Just when 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. We have seen high inflation and rising interest rates erode consumer confidence, while new shopping behaviours are as unpredictable as they are demanding. Retailers themselves are grappling with their own internal struggles, most notably when it comes to staffing.

Today’s workforce is boundless – fluid and always-on – and expects a modern, flexible employee experience. High turnover and attrition rates are adding to a growing complexity crisis, making it difficult for retailers to maintain a consistent workforce and ensure customers are receiving the service they expect. In the most recent Dayforce Executive Survey, 50% of global respondents, director-level and above, said that labour and skills shortages will limit their organisation’s ability to achieve its business goals in the coming year.

As geopolitical tensions and climate-related disruptions are likely to further complicate supply chains this year, retailers are being forced to adapt rapidly to ensure uninterrupted operations and meet evolving consumer expectations.

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. As global travel restrictions have eased, tourism has rebounded, providing a much-needed boost to 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.

This leaves the retail industry 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.

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 Dayforce 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 margin for error. 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. With the industry average time-to-fill a role now soaring above 25 days, there’s an urgent need for process improvements. Retailers in 2024 have an opportunity to leverage technology and 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. The Executive 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

Concern about how skills can be developed internally before employee’s leave is hardly unfounded. A shocking 93% of respondents to a recent Dayforce survey admitted their organisations lacked at least one type of skill.

Unsurprisingly, growth remains a pivotal focus for retailers. 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.

The retail sector is 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, data-driven decision-making is key for retailers who want to win amid today’s complexity crisis.

Matthew Kane is vice president of solutions advisory for APJ at Dayforce.