Human resources in the retail industry: Benefits, challenges, and best practices

Human resource management in the retail sector is even more important than it is for many other industries because retail is so labor intensive. Unlike industries that may invest heavily in equipment and technology to succeed, retail is primarily invested in cultivating a thriving human workforce. 

Productivity in retail is largely based on employee performance which makes human resources in the retail industry a key player in determining a company’s success. HR in the retail sector also faces distinct challenges like high employee turnover, cyclical demand, and a customer-facing workforce. All three directly affect retail sales, and add to HR’s importance within a company.   

What is the role of HR in the retail industry?

On a strategic level, the role of HR in the retail industry is to serve as a bridge between employer and employee, working towards company profitability and growth while creating a positive work environment that supports employees and customers too. 

On a tactical level, human resource management in the retail sector is responsible for overseeing all parts of the employee lifecycle including recruiting, hiring, onboarding, training, scheduling, performance management, employee relations, and ensuring compliance with labor laws. In short, HR in the retail sector manages the workforce to best serve business goals while ensuring compliance with relevant regulations. 

6 benefits of HR management in the retail sector

Retail is hyper-focused on customers. The goal of serving customers informs every aspect of a retail business, and this includes HR. The primary focus of human resources in the retail industry is making sure that retail employees can provide the best customer service. 

For HR in the retail sector, this means attracting talent, and making sure that once they’re hired that talent is trained, engaged, and retained through employee-friendly policies and processes. For a company, it means that HR holds a place of primary importance because a happy employee will have a positive impact on customer experience which in turn, leads to sales. 

The benefits of having strong human resource management in the retail sector include: 

1. Enhanced customer experience: customers always come first. Research has shown that engaged employees have better customer interactions, which in turn creates happier and more loyal customers.       
2. Increased productivity: many human resource management processes boost employee productivity. These include goal-setting and tracking, effective performance management programs, and training and development opportunities. By investing in employees beyond the recruiting stage, employers give employees a chance to grow in their careers, which increases retention and upskills the workforce.     
3. Better company culture: by instituting solid human resources management in the retail sector, HR support for retail workers creates a better company culture which not only improves profitability but also protects a retail business in a downturn. In general, companies find that it pays to treat employees well. 
4. Effective workforce management:  retail can be a chaotic business, whether it’s unexpected layoffs or a change in business plans, HR in the retail sector must be nimble and prepared for unforeseen circumstances. When HR practices in the retail industry are streamlined and efficient, it allows HR staff to be responsive to disruptions while easily keeping pace with daily work.  
5. Increased employee engagement: human resources in the retail industry recognizes that employee engagement is key to hiring and retaining the best employees. By providing clear policies, smooth administration, and flexibility in scheduling, as well as opportunities to advance in their careers, HR can ensure that employees are happy, customers are satisfied and the business thrives.              
6. Connection to company goals: when employees are frustrated and disconnected from their work, it leads to poor performance and dissatisfied customers. By incorporating goal setting into performance management processes, and connecting individual and team goals to overall business goals, it helps employees feel like their efforts have an impact and that they are aligned with the entire company in their drive to achieve success.   

5 responsibilities of human resources in the retail industry

The key responsibilities of HR in the retail industry are essential for maintaining high levels of customer service, reducing turnover, and ensuring the overall success of the business. These include:

1. Hiring and onboarding: because the retail business is seasonal and subject to fluctuation, a key component of HR in the retail sector is hiring and onboarding new employees. Making it easy for candidates to apply, and being able to screen candidates, make offers, and onboard them quickly is necessary to get employees ready to work as fast as possible.      
2. Managing HR across retail locations: the retail industry has a lot of turnover. Making sure that sensitive employee information is secure, organized, and accessible across store locations, state lines, and other countries with different policies and compliance requirements is vital to operating efficiently and securely.  
3. Ensuring compliance:  HR in the retail sector is responsible for making sure that the company complies with all relevant labor laws, which can include regulation around wages, working hours, health and safety, discrimination, and harassment. This is crucial for avoiding legal issues, fines, and potential damage to a company’s reputation.          
4. Training: human resources in the retail industry is responsible for making sure that employees have the right skills to do their jobs most effectively. Employees need to be trained in customer service, product knowledge, sales techniques, and store operations. HR in the retail sector also provides continuous learning options to help employees upskill and advance in their careers.    
5. Workforce management: HR in the retail sector is responsible for making sure that the right staff are in place at the right times. This entails scheduling, forecasting, tracking employee time and attendance, and mitigating compliance risk. HR practices in the retail industry see to it that the business is never over or understaffed while maintaining customer service standards, and managing inventory efficiently. In addition, they make sure schedules comply with labor laws and regulations, like maximum working hours, overtime pay, and rest periods. HR in the retail sector balances the needs of the business with legal requirements and employee rights. 

6 challenges of HR in retail 

Human resources in the retail industry faces unique challenges based on the fluctuating nature of the retail business environment. They must be able to handle multiple demands with grace, and create a positive work environment. Some of the challenges faced by HR in the retail industry include: 

1. High turnover rates: attracting and retaining top talent remains the top challenge for HR in the retail sector. High turnover is expensive because of the high cost of training new employees. Also, seasoned employees are often more productive than new hires. The role of HR in the retail industry requires that they attract top talent and inspire them to grow with the company.    
2. Training and recruiting talent: the role of HR in the retail industry includes training and recruiting new hires. This part of HR support for retail has changed over the years. It now involves setting up programs that are easily accessible for a larger and more varied workforce, and may include remote access, different language accessibility, and different time zones.    
3. Managing a seasonal workforce: many retailers need to hire temporary workers for peak periods, for instance, during the holidays or for sales. Fast onboarding and training is key to getting employees to work quickly. Engaging and training workers who may only be on staff for a short time is a challenge that requires a different approach than the one for longer-term staff.                    
4. Managing an inexperienced workforce: many retail positions have no experience requirement. HR support for retail includes creating policies and training inexperienced employees about expected work behaviors and protocols in addition to training for the job they were hired to do. 
5. Employee theft and misconduct: the retail industry hires both part-time and temporary workers who may only be on the job for a brief time. This makes the retail industry more vulnerable to theft. In addition to the huge cost of theft, employee misconduct such as sexual harassment, discrimination, and safety issues can put a strain on HR in the retail sector, and may result in potential lawsuits for the company.      
6. Employee safety: Many retail employees have to lift objects and generally move around more at work than employees in other industries. The chance of injury is higher than for those who sit at desks in offices. To avoid costly workers’ compensation suits or serious personal injury, HR support for retail includes making sure that safety education is part of the onboarding process and that policies and practices to maintain a safe working environment are enforced at all times.   

5 best HR practices and tips in the retail industry

To maximize efficiency, HR practices in the retail industry should focus on impacting the main drivers of retail industry success: customer experience, company culture, and workforce skills, including soft skills. Here are some best practices HR managers should consider:

1. Rely on technology: getting bogged down in repetitive and manual admin tasks makes it hard for HR to focus on more strategic initiatives. Adopting software that automates routine processes is essential for freeing up HR for projects that make the biggest difference to the business.          
2. Make training innovative: training needs have increased as new technologies are introduced into the retail experience for customers and employees. HR in the retail sector has to become more sophisticated in the design and implementation of training so that companies can provide easily understandable and accessible information for all employees. 
3. Understand and share workplace policies: HR teams in the retail sector should allocate time to workplace training to ensure that they communicate the company’s expectations around safety, sexual harassment, and safety compliance. They should also provide ways for employees to access this information on their own.        
4. Collaborate with frontline staff: store managers are often critical to implementing HR strategies, motivating their teams, and creating a positive work experience.  Human resources management in the retail sector benefits from building strong relationships with store managers to bolster alignment and support. HR can also provide training and resources to help managers effectively handle HR-related issues.      
5. Provide career development opportunities: employee training and clarity about career pathways can offer opportunities for advancement that motivate employees to stay with a company.       

Rippling: Easy HR management for retail businesses 

Rippling HCM makes running a retail workforce easy by bringing together everything needed to manage and pay a retail workforce, including hiring, scheduling, and payroll processing. Rippling automates the entire employee lifecycle, from onboarding to offboarding. Payroll is synced to benefits, time and attendance, and more, saving time and minimizing errors. 

Compliant scheduling is simplified with Rippling. Managers can customize schedules based on sales data, labor targets, foot traffic, and other third-party data, so they’re never over or under-staffed. Staying compliant with complex labor regulations is critical for avoiding penalties in the retail sector. Rippling automatically flags local, regional, and national infractions—and recommends a plan of action for each one.

A good employee experience boosts retention which is a huge issue in the retail industry. Employees will appreciate the ease of Rippling’s intuitive mobile app which they can use to clock in and out, access their schedules, request time off, view pay stubs, and update personal information. It empowers employees to manage their own HR-related tasks while reducing the administrative burden on HR staff. 

By consolidating HR and payroll into one platform, Rippling provides the tools to make the entire organization more productive while freeing up HR to function strategically.

HR in retail industry FAQs

When should you hire an HR manager in the retail industry? 

In the retail industry, companies with less than 20 employees can often handle HR on their own or with one HR professional, but once your company starts edging towards 50 employees or more, HR tasks become too time consuming and compliance issues become too complex. That’s when it’s time to look for an HR manager to provide solutions that will help create policies for employee conduct, handle a myriad of administrative processes like onboarding and payroll, ensure scheduling accurately meets demand, mitigate compliance risks, and help to create a good company culture. 

What does a human resources manager do in retail?

A human resources (HR) manager in retail is responsible for overseeing all aspects of employee management, including recruiting, hiring, onboarding, training, scheduling, performance management, employee relations, ensuring compliance with labor laws, and fostering a positive work environment to support the overall retail operations and customer experience.

How do you manage staff in retail effectively?

HR in the retail sector can start by providing a strong hiring and onboarding process to make a good first impression, and to help new employees settle in quickly and feel like part of the team. 

From there, automate and simplify routine HR processes like onboarding, payroll, and time and attendance. Create schedules that ensure staffing matches customer demand and are compliant. Decrease employee frustration by building schedules that respect their availability and offering shift-swapping. Also, make it easy for employees to clock in, view schedules and more using a mobile app. Mitigate costly compliance risks by building compliant schedules, automatically enrolling employees in required trainings based on role and location, and managing global, federal, state, and local labor law compliance with policies that update as laws change

How do you engage retail employees?

Offer a great benefits and compensation package. Encourage feedback by sending out employee surveys. Build a culture of recognition and honor employees for their service and successes. Offer rewards and incentives like perks, discounts or reward programs. Provide flexibility in scheduling by taking employee availability into account and allowing shift-swapping. Let employees self-serve HR admin and communicate via their phones. Make sure to keep channels of communication open so employees are informed and know they can express their views. Finally, keep in mind that engaged employees are more likely to be happy, loyal, and productive. 

This blog is based on information available to Rippling as of October 21, 2024.

Disclaimer: Rippling and its affiliates do not provide tax, accounting, or legal advice. This material has been prepared for informational purposes only, and is not intended to provide or be relied on for tax, accounting, or legal advice. You should consult your own tax, accounting, and legal advisors before engaging in any related activities or transactions.