their all-time favorite brand in a flagship store can sound like a dream job.

But the reality may differ.

Standing on your feet for hours at a time, serving demanding customers and keeping a smile on your face while you’re at it is something entirely different from walking around the stores as a customer. It is vital that there is clear communication on this aspect of the job as well.

And it’s not just the tasks of the job that should be communicated, but the hours as well.

Weekends, evenings, extra shifts, the retail industry is infamous for its challenging hours. When other people are enjoying their weekend or evening, retail staff needs to be at its best; these are the busiest and therefore most important times for the company.

This part of the job – the long hours – is often underestimated by people when they apply for a role in retail. So management of expectations should have a high priority during the application process.

Tip: one of the instruments that can help you with that, are Situational Judgement Tests (SJTs). This type of assessment gives your applicants a taste of the job at hand. You can show them exactly what the fun aspects and the not so fun aspects of working at your company are. In the meantime, the data of their input can be used for grading.

Another assessment that might come in handy when recruiting retail staff is the personality test. Apart from the physically tough side of the job, it’s important you have employees that know how to deal with all sorts of customers. As mentioned before, not everyone (far from it) is cut out to be friendly and customer minded. Let alone willing to go the extra mile in order for the client to be happy.

In retail, your staff is your business card, whether a customer comes back depends mainly on how they’ve been treated by your employees. Therefore it is crucial you select people with the necessary personality traits to do the job.

More on personality questionnaires for recruitment here.

One last thing, the physical aspect of working in retail is (for now, anyhow) impossible to test online. Before hiring a retail candidate it may be wise to let them spend one or two days with you in the actual store. That way they – quite literally – get a feel for what their potential future job entails from a physical perspective.

4. Insufficient onboarding

Probably due to the high turnover they’re struggling with, companies in retail often lack a well-structured onboarding process. This is unfortunate, as the first period of a new employee is vital for their future within the organization.

The absence of a good onboarding program is another reason retail employees leave: they feel like they’ve been thrown in at the deep end, don’t always know how to get to know other employees and are not familiar with the company’s procedures.

We’ve said it before, think of onboarding as the honeymoon phase for new employees and as the ideal time for the employer to drive engagement.

Thanks to the HR software that’s out there, it’s not too complicated to set up an automated onboarding program that engages new employees and makes them feel welcome; it’s a good way for them to get familiar both with the company culture and their colleagues.

5. A lack of Learning and Development

Whether your team is mostly made-up of millennials, boomers or Gen Z, they’ve got at least one thing in common: their desire to learn and develop themselves career-wise.

Millennials and Gen Z employees attach great value to the commitment their employer shows them. The more the latter commits and invests in them, the more they’ll give in return.

A (personalized) L&D program kills both the learning and development – as well as the commitment – bird with one stone. So offer your employees a learning and development program – cloud-based and mobile-enabled of course – that gives them the opportunity to develop their (professional) skills.

Also, even if this isn’t standard practice in retail yet (except for managers), try to create a career evolution plan for your staff. We’ve mentioned this already: If they know where they’re headed, your employees have something extra to work for besides their quarterly paycheck. Plus, it shows them (once again) your commitment to them and will boost their motivation.   

Help employees develop themselves by defining a career evolution plan.

6. The manager

As an HR professional, surely you’ve heard this one before: people quit their manager, not their job. Of course this may not always be the case, but unfortunately it often is.  

Managing people is tough. Someone may be an awesome retail sales person with stellar results but simply suck at managing a team. And you know what? That isn’t even overly surprising because the two jobs require very different skills and competencies.

So, when it comes to promoting one of your employees into a management role, your selection criteria should be completely different than the ones you used to recruit them for an in-store sales job.

This may seem obvious, but reality shows that too many retail companies still promote people who are (mainly) good at executing tasks to become a manager rather than someone who knows how to build a tight-knit crew that feels like they truly run ‘their’ store together.  

7. They’re just not a right fit

Surely you know how important it is to have a good recruitment process. Especially when you’re dealing with challenges like high turnover and therefore have a constant pressure to find great retail candidates to hire. A well-structured recruitment process can save you a lot of headaches.

How?

With the help of a data-driven, customized preselection tool in the shape of an online assessment for example. First, you get to set the standards when it comes to the specific skills, competencies and personality traits you are looking for in an applicant; based on the profile of your highest performing employees for instance.

Once everything’s set-up, your candidates can flow autonomously through the online experience, reacting to the questions and situations presented to them in a fun and engaging way.  

In the backend, the system gathers data based on the applicants’ actions and answers. An algorithm then calculates the likelihood of a candidate being successful in the retail job they’re applying for. More information on this way of selecting new employees can be found here.

Of course, this is only one part of your recruitment funnel and the rest of it needs to be well-structured too. But using data to support you in your decision-making process – and hence take the gut-feeling out of recruitment – helps to improve the quality of new hires – and eventually those dreaded turnover rates – dramatically.

Before you go

These 7 causes for turnover in retail are not the only reasons retail staff leaves, but they do cover a big part of premature departures.

Using HR technology – like the type of automated preselection software we mentioned – to assist you in your recruitment process can make a big difference.