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Just when we thought the retail industry had turned a corner with the global pandemic and supply chain issues in the rearview mirror, it's now confronted with a new set of hurdles. 2023 has brought mounting inflation and rising interest rates that have eroded consumer confidence, while new shopping behaviours are as unpredictable as they are demanding.
Retailers themselves are grappling with their own internal struggles, notably in staffing. High turnover and attrition rates are becoming the norm rather than the exception, making it difficult to maintain a consistent workforce. In Ceridian’s 2023 Executive Survey, 50% of global respondents said that labour and skills shortages will limit the organisation’s ability to achieve its business goals in the coming year.
On a positive note, the recent influx of international students to Australia is contributing positively, both to the workforce and as an emerging customer base. And as global travel restrictions ease, tourism is beginning to rebound, which could be a much-needed boost for the retail sector.
These economic forces — both positive and negative — will continue to influence both retail operations and consumer behaviour, compelling retailers to rethink their strategies and innovate for a more resilient and sustainable future.
Balancing consumer expectations and economic realities
The retail industry has always been at the mercy of consumer preferences, but the pandemic accelerated this dynamic to new levels. One of the most striking transformations is the fast-tracking of omnichannel experiences, blurring the lines between online and in-store shopping. In the wake of the pandemic, consumers have created new buying behaviours with webrooming — researching online before making an in-store purchase — and showrooming, where they might touch and feel a product in-store but make the final purchase online — becoming the new norm.
Although consumers have more channels than ever before, the current cost of living crisis has severely impacted consumer confidence, making people more cautious about where and how they spend their money.
As it stands, the retail industry finds itself in a paradoxical situation: while technology and online platforms offer unprecedented opportunities to reach consumers, they also require a specialised set of skills to manage them effectively.
Advanced data analytics capabilities are essential to understand these evolving consumer behaviours and to tailor offerings accordingly. Managing efficient supply chains has also become crucial, as has the expertise in cybersecurity, given the increased reliance on digital platforms. On top of this, effective inventory management is more critical than ever to balance the demands of in-store and online consumers.
The three Rs of retail sustainability
The shortage of skilled workers is one of the most pressing challenges for retail.
According to a report by Inside Retail Australia and KPMG, 44% of executives in the sector identified staffing as a key challenge affecting labour costs. This sentiment is echoed by the 2023 Executive Survey, where 66% of respondents said they faced a labour shortage in the past year. Even more telling, a staggering 88% predict that this trend will persist over the next 12 months.
This worrying trend has brought three Rs into sharp focus: recruitment, retention, and reskilling.
Recruitment: A race against time
The rapid pace of the job market is leaving retailers with little room to breathe. Around 60% of organisations claim to lose candidates before even scheduling an interview. Couple that with the fact that top talent remains on the market for an average of just 10 days, and the pressure is palpable.
In a recent industry webinar, Joanne Matthews, Chief People Officer at Michael Hill International noted the crisis’s impact of the labour shortage on their business.
“Our turnover is at a higher rate than we saw pre-COVID,” she said. “With such a strong employment market, candidates have more options than ever on where they can choose to work.”
With the industry average time-to-fill a role now soaring above 25 days, there’s an urgent need for process improvements. Retailers have an opportunity to leverage automation to expedite the recruitment process, capturing top talent before they are swept off the market.
Retention: The new top priority
In an era marked by staff shortages, retaining existing employees has become the linchpin for retail stability. Over a third of retailers identify retention as their foremost priority. Ceridian’s survey underscores the importance of this strategy, with 55% of executives admitting that challenges around employee engagement and retention will limit their business goals in the upcoming year.
Reskilling: The internal development imperative
John Dawson, Director of Talent Intelligence at Ceridian, regularly consults with Chief Human Resource Officers (CHROs) around the world and finds one common concern: skills. The question he is asked more than any other is, “How do we develop skills internally before the skills we have leave?” This concern is hardly unfounded. A shocking 93% of our survey respondents admitted that their organisations lacked at least one type of skill.
Growth continues to be a critical element of success for retail
Unsurprisingly, growth remains a pivotal focus for retailers. Ben Bontia, Enterprise Account Executive at Ceridian points out that many businesses are diversifying through new product streams or breaking into new global markets.
“A lot of businesses, especially in the Quick Service Restaurants (QSR) side of retail, are opening new stores and we’re seeing a lot of organisations creating diversity through new product streams. We’re also seeing a move towards globalisation — a lot of retailers are looking beyond Australia and New Zealand to other regions such as Asia, EMEA, or North America in order to hit their growth targets.”
Around 25% of retailers, according to KPMG research, recognise the need for technological advancements to sustain growth. This signals a growing awareness among industry leaders that leveraging technology is no longer optional, but a vital strategy for competitive advantage and market expansion.
Matthews echoes this sentiment, sharing how technology has enabled Michael Hill International to improve supply chain efficiencies: “Technology has been a key focus for us to take the business forward as we think about how we can do things smarter and more effectively.”
One example has been improving supply chain backlogs. “Not long ago we would fly tiny pieces of jewellery to Canada,” Matthews explained. “Once we established a third-party logistics provider in Canada our replenishment has improved, and the customers have their products sooner. This is a far more effective and cost-efficient way to run the business. Our approach is to look forward to what's coming and consider ways to get ahead of that to lead to the best outcomes for our business.”
Building business resilience through workforce management software
Recent data, including findings from the Ceridian 2023 Executive Survey, reveal a retail sector in the midst of navigating an intricate web of interconnected challenges. From labour shortages and skills gaps to rapidly evolving consumer behaviours and economic fluctuations, the landscape is continuously shifting.
Amid the fast-paced retail environment, workforce management software is emerging as a cornerstone for resilience and sustainability. These systems offer real-time insights into key metrics like schedule adherence, labour costs, and operational performance, enabling retailers to adapt strategies in a constantly shifting landscape. As consumer behaviour continues to evolve and labour shortages persist, the value of data-driven decision-making cannot be overstated.
The benefits go beyond just operational excellence. Workforce management software streamlines essential functions like payroll execution and schedule creation, directly affecting both employee satisfaction and customer experience. These technologies aren't just an interim solution but a strategic investment, equipping retail leaders with the tools to balance the challenges of skill shortages, labour costs, and evolving consumer preferences for long-term success.
Download your copy of the 2023 Executive Survey and explore the innovative workforce strategies top retailers are embracing to build a path to sustainability and resilience in the competitive landscape.
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