Employee Retention in Retail: 9 Ways To Retain Your Staff

Small businesses are flourishing. According to a report by the US Chamber of Commerce, 47% of small businesses expect to increase staff in the next 12 months—the highest percentage since the report’s inception in 2017. 

Stellar employees are essential to running a business efficiently and delivering an exceptional customer experience. But finding and keeping dedicated employees can be a daunting task.

Are you looking for ways to reduce employee turnover? In this article, we’ll discuss the importance of employee retention in retail. We’ll also offer nine ways to boost your employee retention rate today. 

What is employee retention?

Employee retention is a company’s ability to keep its employees. It refers to how organizations keep employees engaged and motivated to stay with a company for an extended period.

Retail has one of the highest turnover rates of any industry in the United States. Korn Ferry reported an annual turnover rate of 75.8% for all hourly in-store retail positions in 2022—up from 68% in 2021.

Several factors contribute to employee retention, including: 

• New hire onboarding: Do new employees have the training and tools to succeed?
• Employee roles and responsibilities: Do employees feel their role matches their experience and skillset?
• Training and development: Do employees feel like they have ongoing opportunities for growth?
• Flexibility and work-life balance: Do employees feel they can switch shifts or request a day off? 
• Employee recognition: Do employees feel valued and appreciated?
• Work environment: Do employees feel respected and comfortable being themselves?
• Compensation: Does the company pay its employees competitive and fair wages?

Why employee retention in retail matters for small businesses

If you’re worried about employee turnover, you’re not alone. Today, 57% of small business owners express concern about retaining employees.

High turnover rates can be detrimental to small businesses. With limited resources, small business owners often rely on their employees to support store operations, deliver exceptional customer service, and generate revenue. 

Investing in employee retention can help small business owners:

• Reduce costs: Finding, hiring, and training new employees consumes time and resources. By setting employee retention objectives, you can save money on recruiting and training costs. 

• Boost productivity: A long-term employee will better understand your business, processes, and customers. As employees gain experience, they will become more efficient and take on additional responsibilities.

• Create a better customer experience: Long-term employees will possess a deeper knowledge of the company’s products and services. As a result, customers receive more personalized service. At the same time, these employees can develop stronger relationships with repeat customers—increasing customer loyalty.

• Recruit the best employees: Employee longevity can also be a powerful recruitment tool when hiring new employees. Suppose you decide to bring on additional employees and have low employee turnover. In that case, prospective candidates will be more likely to view your business in a positive light. 

How to calculate your employee retention rate

Calculating your employee retention rate is critical. You should try to calculate your retention rate at least once per year and maintain a record of these results. If your turnover rate is high, you can identify ways to boost employee engagement and satisfaction before your existing employees leave. 

First, choose a period you want to measure. While retailers typically measure employee retention annually, any time frame will do.

Then, use this formula for calculating employee retention rate:

((Number of employees at the End of the Period - Number of employees who left during the period) / Number of employees at the Start of the Period) x 100

9 ways to boost employee retention 

In an interview with SHRM, Kristen Magni—founder and principal consultant at C Future LLC—stresses the importance of taking a proactive approach to employee retention:

Great, quality places are people-focused, flexible, adaptable, collaborative and inclusive,” she says. “They are about creating places that people love while recognizing that sustainability is an ongoing and iterative process. It’s important to be proactive rather than reactive—turnover is a lagging indicator.

Kristen Magni

Here are nine employee retention strategies you can implement today.

1. Write an employee handbook

As a small business owner, writing an employee handbook might feel unnecessary. 

But an employee handbook can be a valuable resource to set expectations, document procedures, and provide legal protection. Employees can also refer to the handbook if you’re not available or if they don’t feel comfortable asking a question.

You can find free and paid downloadable employee handbook templates online. Your employee handbook should include the following: 

• An overview of your company’s mission and values
• Job expectations and responsibilities
• Policies and procedures—including those required by local, state, and federal governments
• Workplace safety guidelines and emergency procedures
• Contact information
• An acknowledgment form for employees to sign

Provide new employees with the employee handbook as soon as they start. Keeping a digital version of your handbook is helpful so employees can refer back to it, and you can update policies as needed.

2. Create an onboarding process

Employee retention begins from the moment an employee joins the company. According to Yoobic, retailers that invest in onboarding increase employee retention by 82%. 

By creating a comprehensive onboarding process, you can establish expectations, ensure employees receive the training they need, and set them up for success. 

Here are some key elements to include in your onboarding process: 

• Welcome and introduction: Greet employees when they start their first day and introduce them to any team members. 

• Company overview: Provide an overview of your company’s history, mission, and values. Share your goals for the upcoming quarter or year. 

• Job description and responsibilities: Outline the position’s responsibilities and share key performance indicators (KPIs). How will your employee know they are successful? 

• Policies and procedures: Review policies, such as dress code, attendance, customer interactions, and managing returns and exchanges. Ensure employees also understand any legal requirements related to their job. 

• Store tour: Familiarize the employee with the physical layout of the store, as well as the area surrounding your store. 

• Training: Educate employees on the product and services you offer, the point-of-sale system, inventory management, and any other skills required for the position. Provide guidelines for how to interact with customers and resolve complaints. 

• Safety and security: Share safety protocols and emergency procedures—including how to handle loss prevention.

3. Develop a culture of feedback

Employees must enjoy their work environment—including the management style, their coworkers, and company culture. By creating an environment that encourages open dialogue, companies boost employee engagement and satisfaction. If employees feel comfortable expressing concerns, you can uncover issues before they start looking for other jobs. 

Fostering a positive feedback culture starts during the onboarding process. Regularly check in with your new employee and ask for their feedback. When providing feedback, be specific. For example, instead of saying, “You’re doing great,” you can say, “I noticed how patient and attentive you were with that customer.” 

At the same time, schedule regular check-ins with existing employees. Setting a recurring appointment on your calendar—such as monthly or quarterly—may be helpful. Be sure to recognize employees’ achievements and ask for feedback. 

Exit interviews

If an employee decides to leave, conduct an exit interview. By asking questions about their experience, you can uncover ways you can better support employees in the future. 

Exit interviews are short (15 to 30 minutes) and typically occur on an employee’s last day. Some questions you can ask include:

• Why are you leaving? 
• How would you describe your experience working here? 
• What did you enjoy most about your time working here? 
• What aspects of the job or store did you find challenging or frustrating? 
• How would you rate the level of support and feedback you received? 
• Were there any policies and procedures you found beneficial? Any you found unnecessary or challenging to follow? 
• Were there any concerns you raised during your time here that you feel were not adequately addressed? 
• What suggestions do you have for improving the employee experience here?
• Do you have any other comments you’d like to share?  

4. Provide ongoing training and development

As your confidence in your employees grows, look for opportunities to involve them in other aspects of your business—such as merchandising, marketing, or inventory management. This will allow your employees to grow and better understand your business. It will also demonstrate your commitment to their development.

5. Invest in technology

Today, hundreds of tools help retail businesses simplify routines and automate routine tasks. By providing employees with the right tools and resources, you can boost efficiency and free up employees to work on more meaningful projects. 

You can also use technology to encourage collaboration and boost morale. For example, consider setting up a Slack account for you and your employees to communicate. Employees can use the tool to ask questions, share wins, and give shout-outs to teammates.

“We have a Slack [channel] for the whole company and a group chat for each store,” says Robin Boesch—owner of y&i clothing boutique. Boesch’s team has separate channels for scheduling, damaged merchandise, special orders from customers, and content for social media. They also have a channel for unpopular merchandise. “[Staff] can upload pictures of products that are not moving so we can work on swapping it or marking it down.” 

6. Offer flexibility

In the aftermath of the pandemic, employees are seeking greater flexibility and better ways to balance their work and personal lives. Although offering flexibility can be challenging in a retail environment, consider small ways to give employees options when it comes to scheduling.

For example, The Lullabar—a cafe and nail salon for mothers and caregivers in San Diego—requires employees to work at least five days a week. However, employees choose the days they want to work.

7. Recognize and reward employees

Employee appreciation is essential to motivating employees and increasing engagement. But employee recognition does not have to be extravagant. 

Here are some ways to show appreciation to employees:

• Feature your employees on social media with a “Meet the Team” post. 
• Remember and celebrate work anniversaries. 
• Take note of what excites your staff. For example, if an employee likes music, let them create a playlist for the store. If a staff member is an artist, ask them to design marketing material for your next event or sale.
• Offer small treats—such as cookies from a local shop. 
• Write a personalized thank you note if an employee goes above and beyond. 
• Implement an Employee of the Month or of the Quarter to recognize performance. The employee can receive a gift card to a local coffee shop or have their picture posted in the store. 
• If you have more than one employee, recognize employee accomplishments during a team meeting. 

8. Pay competitive rates

While compensation can be challenging for small business owners, offering competitive rates is critical. “Pay is really important when it comes to retaining your employees,” said Elliot Djmal—Co-CEO of Material—on a recent episode of our Material Retail Dumps podcast. 

“If McDonald’s is offering $15 an hour [in your town] and you’re currently paying your employee $12 an hour or $13 an hour, you better believe that that employee is not going to be happy.” 

Along with competitive base pay, consider offering a commission program. A well-structured commission plan attracts better employees and rewards them for their performance. 

9. Support younger employees

Younger employees can be strong assets to your company. Besides being enthusiastic and eager to learn, they tend to have more flexible schedules.

However, this cohort of workers requires more guidance and support. Some tips to support younger employees include: 

• Be patient. These employees often have less experience in the workplace and will likely make mistakes.
• Describe your expectations in more detail. Set specific guidelines around the dress code, cell phone policy, and how to communicate with customers. 
• Allocate more time for training.
• Ask for questions regularly and foster a culture of open discussion.
• Provide more feedback, encouragement, and recognition.
• If possible, assign a mentor. 

Elevate your small business through employee retention

Reducing employee turnover can save money, boost productivity, and increase your bottom line. But as a small business owner, it can be challenging to devote time and resources to your employee retention plan. That’s where Material comes in.

Material helps independent retailers optimize their operations. Our retail toolkit includes all the resources you need to power your business. And our employee management tools—including employee pins, timesheets, and sales attribution features—make it easy to boost the productivity and satisfaction of your staff.

Sign up for free today to see the Retail Toolkit in action.