3 March 2025
Key operational and HR challenges in the retail industry
There are many HR challenges in the retail industry, so we’re unpacking them in this blog all focused on retail HR and payroll.
Many retailers are undergoing store closures and restructuring, driven by increasing costs and cautious consumer spending. In 2024 alone, over 17,000 retail stores closed in the UK, a 30% increase from the previous year, according to the Centre for Retail Research. Increasing supply chain strains, complexities in trading internationally, and continued cost-of-living pressures that show no sign of slowing down. Leaders are revisiting the underlying models that drive their businesses, with targeted restructures being more common as companies seek to reduce overheads in the face of economic uncertainty making consumer spending less predictable.
The cost of doing business is on the up even with those job cuts, thanks to inflation, rising wages, energy costs and supply chain issues that squeeze margins, so retailers need to find ways to streamline and stay competitive.
As if this wasn’t enough, a lot of retailers are having to fight their own processes despite unprecedented investment in technology. Manual processes and complex workforce structures continue to divert store managers from driving sales. Retail HR managers are struggling with unnecessary administrative burdens, thanks to systems that offer limited employee self-service and poor integrations across payroll, scheduling, and workforce management. These inefficiencies make it harder for leadership to gain a real-time view of workforce data, leading to errors, compliance risks, and increased administrative workload for store managers.
However, despite these challenges, some retailers are bucking the trend and thrive within these challenging trading conditions. These success stories are gaining market share and maintaining margin by focusing on one or more of these six areas.
1. Reducing store manager admin by digitalising timesheets and rotas
Digitalisation is one of the most powerful improvements you can make and yet many retailers are still relying on paper-based processes. That can lead to confusion among employees, missed shifts and miscalculated pay. However, above all else, it is taking your store managers away from revenue generating activities.
When all of these processes are handled digitally, it allows store managers to spend their time driving store performance, focusing on tasks like coaching teams, enforcing store standards and resolving complex customer issues.
Real-time pay, whereby an employee can see their take-home pay change upon the completion of their shift, can create clearer links between time worked and pay to improve shift take-up. You’ll quickly see your retail store managers turn admin hours into sales hours! To illustrate: imagine having 100 managers across your store network, each having to spend 5 hours a week on admin. That’s almost half a million pounds spent on non-revenue generating activities. Digitalising your store processes allows you to reinvest this into driving sales and service.
2. Eliminating double entry by integrating cloud-based HR systems
Double data entry is a huge problem across the retail sector, even when digitalisation has started to take place. Data siloing – where different solutions are used that don’t integrate with each other, making accessing data difficult- is commonplace.
Retailers are constantly looking for ways to improve efficiency, and one of the biggest barriers to this is the duplication of effort caused by disconnected systems. Investing in a single, unified system that seamlessly connects HR, payroll, and workforce management eliminates double data entry, reducing administrative overhead and improving accuracy.
With retail margins under constant pressure due to rising costs, inefficiencies in operations can have a direct impact on profitability. Every minute spent on redundant data entry is a minute taken away from driving sales and enhancing customer experience. Streamlining these processes through integrated technology ensures that store managers can focus on what truly matters—leading their teams and optimising store performance. In an industry where every second counts, ensuring seamless data flow between systems is no longer a luxury—it’s a necessity.
3. Supporting store managers with AI-powered talking points
Many retail managers have a lot of plates to spin. They’ll often have more direct reports than managers in other industries have to deal with, and due to high churn rates, building effective line management relationships is difficult. Retail often has many managers for whom this is their first leadership position, with many managers coming up from the ranks.
Check-ins are a vital tool to help keep managers and employees on the same page, whether it’s regarding store standards, developing staff or maintaining engagement. But holding successful check-ins is a skill set that both sides of the conversation need to develop. Successful retailers are beginning to use AI talking points that help managers deliver a great check-in by factoring in staff communication style preferences and company best practices. This accelerates the manager's development as a coach/leader and helps them to deliver a check-in of a quality way beyond their years of experience
4. Boosting retention by incorporating financial wellbeing tools
Retailers often have to deal with high churn rates, bringing in new employees to replace old ones who leave. The cost of this can spike rapidly, especially if your performance relies heavily on seasonal peak trading periods. Therefore retailers spend millions of pounds each year hiring people for their stores and distribution networks.
Retention is key to reducing these costs. A great retention strategy will reduce attrition and the significant costs associated with it. For example, say a retailer with 6000 employees loses 50 people per week, that's 2600 new hires a year, who all need to be recruited and onboarded. With recruitment costing around £1500 per hire, training and onboarding costing around £1200 and lost productivity costing around £1000, that’s about £3700 per leaver. In total, that adds up to £9.6 million a year!
One critical angle of retention is financial wellbeing. With a heavy reliance on shift work, which can often lead to uncertainty about cash flow, retail workers can be acutely vulnerable to poor financial wellbeing. According to Wagestream, 50% of houses don’t have £300 in savings. Financial wellbeing tools, especially when those tools integrate into your HR and payroll systems, can help ease those anxieties, letting employees focus on their daily tasks instead of how they’re going to cover their costs.
Additional solutions like real-time payroll can help reduce pay queries by letting employees see their earned wages throughout the month .
5. Accelerating onboarding by engaging new hires before their start date
In retail, you often need new hires to hit the ground running. But neglecting your onboarding strategy for the sake of speed will cost you more in the long run. Employees who haven’t undergone a robust onboarding program make mistakes and reduce store efficiency and the quality of service that they can deliver, both of which impact store performance.
Good onboarding software will ensure you can onboard new employees before their start date. This may include providing policy guidance on things like dress code, requesting and ordering uniforms and other compliance training, or practical advice on things like shift patterns, locations and other requirements. It could even be introducing them to their line manager or colleagues early to help them build relationships. Smoother over this experience soothes first-day nerves and reduces their time to productivity.
6. Simplifying their processes and systems to remove unnecessary cost
Crucially, the step the most forward-thinking retailers are taking is simplifying processes. There’s no reason we should rely on doing things ‘the way they’ve always been done,’ when there are new, innovative ways to overcome them. That will help you stay competitive in a crowded market, delivering a great service to your customers that will see them coming back to you over and over again.
If you want to be part of the conversation of how HR, payroll and workforce management software for retail can keep you and your business ahead of the curve, we’re going to be heading to Retail Technology Show 2025 at London ExCel. This event will highlight key innovations in automation, AI-driven workforce management, and financial wellbeing tools—critical trends shaping the future of retail HR. We’ll be discussing how integrated solutions can reduce administrative burden, enhance employee experience, and ultimately, improve profitability in an increasingly challenging market. We’re keen to talk with retailers to really dig into the issues the industry is having to contend with.
Book onto the Retail Technology event with the link below to talk to us more about these issues.
