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How to Reduce Retail Employee Turnover in 4 Steps You Can Take Today

August 30, 2017

Don't let retail employee turnover become a drain on your business; find out what you can do to keep your staff in top condition.

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Has it happened to you? You walk into your favorite bookstore, grab the last copy of the trilogy you're reading, and go to check out. You can't wait to tell your favorite employee how much you love the series since she's the one who told you about it. Only she isn't there; she left last week. You're a little disappointed, but life goes on.

You get a coffee at your favorite bakery on the way back to work. Again, you're disappointed to find out the guy who makes the best latte in town isn't there. He left two days ago.

Retail employee turnover isn't just an inconvenience for hiring managers. It impacts customer service and satisfaction, your business reputation, the efficiency and quality of your retail operation, and your bottom line. And now that you think about it, you aren't sure if some of your favorite employees at your retail shop plan to stick around much longer.

How bad is the problem? According to several studies, the annual retail employee turnover rate is anywhere from 54% to 65%. And if the inconvenience of turnover isn't enough, the direct and indirect cost to replace a retail employee is about $3,500. If six out of every ten of your employees leave, you're looking at $21,000 each year just to replace your staff.

What can you do about it as a small business owner or retail manager? Quite a bit. And the first step is to find out why people are leaving.

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Why People Leave and How to Get Them to Stay


1. Find out why employees are leaving

Why do good employees leave? There are any number of reasons, some of which are entirely out of your control, such as moving or personal circumstances. Other causes are very much within your controlespecially one of the biggest: a bad boss. According to Ceridian, an HR software solution, "50% of employees have left a job to get away from a bad manager."

What can you do? Hire carefully, offer anonymous surveys on a regular basis, and pay attention to schedules. In fact, many retail employees don't have set schedules, which makes it difficult to plan for personal events, family needs, or even things like doctor appointments.

Retail giant Macy's uses employee engagement software to let employees schedule their own shifts and vacations. That, in conjunction with other changes in management style, helped decrease their employee turnover by 28% in four years.

2. Hire the right people

Anyone who has worked in retail can vouch for the fact that the work is challenging. There is a lot of inherent chaos that comes with busy periods, technical problems, deliveries, and that one customer who is so sweet but can talk to your coworker for 45 minutes. When you hire the right people and build a team, that chaos becomes a challenge to face rather than a frustration.

Don't hire just to have a warm body to stock the shelves. You're better off holding out for the right person. Not only will they do a better job and provide better customer service, but they will also improve team spirit and show your star employees that you care about their experience at work.

And when you do hire the right person, don't just throw them into the mix. Train them thoroughly. It helps them feel ready, and it creates a better customer experience.

3. Compensate your employees

The Federal minimum wage is $7.25 per hour. For a retail employee working 40 hours per week, that's approximately $1,160 per month before taxes. And yet, Apartment List, Inc., shows the median price for a one-bedroom apartment in San Diego is $1,550. In Los Angeles, the median price for a one-bedroom apartment is $1,340. In Newark, New Jersey, it's $1,170, and in Charlotte, North Carolina, it's $950.

In fact, out of the 100 largest cities in the U.S., only two (Toledo, Ohio, and Wichita, Kansas) have median rents below $600 per month for a one-bedroom apartment. It's not hard to see that if you want employees who will work hard and bring value to your organization, you have to pay them a reasonable wage.

That isn't just being nice, either. According to Tom Stockham, CEO of the consulting firm Experticity, "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."

4. Reward responsibility

Though not specific to retail, a study by Willis Towers Watson found that "among all employees, a lack of opportunities for career advancement is the second most frequently cited reason for leaving an organization." Career growth is certainly one way to reward a responsible employee. Create a career path and mentoring program for people who are interested in moving up within the company.

Smaller retailers, with limited job growth potential, need to be more creative in rewarding responsible employees.

Provide training or learning opportunities that can also benefit your business. For instance, if you sell t-shirts, reward an interested employee with a screen printing class and sell their shirts in your store. That benefits both of you (and is a great marketing angle, too!).

Give a motivated employee something to "own." It could be the company Twitter account, the display window, or redesigning a poorly performing section of the store. The point is to show trust and that you value their ideas and their work.

There's always more you can do to reduce retail employee turnover, but at its heart, all of these ideas come down to treating people well. Respect your team, and they will respect you.


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