Holiday Shopping Season Competition Urges Stores to Drive Up Investment in People

UKG survey shows that creating a great place to work will result in a great place to shop

A new report on holiday season retail trends from HR, payroll, and workforce management software provider UKG finds store traffic and shopper demand are up year over year, and almost all retailers (96%) — up from just 40% in 2022 — have plans to increase headcount in stores for the 2023 holiday shopping season. Seasonal hiring goals could be difficult to hit, however, as turnover continues to be a challenge and competition for talent remains strong, potentially putting the customer experience on the line.

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The fourth-annual UKG survey¹ finds most retailers (87%) are more optimistic this year heading into the holiday shopping season, yet warn the lines might be long and their stores understaffed, mainly due to poor shopper behavior and a failure to prioritize what matters most to their people. According to the study:

• One in 3 retailers (32%) say staffing shortages limit their ability to adequately care for customers at least weekly, and 75% say shopper expectations are higher than what their stores can deliver.
• At the same time, 1 in 3 retailers are dealing with angry or aggressive shoppers in stores at least weekly, and retailers say this and increased exposure to other adverse situations (e.g., increased theft/loss in stores) are dissuading people from working in retail.
• Moreover, 82% of retailers say store employees want more schedule flexibility than they currently provide, and 1 in 3 say managers are quitting in order to get it.
• Plus, 93% of retailers say their stores are struggling to meet sales goals, and nearly a third (31%) say staffing shortages are the cause.

[Watch UKG discuss these retail-survey findings on LinkedIn Live: “Frontline First: The Recipe for a Successful Holiday Season and Beyond.”]

Where Have All the Store Employees Gone?

U.S. stores are understaffed one third of the time, on average, and many retailers (69%) say it’s their #1 concern this holiday shopping season. Nearly half (48%) expect stores to be understaffed two to three days per week.

Around half of retailers also cited year-over-year increases in voluntary (54%) and involuntary (49%) turnover, and research from Great Place To Work^® finds only 2 out of 3 retail employees (67%) plan to be in their same jobs within the next six months — well below other U.S. industries, which average 78%.

“Understaffing in retail has been a problem for years,” said Rob Klitsch, industry principal, retail and hospitality, at UKG. “Hiring people is an uphill battle because of increased competition in and outside of retail, and retaining staff is challenging because only half of employers are prioritizing things like workplace culture (54%) and supportive managers (48%). More leaders need to understand that their most critical success factor is their people. Investing in the employee is always good for business.”

For global coffee giant Costa Coffee, AI-powered staffing and strategic workforce planning technology are key to ensuring stores are efficiently staffed at all times, especially during the holiday season, creating a better experience for all.

“The results we’ve experienced are tremendous,” said Katie Little, labor operations manager at Costa Coffee. “Store managers can accurately plan their staffing needs well in advance and make data-driven decisions, so our stores always have the right people with the right skills in the right place. This not only helps keep customers happy but ensures we have the ideal mix of employees, which creates a better experience for them, all while keeping us on budget.”

Be the Best to Attract the Best: Retailers Break It Down

Two out of five retailers say stores’ top staffing priorities when planning for seasonal spikes include delivering a seamless omnichannel experience (41%) as well as convenience for shoppers (40%). But more than that, closer to half of retailers (46%) say they’re focused on keeping staff engaged, happy, and satisfied.

“They have to be,” said Klitsch. “Satisfied employees are crucial to keeping retailers in business. You have to get the employee experience right year-round.”

So, what do retail employees and jobseekers care about most when it comes to their employment? Retailers have found wellness benefits top the list, followed by competitive pay, core benefits, growth opportunities, frequent and transparent communications from HQ and store leadership, and schedule flexibility. But these needs aren’t being prioritized across the board for employees or managers.

Nearly 9 in 10 retailers (87%) also admit they could be doing more to support store employees with mobile technology. Just 45%, on average, have equipped store staff with a mobile solution to complete common work tasks or access work-related information (e.g., submitting time-off requests, swapping a shift, or sending out employee communications and managing employee schedules). More than a quarter (28%) say inefficient tools and technology for store employees are to blame for sales deficits, and even managers are pointing out their stores’ technology constraints as reasons for quitting.

When peeling back the layers and prioritizing employee satisfaction, retailers are seeing the benefits of solutions powered by AI: Around 1 in 3 retailers are leveraging AI to streamline valuable people processes today and, among them, almost all (92%) believe AI improves efficiencies in the flow of work for store managers and employees.

Read the full report on holiday retail trends: “The People-Driven Side of Peak Selling Seasons.”

About UKG

At UKG, our purpose is people. We are on a mission to inspire every organization to become a great place to work through HCM technology built for all. More than 80,000 customers across all sizes, industries, and geographies trust UKG HR, payroll, and workforce management cloud solutions to drive great workplace experiences and make better, more confident people and business decisions. With the world’s largest collection of people data, work data, and culture data combined with rich experience using artificial intelligence in the service of people, we connect culture insights with business outcomes to show what’s possible when organizations invest in their people. To learn more, visit ukg.com.

Footnote 1: Survey Methodology — Research findings are based on a survey conducted by Morning Consult on behalf of UKG, September 8-20, 2023, among a pool of 500 retail executives and managers representing both the frontline and corporate perspective at small/medium and large U.S. retailers. Industry segments include big box (30%), department stores (23%), grocery (15%), specialty (10%), and others spanning discount, luxury, pharmacy, and wholesale (22%). The project’s objective was to understand how U.S. retailers prepare for seasonal surges, including the 2023 holiday shopping season, while navigating staff shortages, high labor costs, and inflation to create memorable customer experiences in stores and increase revenues during peak seasons. All interviews were conducted online with adults 18 years or older. UKG has conducted similar holiday-season studies in 2020, 2021, and 2022.

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