How retailers can rebalance and re-energize their workforce

Years of disruption have set retail employees and employers on decidedly different paths in terms of priorities, pressures and potential when it comes to the future of work. Last year, EY conducted its biennial Work Reimagined Survey (it is an annual survey).?The EY 2023 Work Reimagined Survey, which surveyed 1,215 retail employees and 95 retail employers globally, surfaces a talent environment that is upended by a mix of cyclical forces and structural challenges.

Retail employers view their challenges primarily through the cyclical lens. Geopolitical and economic uncertainty, a shifting talent and skills market, and emerging technologies are forcing retail employers to review and rethink their workforce strategy to move beyond any one business function more fully.

Retail employees are guided largely by structural workforce realities, such as retaining more perceived power in the labor market and being willing to change jobs to get what they want. Many retail employees want better total rewards packages amid high inflation and cost of living, and place higher value on wellbeing. They also want to learn the skills they need to succeed in a world of continued work flexibility.

Hybrid work, meanwhile, which is predominantly favored by both retail employees and employers (office based rather than store front), has evolved to require more thoughtful considerations for how technology, office space and amenities influence productivity, culture, and trust.

Employees rank pay and wellbeing as top priorities

When it comes to key concerns, retail employees are unequivocal about what matters most. Compensation and wellbeing are top priorities, with 40% of retail employees expressing a need for better pay, while 29% yearn for improvements in their overall wellbeing.

By contrast, retail employers cite talent retention as their number one focus. Only 19% of retail employers rank employee compensation levels as a key risk. Addressing burnout or employee wellbeing doesn’t even feature in the top risks for retail employers.

This yawning gap between employee and employer perceptions highlights a disconnect that retail executives need to pay attention to.

The pay paradox creates challenges for retailers

While retail employees clamor for improved pay and bonuses – more so than their global peers (45% of retail employees vs 39% of employees overall) – employers are more attuned to the intricacies of modern work motivations. Focusing on technology enhancements and revitalizing time-off policies, retail employers bet on holistic changes to the work ecosystem to retain and attract talent. The dichotomy in these priorities underscores the complexity of aligning rewards with workforce demands.

There are also marked difference in the perspectives of essential retail employees, half (49%) of whom are significantly more focused on all aspects of their reward package vs retail knowledge workers (40%), and the diverging views of female retail employees (51%) who have a higher desire for updated pay than their male co-workers (40%). These variances further underscore the challenges retailers face in developing employee value propositions that adequately balance employee and employer expectations.

Retail employees and employers are more aligned on hybrid work than their global peers

Hybrid work, often heralded as the future of work, is one area where retail knowledge worker employees and their employers find some common ground. Forty percent of retail knowledge workers and 47% of retail knowledge worker employers prefer two-to-three remote working days per week.

However, this is where any modicum of alignment ends. Nearly one-third (30%) of retail knowledge workers would prefer to work remotely full-time, vs10% of retail knowledge worker employers. At the other end of the scale, 17% of retail knowledge worker employers would prefer to offer only one day of remote work a week vs 6% of retail knowledge workers who agree.

Creating a hybrid model that caters to these varied needs underscores the tensions that persist around flexibility and return to work.

Job requirements drives higher on-site work

Nearly four in 10 (38%) of retail employees report the need to be on-site as a job requirement, which, unsurprisingly given the nature of retail work, is more than their global peers (31%). Roughly one-third (33%) of retail employees say they like to be on-site to stay socially connected.

Retail employers, meanwhile, place a premium on the social aspects of the worksite — staying socially connected, and building and maintaining relationships — than employers generally.

Understanding and reconciling these priorities is instrumental to fostering a fulfilling workplace environment.

AI optimism low among retail employees, soaring among their employers

Retail employees are leaping more slowly into the fray when it comes to AI and Generative AI (GenAI). Only 37% of employees in retail say they’re using AI or plan to use AI, compared to 49% of employees globally.?

Interestingly, retail employers are much more optimistic about AI than their cross-sector peers. Two-thirds of retail employers say they expect to use GenAI for collaboration and teaming (vs 52% of employers overall); 61% see GenAI supporting ways of working flexibly (vs 53% of employers overall); and 57% say they intend to use GenAI to keep employees focused on high-value work (vs 51% of employers overall).

The 51% gap between retail employees (37%) and employers (88%) in terms of their company currently using or planning to use AI suggests a significant fissure of knowledge and communications in how AI is or will be deployed and for what purposes across the organization. This is an issue that retail employers must address quickly if they want to maximize AI’s potential and ROI.

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Five actions retailers can take to reimagine their workplace

For retailers, the insights from the EY 2023 Work Reimagined Survey offer a compass to navigate uncharted workforce territory. The path forward is nuanced and multifaceted. However, there are five actions that can help retailers realign and rejuvenate their workforce:

1. Address labor market pressures through employee value propositions

Retailers must revisit their employee value propositions to better compensate and cater to employee wellbeing. This should include internal adjustments to match inflation and total rewards programs that prioritize health and wealth for all workers. By addressing employee value propositions, reward value propositions and skills training, retailers will be in a stronger position to attract and retain critical sales, production, in-store and knowledge talent.

2. Define and cultivate a people-first culture that emphasizes total rewards, wellbeing and recognition

Leaders need to recognize how important trust and empathy are in driving better outcomes. Shifting from a “me” mindset to a co-created “we” mindset will unlock productivity and connection through teaming. Retailers can build trust through transparency and by measuring behaviors, attitudes, and outcomes from a variety of data sources. Understanding the metrics can then lead to more fully activating a sustainable “we” and “enterprise” mission, purpose and culture.

3. Elevate the “destination office” and workplace experience

Work flexibility is a baseline expectation in retail, with 40% of retail employees preferring working remotely two-to-three days a week and 30% wanting to be fully remote. Retailers should build touchpoints, technologies, and processes to customize hybrid work, learning and culture for this new normal. Real estate is not a primary driver for employee sentiment, but it does drive culture and productivity and intent to stay. A vibrant use of space with high-quality social and collaboration opportunities will increase ROI.

4. Adapt working patterns for the Great Rebalance

Retailers need to position themselves to deal with cyclical market challenges. At the same time, they need to understand that structural changes in employee priorities around total rewards, hybrid work, and overall culture require adaptation and resilience. Legacy talent strategy models and organizational structures aren’t built for this dynamic environment. Retail organizations that can pivot will find more opportunities to thrive, discovering and delivering enhanced consumer experiences and outcomes.

5. Prioritize people in the age of generative technology

Optimism around the potential of GenAI and the importance of a seamless user experience with technology represents an opportunity for retail employers and employees to co-create new expectations around benefits, capacity and safety. Technology won’t completely upend the structural talent issues retailers face, but to fully benefit from new tools, the workforce needs to be aware of the potential of these new tools. They also need to be trained and empowered to reimagine work in a way that embraces new capabilities, and still keeps humans at the center.

Retailers stand at an inflection point, where the decisions and actions of today will shape their future. The call to rebalance and re-energize the workforce isn't just about keeping pace with change—it's about near-infinite possibilities in an age of relentless transformation.