Retailers Grapple with How to Manage Customer Expectations, Staffing Issues

October 19, 2022, LOWELL, Mass., and WESTON, Fla.

It’s a complex time of year for retailers in any economy — but in 2022, record-high inflation, continued blowback from global supply chain disruptions, and an intensely competitive labor market threaten to take the “happy” out of holidays before the season even starts. Retailers surveyed¹ by UKG say they’re committed to elevating the customer experience in stores for the holidays — it’s their #1 priority for the season² — and 91% agree store employees are instrumental to bringing these experiences to life. However, 84% of retailers say customer expectations today are higher than what their stores can deliver in terms of service (up from 75% in 2021).

The third-annual retail holiday season survey and trend report from UKG finds many U.S.-based retail stores are struggling to meet sales goals because they’re short staffed (80%, up from 68% in 2021) and say customers will likely feel the impact of these labor challenges when shopping for the holidays (72%).

Almost all retail stores will be understaffed at least once a week throughout the holidays
Despite their best efforts, 95% of retailers predict weekly understaffing in stores during the holiday season. One in 10 (11%) say stores could be understaffed five days a week minimum, and nearly 1 in 3 (29%) are preparing to be short-staffed “most weekends.” To help fill labor gaps during their busiest months, 77% plan to tap gig workers, and retailers estimate on-demand talent could represent up to 14% of their total in-store workforce for the 2022 season.

Do people want to work in retail anymore?
Looking back, 36% of retailers had to alter store hours in 2022 due to insufficient staffing, and nearly 1 in 5 (19%) said their stores were understaffed at least half the time in August. Explosive turnover,³ employee ghosting,⁴ and unplanned absences⁵ are all partially to blame. The monthly UKG Workforce Activity Report similarly highlights a steady decline in retail shift work throughout 2022, including a 3.1% drop from August to September.

Taking stock of recent staffing patterns, close to two-thirds of retailers (63%) get a vibe that people just don’t want to work in retail anymore — a preference they feel is primarily motivated by concerns about workplace health and safety risks, such as catching COVID-19 or dealing with hostile customers (52%), as well as a desire for increased pay (49%) and flexibility (40%).⁶

A pandemic-era rise in retail theft and guest-on-associate violence poses real impacts to employees’ physical and mental health. Store staff are responding to situations involving angry shoppers once a week or more, according to 42% of retailers, and 13% say shopper behavior has gotten worse recently, not better. Nearly a third of retailers (31%) said store managers quit in the past 30 days⁷ because they were mistreated by customers.

Store managers are also quitting in search of greater schedule flexibility, according to 50% of retailers. Jobseekers increasingly want flexibility to work the shifts they want (39% agree this is a top consideration), and the survey reveals numerous opportunities to capitalize on this unmet demand to attract and retain talent (e.g., offering on-demand employment in house, allowing employees to self-schedule), as detailed in the report.

“Understanding why people are gravitating away from retail work or leaving their employer in search of a better alternative is the first step toward fixing the workplace experience and developing a safe and comfortable environment for employees to work and customers to shop,” said Rob Klitsch, director of the retail, hospitality, and food service practice at UKG. “Employee experience determines customer experience, so to improve the latter, retailers must address their people’s needs first.”

Retailers hesitant to hire amid economic uncertainty⁸
Put in a tough position, retailers approach holiday hiring with caution.

Only 40% say their stores are hiring seasonal workers for the holidays, and 35% will recruit fewer seasonal workers than last year.
A third (33%) are scaling back all hiring in stores for the remainder of 2022, and more than a quarter say in-store hiring freezes are likely (26%). Another 26% are actively taking steps to reduce headcount today.

Future success will be determined by “total experience”
Priorities for retailers in 2023 are aligned to provide a powerful total experience for people to shop and work: their top three initiatives span employee training and development (42%), employee experience and engagement (40%), and customer experience (39%).

“Bringing exceptional experiences to life for managers, employees, and customers simultaneously is vital year-round. The key is to listen, adopt, and adapt quickly, because the future of work is now,” said Klitsch.

About UKG

At UKG, our purpose is people. As strong believers in the power of culture and belonging as the secret to success, we champion great workplaces and build lifelong partnerships with our customers to show what’s possible when businesses invest in their people. Born from a historic merger that created one of the world’s leading HCM cloud companies, our Life-work Technology approach to HR, payroll, and workforce management solutions for all people helps more than 70,000 organizations around the globe and across every industry anticipate and adapt to their employees’ needs beyond just work. To learn more, visit ukg.com.

Footnote 1: Survey Methodology: This survey was commissioned by UKG and conducted online between August 31 and September 9, 2022, among a pool of 305 store managers, owners, and executives representing U.S.-based retailers spanning numerous industry segments, including big-box retailers, department stores, drugstores, and others specializing in apparel, electronics, furniture, home, luxury, discount, and sporting goods. Around one-third of retailers surveyed (31%) have more than 25 stores, 56% employ more than 500 employees, and 42% operate a distribution center or warehouse.

Footnote 2: “Elevating the customer experience” was ranked by 57% of retailers among their top five priorities in planning for a successful holiday season, followed by “increasing efficiencies for managers” (50%), “increasing convenience for shoppers” (48%), “matching inventory with demand” (45%), and “creating a seamless omnichannel experience” (39%).

Footnote 3: In August 2022: 17% of retailers said store managers quit at least once every week; 28% of retailers said store employees quit at least once every week; and 28% of retailers said store employees were let go at least once every week.

Footnote 4: In August 2022: 30% of retailers said a new hire “ghosted” on their first day (i.e., they did not show up for their first day of work) at least once every week.

Footnote 5: In August 2022: Nearly half of retailers (48%) said store managers had to adjust staff schedules to account for unplanned absences at least once every week.

Footnote 6: Only retailers agreeing that “people don’t want to work in retail anymore” (191 respondents) were asked to expand on reasons why they thought this.

Footnote 7: Respondents answering questions about “the past 30 days” were surveyed between August 31 and September 9.

Footnote 8: More than half of retailers (58%) cited “inflation and economic uncertainty” among their top challenges today.

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