According to Retail Economics, retail is currently the largest private-sector employer in the UK with nearly 3 million employees. Over the course of 2019, retail sales grew by 3.4% year-on-year, amounting to an enormous £394 billion. Online sales in the sector are increasing at an even faster rate: the average annual growth of online retail sales reached an astonishing 10% in 2019. A third of UK consumer spending went through retail channels last year.
Although there are currently 208,760 VAT-registered retailers across the UK, employment within the sector is dominated by a relatively small number of firms. Data from The Retail Appointment indicates that 66% of retail workers are employed by the 75 largest of these retail businesses. The overall gender profile of the sector is 58:42 women and men, with 50% of retail employees working part-time. Furthermore, just under a third of these workers are below the age of 25.
The 7 Biggest HR Challenges in Retail
As these statistics show, the retail sector presents unique HR challenges, particularly in terms of employee retention. Over the course of this guide, we’ll cover seven challenges for HR in the retail sector in 2020 and beyond. Some of these points relate to wider political developments such as Brexit, whilst others are more specific to certain areas of HR.
1. Brexit
There is no doubt that the effects of Brexit will be felt by HR managers both in retail and across many other sectors. The government has announced that, as of the 1st January 2020, there will be no visas for low-skilled workers and all prospective immigrants will be screened using a points-based system.
The fundamentals of this points-based immigrant system have already been explained:
- Overseas citizens will require 70 points to work in the UK.
- Points will be awarded to those who have skilled job offers, qualifications such as an NVQ or PhD in a STEM subject, and a strong grasp of the English language. Other factors such as the applicant’s available maintenance funds may also be taken into account.
- The yearly salary threshold for applicants will be £25,600, although exceptions will be made for specific shortage occupations such as nursing.
What effect will these changes in immigration policy have on HR professionals in the retail sector? Aside from head office roles, academic qualifications are not a typical route into retail and the average UK retail salary of £23,638 falls below the threshold. As such, many retail jobs will be classed as low-skilled work and there will be no specific visas for overseas workers who wish to apply – they will need to obtain Tier 2 visa sponsorship.
Although some prospective immigrants will still be eligible due to their salaries and other factors, the pool of potential low-level retail workers will be diminished, making recruitment a more challenging task post-Brexit. Moreover, retail employers will need to ensure that they are compliant with sponsor duties and carry out the residential labour market test before employing any immigrants, meaning more heavy lifting for HR departments.
2. Pay Reporting and Transparency
According to a report published by People Management, the majority of UK workers have never had their salaries explained to them. The lack of transparency has sparked debate in recent years about pay reporting, encouraging more employees to raise questions about their own pay levels. As we advance further into 2020, HR departments will need to manage these pay-related queries appropriately and focus on being transparent about their pay levels.
The current best practice for employers is to introduce a transparent salary framework or banding system that all employees have access to, backed up by regular pay reviews in which clear objectives are set. Above all, HR professionals must ensure that all retail workers understand the way in which their remuneration matches up with the value that they provide for their employers.
In 2019, the issue of pay transparency centred around the gender pay gap in the UK. Retail firms have already begun to pave the way for other employers in this area by adhering to HR best practice and levelling the playing field in terms of wages. Last year the British Retail Consortium (BRC) found that the gender pay gap was less pronounced in retail than in other sectors: the gender pay gap in retail is 9.1% lower than the figure for the whole of the UK.
Research conducted by the Institute for Public Policy Research (IPPR) suggests that pay reporting regulations have improved the situation to an extent. We have already seen that compulsory gender-specific pay reporting has focussed public attention on the disparity in salaries between men and women. The IPPR report also outlines proposals to expand existing regulations. For example, employers may be required to publish narrative reports that accompany their gender pay gap data.
3. Employee Wellbeing
Employee wellbeing is another focal issue for HR professionals in the retail sector. According to research by Trendence and 10x Psychology, graduate employees in retail are the most likely to have poor mental health: only 54 per cent of graduate retail workers reported that their mental health was “very good,” compared to the highest figure of 64 per cent in engineering. These statistics highlight the fact that mental wellbeing will be an important area for HR professionals to address going forward, particularly in the worst-affected sectors such as retail.
Mental health issues can severely impinge on an employee’s ability to carry out their job effectively and may result in them taking sick leave. Often related to factors such as stress in the workplace and poor financial wellbeing, mental illness can be debilitating for sufferers and can have a serious negative impact on productivity levels.
HR professionals must understand the impact of mental health problems both on individuals and the firms they work for, looking out for anyone who may be suffering and providing support where it’s needed. In addition to monitoring time and attendance and sick leave, it’s vital that HR departments are kind to employees and look to treat the cause of mental health issues (not the symptom).
4. Workforce Management
Managing a workforce has always involved the careful navigation of a wide range of different roles and responsibilities. Employers are now responsible for their employees in more ways than ever before as their duty of care has broadened, rendering workforce management an increasingly difficult task. With more and more regulations in areas such as pay transparency on the way, this isn’t set to change any time soon.
What’s more, failure to keep track of the full spectrum of management tasks can have devastating consequences for employee experience and ultimately employee retention rates. By implementing workforce management software, you can create a single view for your HR managers and keep everyone in the business on the same page, enabling decision-makers to identify where additional resources are needed and plan effectively.
5. Attracting and Keeping Talent
With half of UK retail workers employed part-time and a large proportion of them under the age of 25, the task of attracting and keeping talent in the retail sector is strenuous. Recent research has shown that staff turnover rates in retail are higher than in other sectors and this trend shows no signs of improvement in the near future – job satisfaction levels are alarmingly low in retail customer service in particular, with 38% of staff reporting that they would apply for other jobs in January 2020.
To combat high staff turnover, retailers should implement staff retention plans. The same research that predicted increases in employee turnover rates in the retail sector also proposed that retention plans should focus on building employee engagement rather than increasing remuneration: employees who are engaged and invested in their work are more likely to exhibit loyalty to a company than those who are offered more pay. Employers can engage their staff by emphasising the benefits of working in retail such as varied tasks and potential career breaks.
6. Manpower Planning and Seasonal Demand
Seasonal demand poses a challenge to HR departments in the retail sector. Clearly, it’s important to forecast changes in demand levels throughout the year and plan appropriately so that each store has the necessary manpower to cope with busy periods, particularly when footfall varies significantly between outlets. Behind the scenes, there’s the additional challenge of organising sufficient staffing throughout different areas of the business, from shop floor staff through to transport and logistics.
Managing the entire workforce effectively through seasonal changes in demand is a tough task. It’s far easier to plan and organise manpower when all of the information regarding employees and the processes they carry out is available in an integrated platform. Our workforce management package brings together all of your HR systems in one place, allowing potential staffing issues to be identified and resolved with ease.
7. Managing Theft and Misconduct in Employees
Employee misconduct can take many different forms and varies in severity. Minor misconduct encompasses a range of relatively small misdemeanours that can be overcome through the right procedures, including persistent lateness and missing work deadlines; gross professional misconduct, on the other hand, is far more serious and often leads to more significant outcomes (theft and fraud are examples of actions that constitute professional misconduct).
Whilst the issue of dealing with employee misconduct is nothing new, there are innovative technological solutions that can help HR to approach this old problem in new ways. For instance, many forms of minor misconduct can now be identified and dealt with through automated systems, such as time and attendance software that can be supported by biometric or RFID clocking units.
Of course, it remains important to have robust procedures in place to deal with both minor misconduct and serious infringements such as employees stealing from the business. Any legal action that proves necessary must happen at the right time, following in-depth consultation with the company’s lawyer(s). As an employer, it’s also essential to remember that serious allegations of misconduct can be emotionally draining both for the suspected perpetrator and the HR staff who handle the case, so such matters must be handled with sensitivity.
Rounding Up
Whilst the next few years will undoubtedly present a wide range of challenges for HR professionals in the retail sector, the emergence of new technologies and systems will help them to thrive in their jobs. To progress effectively and efficiently in this line of work, it will be increasingly important to streamline and automate essential HR processes where possible. Workforce management and time and attendance software are just some of the tools that will help retailers to remain compliant, flexible, and productive in 2020 and beyond.
