Effective Employee Retention Strategies for the Retail Industry

5 min read
Aug 11, 2016

Employee retention strategies for retail

No matter the industry, staffing turnover is a naturally occurring part of the business world. However, excessive employee turnover can affect the efficiency of a company. The costs of recruiting and retraining new employees can have a severely negative effect on your overall bottom line. 

Of all the industries in the global marketplace, retail certainly experiences some rough weather when it comes to employee retention.

According to Bloomberg, the retail sector has been experiencing staff turnover at a rate of about 5% per month. To put this in perspective, if Walmart followed this average over one year, it would lose 60% of its sales force. Bloomberg cites the following statistics:

  • The average retail salary is $10.16 per hour or $21,140 annually

  • The cost of replacing an employee is about 16% of their annual wage, or nearly $3,500

  • Following this logic, Walmart, with 500,000 low-wage employees, would lose about $1 billion annually due to employee turnover

With CNBC predicting that retail turnover is on the rise, employers need to look closely at their organizational culture and processes in order to improve employee retention numbers. So here are some clear-cut strategies for retail employers — big or small — to consider.

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Hire Smart

Let’s start at the very beginning of the process and look at recruiting and hiring.

First, retail employers should increase their recruiting efforts. Start thinking about what type of candidate is passionate about your brand. For example, do they like to purchase shoes or love photography? Maybe they’re enthusiastic about sports. If any of those characteristics match your brand, then they might be a good fit for your store. 

A recent Inc. article suggests retailers should become more rigorous in their hiring procedures by using the DISC Personality test, which monitors drive, influence, steadiness, and compliance as part of the hiring process. This brings a level of standardization to an interview process that is sometimes subjective and potentially not an accurate assessment of whether an employee will be a good match.

Other retailers bring in new employees as part-time with the option to go full-time if the employee and the company fit well. If you’re hiring in December for Christmas sales, why not give them the carrot of full-time employment with a raise for the first of the New Year?


Improve Training

A good retail associate is made better by great training. Unfortunately, in retail, training is often completed on the fly. The “sink or swim” method of retail training often results in frustrated employees and unhappy customers. The best retail training classes only release new employees to work with customers after they’re certain they’ve mastered the art of customer service.

Retailers should work on developing best practices for corporate training that include the use of creative role-playing and better adoption of technology, like SalesRX, to reinforce training methods.

No employee onboarding program should be completed without providing trainees with an experienced mentor that can help them enhance their customer service skills in real time — during those crucial first few days on the store floor. The mentor could be a store manager, but it’s important to remember the adage, “You join a company, but you quit a manager.” Corporate retailers need to be certain they’re investing in training for store managers in addition to new retail associates.

Store managers are people managers, not just nightly cash balancers or merchandisers, so retailers need to be certain they are properly trained and adequately supported in the role.

Corporate training for retail


Recognize and Reward

Employee recognition programs are particularly important in retail. Staffing schedules are often not consistent from week to week, and the stress is high, especially during holidays. If retailers can make store associates understand how valuable they are to the company’s success, it will improve their attitude. Employee recognition programs help carry that goodwill over into daily interactions with customers. 

CNBC stated that the engaged and motivated retail store employee brings in 69% more revenue than those who are not. According to the article, “Retailers that treat their employees as more than just an expense on the balance sheet tend to have higher retention rates, higher sales per square foot and lower store return rates.”

Retailers like Nordstrom have a unique rewards program that allows salespeople to build their own clientele and operate like a business within a business. This encourages employees to use their own initiative and rewards them for it. Considering Nordstrom made Forbes Top 100 Best Places to Work in 2015, they must be doing something right.

Sales incentives are only a part of the rewards retailers can offer employees. They can adopt rewards for top hours worked during Christmas or give kudos for perfect attendance or safety as ways to show appreciation for employees. 

Retailers can engage employees by making them feel valued. Salespeople can be a wonderful resource for creating streamlined retail procedures. Unfortunately, employee suggestions sometimes never reach corporate ears. Creating a mechanism recognizing the best improvements from retail associates will engage employees in their own success — and the success of the company.

Employee retention in retail


Retail Truths

Twenty-five retailers made Forbes’ 100 Best Companies to Work For in 2015. The list included L.L. Bean, Build-A-Bear Workshop, and Whole Foods, to name a few. Consistently, these retail outlets manage to retain their employees by building a strong customer service culture while rewarding their workers at rates that exceed the industry standard.

These companies consistently reward their teams for great customer service by providing awards, time off, or public recognition in the company newsletter. Reinforcing the service-oriented behaviors retail employees exhibit will make them feel better about their role in the organization, which will pay off both in happier customers and happier team members. In fact, we believe that all the praise, awards, and recognition might just be one of the most cost-effective ways to maintain a productive workforce!

In order to reduce employee turnover, retailers need to look closely at the corporate behaviors exhibited by some of the Forbes Top 100 as well as Glassdoor’s 2015 Best Places to Work list. HEB, Nike, Bose, and Costco made it to the top of their employee-ranked survey. 

Here is the real question for the retailer seeking to improve employee retention: would you rather model your business after Costco or Walmart? Both models are profitable, and you could adapt your employee hiring and retention policies to fit either corporate template. The answer to the question is simply up to you. TINYpulse


Editor’s Note: This post was originally published in July 2015 and has been updated for freshness, accuracy, and comprehensiveness.   



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