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How retailers can attract and retain frontline talent amid the Great Attrition
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HOW RETAILERS CAN ATTRACT AND RETAIN FRONTLINE TALENT AMID THE GREAT ATTRITION
August 17, 2022 | Article
By David Fuller, Bryan Logan, Pollo Suarez, and Aneliya Valkova
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Almost half of US frontline retail employees and two-thirds of frontline
managers say they are thinking about leaving their jobs in the next few months.
What’s a retailer to do?
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Article (10 pages)
High attrition in retail is nothing new: annual employee turnover among
frontline retail workers has been at least 60 percent for a long time. Retailers
regularly face the challenge of replacing more than half of their store staff
every year. But that challenge has grown amid record inflation and a continuing
global pandemic: half of frontline retail employees are considering leaving
their jobs in the next few months alone. Perhaps worse, 63 percent of frontline
retail managers are thinking about quitting in the near future. And many of them
do not want to work in retail anymore.
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No other US industry is more affected by the “Great Attrition” than retail,
simply because it employs more people than any other sector in the US economy.
The following six charts show highlights from our research involving more than
1,000 US frontline retail workers across a range of retail formats, including
grocery retailers, big-box stores, department stores, restaurants, convenience
stores, and other small formats. These charts illustrate the attrition
problem in US retail—but also point the way to potentially powerful solutions.
By understanding what frontline workers want in a job, retailers can create a
competitive advantage. Our research shows that frontline employees at the
leading retailers are twice as motivated in their day-to-day jobs and leave half
as often. At the best frontline retail employers, comparative-store sales are
three percentage points higher than at low performers. If retailers simply
continue business-as-usual approaches to hiring and retention, they risk chronic
staffing shortages for the rest of 2022 and beyond. Attracting, developing, and
retaining frontline talent must become a top agenda item for retail CEOs.
The biggest workforce. Around 20 percent of US employees—or approximately 31
million people—work in the retail and hospitality sector. That is approximately
9 million more employees than in each of the two next-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 just the companies they work for but the broader US economy as well.
Unfortunately, as the next chart shows, the retail industry struggles to retain
frontline workers.
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A mass exodus. The retail and hospitality sector faces a much more serious
retention challenge than any other sector. The “quit rate” in US retail and
hospitality is the highest among sectors and is outpacing the overall US quit
rate by more than 70 percent. Frontline retail employees are recognizing that
they have more employment options—and more tools to access those options—than
ever before.
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Will they stay or will they go? The exodus shows no signs of slowing, especially
when we zoom in on retail’s front lines. Almost half of all frontline retail
employees—compared with only 38 percent of US workers overall—are considering
leaving their jobs in the next few months. Perhaps more concerning, nearly half
of the frontline retail employees who want to leave their current jobs plan to
seek employment outside the retail sector. Retailers are competing not only with
each other for frontline talent but also with other industries and
nontraditional work options.
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What workers want. “Not enough workplace flexibility” is the number-one reason
frontline retail workers are considering leaving their jobs. No other industry’s
employees rank lack of flexibility as the top driver of attrition. Ironically,
the nature of frontline retail work makes offering flexibility quite
challenging. Can retailers create a more flexible workplace for store staff? The
best frontline retail employers are innovating to do so—for example, by offering
shift swapping among peers and more autonomy for employees to decide what role
they would like to play in the store on any given day. Flexibility can take many
forms, and different flexibility features resonate among various talent pools.
Like workplace flexibility, “health and well-being” was ranked more highly in
frontline retail (where it was the third-most-cited factor) than in any other
sector we studied. Similarly, employees from only one-third of other sectors
ranked “meaningful work” more highly than frontline retail employees did (number
five).
Rounding out the top five for frontline retail are two factors that matter in
nearly every sector we have researched: career development (number two) and
compensation (number four). Two other factors ranked closely behind the top
five: supportive colleagues and inspiring leaders.
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How to support managers. Frontline retail employees are a diverse population,
with varying needs and levels of satisfaction. For instance, we found much
higher risk of attrition among managers: they are 1.75 times likelier than
nonmanagers to consider leaving their jobs (63 percent versus 36 percent).
The gap is stark, so we dug into what matters to managers versus nonmanagers and
found important differences. Flexibility is even more important to managers, for
example. Nonmanagers, on the other hand, overindex on career development,
compensation, health and well-being, and inspiring leadership—all attributes
that managers influence. Retailers will therefore need a significant improvement
in manager satisfaction to be able to create the workplace environment that
nonmanagers desire.
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Differences among demographic groups. Among age groups, frontline retail
employees 35 and older are most likely to consider leaving their jobs in the
near term. Much like in our analysis of managers and nonmanagers, we found key
differences in what matters among age groups. The top driver of attrition for
employees under 35 is a lack of career development, which ranks as only the
fifth most important factor for employees 45 and older. Meanwhile, a 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 those 45 and older, but falls to only the eighth most
important for those under 35.
In US frontline 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
point to a lack of inspiring leadership as a reason to leave, while men more
often point to poor career development. Flexibility matters to both men and
women.
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This research complements our experience working alongside leading frontline
retail employers. Our findings suggest four imperatives for retailers:
1. Understand your frontline talent pools and build 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 must identify
the talent pools that fit best with their company, determine what matters to
those segments of workers, and develop an employee value proposition
tailored to the unique needs of those employee segments.
2. Innovate to offer differentiated flexibility. While office workers have seen
an increase in flexible work, flexibility remains the most pressing issue
for frontline retail employees. In pursuit of more flexibility, many have
left traditional frontline jobs to take on gig work. Retailers must think
more creatively about how to offer flexibility on the front lines—for
instance, by providing options for employees to increase or decrease their
hours to accommodate their other part-time jobs, allowing them to work at
other store locations on certain days, and giving them more control over how
their work gets done.
3. Simplify frontline retail jobs and make them more engaging. A lack of
meaningful work (boring or repetitive work, work with little social impact,
or work with no connection to the mission of the organization) is a top five
driver 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 frontline employees’ most mundane activities and look for ways
to simplify them, which can improve productivity and help make the job more
attractive.
4. Invest to build strong managers and a development culture. Managers are not
satisfied—they are inclined to leave their frontline retail jobs at a 75
percent higher rate than nonmanagers. Yet managers are the foundation for
any improvement in frontline retail attrition. Factors in managers’ control,
such as inspiring leadership and career development, matter a lot to
nonmanagers. Managers can offer on-the-ground perspective to help retailers
design a new employee experience. Retailers also need to rely on managers to
lead the execution of any new employee strategy. Clearly, the importance of
investing in the manager role cannot be overstated; it will have a cascading
impact on the rest of the organization.
We expect competition for frontline retail talent to remain intense, which will
spur a wave of innovations in employee experience. The best retail employers
will create a new competitive advantage: a highly engaged frontline workforce
that significantly improves customer experience and financial performance. More
than 30 million retail workers stand ready to benefit from it.
ABOUT THE AUTHOR(S)
David Fuller and Aneliya Valkova are associate partners in McKinsey’s Chicago
office, where Bryan Logan is a partner and Pollo Suarez is a consultant.
The authors wish to thank Bonnie Dowling, Marino Mugayar-Baldocchi, Laura
Pineault, Jane Qu, Arjun Singh, and Hang Yang for their contributions to this
article.
--------------------------------------------------------------------------------
This article was edited by Monica Toriello, an executive editor in the New York
office.
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