How to unlock talent advantage in the retail sector

As retail evolves, the EY Work Reimagined Survey 2024 reveals insights to help leaders reclaim talent advantage. Let’s explore how! 

In brief

• The EY Work Reimagined Survey 2024 shows that companies with talent advantage handle pressures, boost productivity, and outperform competitors.

• The retail sector, once favored for career growth and flexibility, now ranks below average in terms of talent advantage.

• By focusing on five critical levers, retail companies can reclaim their positions as leaders in talent advantage.

In just a few years, the retail sector has experienced a significant move. Once a preferred choice for talent due to its promising career development opportunities, flexible working hours and strong culture of innovation and change, the sector now ranks below average on nearly every dimension of the talent health index¹ in the EY Work Reimagined Survey. For example, employees in retail are more likely to leave their positions and report lower satisfaction with rewards compared to their counterparts in other industries².

Undeniably, the sector has faced some significant stressors in the past. The rise of e-commerce, changing consumer behaviors, competition from other industries like technology and finance and geopolitical and economic uncertainties are just a few examples. The current challenges related to talented workers seeking opportunities that offer more innovative work environments, better pay and greater career prospects are simply another facet of this evolving landscape. 

While changing conditions can be daunting, they also present opportunities for those willing to adapt. The research indicates that companies with talent advantage³ are significantly better equipped to navigate external pressures, enhance productivity, and outperform their competitors. In fact, retail employers with talent advantage are three times more likely to report substantial improvements in workplace culture over the past year compared to those facing talent disadvantages. The question is, will you adapt to thrive, or risk being left behind?

Let’s explore how retail companies can leverage five key levers to enhance their talent advantage!

Talent health and flow:

Retail companies must develop robust workforce planning and talent management tools that leverage analytics to predict talent needs, identify skill gaps, and tailor recruitment strategies for effective hiring and retention.

Today’s workforce is in constant flow. Currently, 41% of retail employees (compared to the global average of 38%) are considering leaving their jobs within the next year, a trend that is partly due to frontline workers being more likely to seek new opportunities. Retail employees also scored five points below the global average for talent health. These trends signal the need for leaders to rethink their talent strategies and prioritize workforce analytics to not only attract and retain talent but also understand the evolving needs of their workforce.

Work technology and generative artificial intelligence (GenAI):

Employers must actively support their employees in their AI journeys by personalizing technology adoption for each role to boost productivity. This involves gaining a deep understanding of the unique needs associated with various positions and customizing AI solutions to optimize specific workflows.

The use of GenAI is linked to a higher talent advantage. While the retail sector is only one point below the global average in terms of extensive users (22%), its employees are less optimistic about its potential impact on productivity and high-value work. This is particularly clear in the Nordics, where scores fall significantly below the global average (-15 points for productivity and -21 points for high-value work). Increasing GenAI-adoption will be crucial for enhancing employee engagement and productivity.

Total reward priorities: 

Pay is important, but total rewards must be optimized to reflect the diverse and personalized workforce needs. 

Retail employees perceive their compensation as less fair (-6 points) and less reflective of their skills and experiences (-6 points) than the global average. In the Nordics, the disagreement regarding its reflection of skills and experiences is even more pronounced (-14 points). To attract and retain talent, greater emphasis should be placed on enhancing sector-specific preferences, such as paid time off, bonuses and health and wellness benefits.

Learning, skills and career pathways:

Being intentional and future-proof oriented when designing and delivering learning experiences is key to empowering employees and boosting their confidence for the future.

Retail employees are less confident about their ability to keep pace with changing needs and the relevance of their skills in the next three years (-5 points and -4 points below global average, respectively). In the Nordics, only 38% believe enough time is dedicated to building future skills, and just 26% find it easy to explore new roles within the company, a 26-point shortfall compared to the global average. 

The question we face is whether we should primarily prioritize enhancing tailored training and career opportunities to address this gap, or if we also need to ensure that learning initiatives are anchored in our business strategy and future needs. Both approaches are necessary for future proofing our employees and our business, as well as combining it with clear communication with employees to further foster their confidence in the future.

Culture and workplaces:

In today's dynamic retail landscape, evaluating and optimizing workplace mix, space design and location investments is crucial for enhancing employee engagement and productivity. Retail companies must assess their workplace strategies and leverage data-driven decisions to create spaces and cultures that promote collaboration, innovation and wellbeing.

The retail sector has struggled to perceive improvements in company culture over the past year, with Nordic retail employees expressing even greater pessimism. The study reveals that retail employers with a talent advantage are three times more likely to report significant cultural improvements compared to those facing talent disadvantages. This success is largely attributed to their ability to cultivate a cohesive and positive culture that supports a diverse and dispersed workforce. Therefore, retail leaders must prioritize the cultivation of positive workplace cultures that encourage collaboration and innovation. By doing so, they can significantly enhance employee morale and productivity, which are essential for attracting and retaining top talent.