How retailers can build and retain a strong frontline workforce in 2024 (2024)

The retail and hospitality workforce is still feeling the impact of the pandemic shocks of 2020. From February to April 2020, employment for the retail and hospitality industry dropped by more than 25 percent, compared with employment in January 2020. (Employment for all other industries dropped by about 10 percent.) By November 2021, employment in all other industries recovered to January 2020 levels and has since increased an additional 6 percent. Meanwhile, in the United States, employment for retail and hospitality finally recovered to prepandemic levels in September 2023 but still lags employment in other industries.

The slow pace of recovery in the sector may be attributable to a handful of factors. At the height of the pandemic, retailers were closed for months, which forced store employees to find jobs outside of the industry. When stores reopened, many former retail employees were deterred by in-person work. In other cases, former retail workers preferred the scheduling flexibility that gig work offered. With the larger drop in employment, the recovery was always going to be difficult for retailers. Yet our data continues to show that retailers’ employee value propositions are not meeting workers’ needs, which is likely contributing to the lack of workforce growth in the sector since January 2020.

When we surveyed frontline retail employees in May 2023, 44 percent of these workers said they were considering leaving their jobs in the next three to six months, making them 1.2 times more likely to have done so than the average US employee. That gap improved slightly from the year before, when frontline retail employees were 1.3 times more likely to consider leaving.

But there’s an added wrinkle to the story: 72 percent of retail employees who decided to leave their jobs over the past three years have left the industry altogether. Consequently, retailers are competing for an unstable talent pool. Indeed, nearly every industry sees a quit rate that is lower than that of the retail sector. Gig and other nontraditional work options are sources of new competition, offering benefits that most retailers have not been able to replicate, such as flexible working times and locations.

In most other industries, one or two factors of attrition stand out; in retail, each of the top six or seven factors propelling attrition rates can have a significant impact on an organization’s workforce. The latest top attrition factors highlight the importance of “relational factors,” or the ways through which frontline retail employees interact with their managers, feel a sense of belonging, and see their impact within an organization.

Career development was the number-one reason frontline retail employees planned to leave their jobs in 2023, up from number two in 2022. Some retail employers have addressed this issue by offering more career development opportunities. One large retailer, for example, invested in college-level courses and skills certification for its frontline employees. It was a win–win situation: participants developed relevant skills and were four times more likely to stay with the retailer.

The shift in top attrition factors from 2022 to 2023 also reflects workers’ perceptions of the economy. Flexibility was a more pronounced factor of attrition at the peak of the COVID-19 pandemic, though it still remains important for employers and employees alike. Compensation became a more important factor of attrition in retail, now number two overall, as wage growth did not keep pace with inflation during much of 2022 and 2023.

In our latest research, we found that managers and nonmanagers were considering leaving their frontline retail jobs at similarly high rates. They reported common frustrations, with a couple of exceptions.

Inspiring leadership is important for frontline retail employees, but especially so for managers. Managers cited a lack of inspiring leadership more than any other attrition factor—and 11 points more often than nonmanagers did. Of the frontline retail managers who were considering leaving, more than four in ten saw an issue with inspiring leadership, highlighting the potential gap between field leadership and store managers, as well as a potential gap between store managers and their shift managers.

These leadership gaps have a cascading impact. Managers, including the dissatisfied four in ten, are responsible for much of what nonmanagers are seeking: career development, meaningful work, and a healthy sense of well-being. Unfortunately, frontline managers are being challenged as much today as they were at the height of COVID-19. During the pandemic, managers were required to enforce in-person protective measures and assume extra responsibilities, such as handling e-commerce returns when stores became logistics hubs. After a few demanding years, some inspiring frontline retail managers have left. Today’s managers struggle with hiring challenges, and their responsibilities are harder to manage in understaffed stores. In our experience, any frontline transformation must start with an investment in the manager role: they are the linchpin for change, yet they are under the most stress.

Many of the best retailers study their employee bases with analytical approaches similar to the ones marketing departments use to understand consumers. A retailer, for example, conducted an attitudinal segmentation of its workers, grouping employees according to shared characteristics and perspectives about their work experiences.

The research revealed five unique cohorts among the retailer’s workers, each with a slightly different set of priorities. There was also a wide variation in intent to stay for the next 12 months, with a 43-percentage-point gap across groups. In two segments, which accounted for more than a third of the retailer’s frontline employees, less than 25 percent of employees intended to stay. Understanding what mattered most to each cohort (especially those who were more likely to stay) allowed the retailer to prioritize investments in its employee value proposition, in this case with a sharper focus on career development, supportive managers, and in-store culture. The retailer also found a strong correlation between employees’ passion for the retailer’s category and their likelihood to stay. This insight led the retailer to revamp its new-hire-screening criteria to identify enthusiasm for the products it sells.

Investing in employee experience is not only the right thing to do for workers, but it’s also good for customers. We analyzed the employee experience (EX) and customer experience (CX) of over 100 retailers, using data from Glassdoor and the American Customer Satisfaction Index. Providing a superior CX can be elusive but less so for retailers that invest in their employees. We found that companies with a top-quartile EX are more than twice as likely as those outside the top quartile to achieve a top-quartile CX. Many levers exist to improve CX, but there are not many that can double the odds of success.

Yes, the happiest workers can engender similar emotions in their customers, but they are also better at their jobs. Satisfied employees stay longer, and employees with more experience make fewer errors, developing pattern recognition to solve unexpected problems. Most important, they can dedicate their full mindshare to tasks at hand, not to learning on the job. The best frontline employers have found ways to bring their workers to peak performance as fast as possible, developing employees to behave like seasoned workers within 90 days.