Registering the Retail Industry's Labor Shortage
The point of sale is at a pressure point.
Organizations in the retail industry can expect already tight labor market conditions to intensify. Younger, entry-level workers are in a critical shortage, while fewer than expected retirees are reentering the workforce in frontline roles. As companies explore ecommerce and point-of-sale automation, many service roles are not positioned for achieving customer satisfaction and retention across all touchpoints. With significant workforce shortages over the next five years, corporate leaders must focus on engaging local workforces and pursuing new technologies.
Risk Factors
3.88
Occupation Risk Score
Roles such as retail sales workers, customer service representatives, cashiers, and retail salespersons have a lower barrier to entry, but are traditionally filled by younger workers who are largely choosing to focus on school rather than work part-time. As well, 25% of prime-age first-line supervisory roles, especially of sales workers, are exiting the workforce. Without a pipeline of younger people to enter the retail workforce and grow their careers, retailers are at risk of losing experienced workers who can replace management. This risk is elevated for retailers requiring specialty knowledge, like automotive parts.
2.29
Market Risk Score
Consumer demands often fluctuate across seasonal cycles and consumer spending power as economies shift. This creates tension in market supply, as the workers who have traditionally fulfilled part-time jobs in these peaks are retiring permanently, or are among the youth workforce who are not participating in the labor market. Retailers operate across both US and global markets, all of which are facing the same demographic challenges. Local market success is highly dependent on both employer brand and value proposition, as well as consumer brand affinity as that is often what appeals to younger workers in particular.
3.00
Industry Risk Score
The youth workforce, who have traditionally filled entry-level roles, are a smaller population and participate in the workforce less than ever. At the same time, over 1 million retail sales jobs are filled by workers aged 55 and over, and 15% of workers are foreign-born (combined retail and wholesale). Engaging a new generation of retail workers is critical for service roles. AI and automation technologies are making strides in retail operations, but are not a replacement for interpersonal customer service. For large retailers, globalization has been a longstanding business model and continues to be a source of competitiveness.
2.68
AI Skills Gap Score
AI skills are most impactful to operational roles, rather than interpersonal customer service delivery. AI is rapidly impacting data analytics, consumer insights, digital marketing, and e-commerce—and requires continuous upskilling to enhance retail efficiency, especially as supervisory roles are harder to source. Customer experience management, particularly for omnichannel shopping, AI-generated personalized recommendations, automated fulfillment, and contactless payment systems drive customer demands for a satisfactory experience, but the industry is lagging behind in adopting these skills.
Retail Organizations in the Fortune 1000
In the Workforce Risk Outlook, Lightcast found little correlation between workforce risk exposure and their Fortune 1000 ranking. C-suite leaders must align their workforce strategies with their quadrant position, as opposed to assuming their revenue makes them immune.
High Risk/High Scale to Address: Organizations in this quadrant face significant risk of being disrupted in their industry, but also have the financial resources to reduce their risk if they are proactive. These organizations should invest in AI-driven inventory management, expand workforce training in omnichannel retail, and implement robotics and automation in warehousing and fulfillment to reduce dependency on manual labor.
High Risk/Lower Scale to Address: Organizations within the riskiest quadrant are lower on the competitive ladder and have less resources to address their incoming risk. These organizations must focus on workforce cross-training, leverage self-service technologies like cashierless checkouts, and optimize supply chain operations through real-time data tracking to minimize disruptions.
Lower Risk/High Scale to Address: Organizations in this quadrant may not face immediate workforce shortages, but should remain proactive to maintain and reduce their exposure to risk. Expanding employee development programs, strengthening data-driven customer insights, and enhancing workplace flexibility can help sustain workforce stability and long-term brand loyalty.
Lower Risk/Lower Scale to Address: Organizations in this quadrant, if they are proactive, have a chance to be the disruptors. Specifically, they can disrupt industry competitors in the High Risk/High Scale quadrant. They should focus on innovative retail models such as experiential shopping, direct-to-consumer strategies, and localized inventory planning while using automation to optimize labor efficiency.
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Solving Retail Workforce Management
Talent Analyst
Strategies to Standardize Roles and Streamline Recruitment
Corporate retailers are faced with a complex workforce composition across job titles and locations, making talent management, sourcing and compensation difficult. With a high volume of job descriptions and skill profiles, sourcing hourly workers, like cashiers, stockers, and sales reps, can quite literally be all over the map. Standardizing roles and descriptions unlocks accurate compensation benchmarking, and a more streamlined approach to multilocation recruitment. To the hourly workforce who is in high demand, competitive compensation and career growth are a must—and also need to be a must for organizations as well.
How Value Retailers are Transforming Hourly Talent
A global value retailer, faced with significant challenges in managing its hourly workforce, needed to address high-turnover cashier and retail sales associate roles. With over 1,000 unique titles, it needed to refine its job architecture to align descriptions with industry standards to compensate competitively, and to understand location-specific talent trends. With insights from Talent Transform, it streamlined its job catalog, benchmarked wages, assessed competitiveness at the store level, and balanced supply-demand dynamics to better retain employees, ensuring workforce stability and operational success.
Talent Transform
Strategies to Shift Retail Job Perceptions
As the youth workforce is largely opting out of the labor market in favor of focusing on school, especially higher education, retailers will need to improve employer value propositions to change perceptions of entry-level roles as not “just a retail job.” Mapping skill paths from entry-level—especially high-demand interpersonal and problem solving skills—to the skills needed for operations and customer service management roles will provide candidates with a more confident view of these jobs as part of their career growth. Additionally, it increases retention efforts, especially among workers who want career paths that don’t require a college degree.
Retaining Employees with Retail Career Growth
A Fortune 50 retailer is modernizing its talent strategy by enriching its internal people data in Workday with external skills insights from Lightcast’s Talent Transform and Professional Services. Through standardizing job roles, aligning descriptions with market standards, and tracking skill demands, it developed a scalable upskilling strategy to successfully compete for talent—employees have a tangible career path from cash register to corporate leader. With a skills-based strategy, it has improved talent acquisition, workforce development, and decision-making with data-driven precision.
