Almost all (94%) retailers are ‘worried’ about talent shortages in the retail industry, with four in 10 (40%) ‘extremely worried’, according to new market research by the leading global software provider for the retail and hospitality sectors, Fourth.  This number is as high as 100% of retail leaders in attractions, clothing, and automotive industries.

The research comes as Fourth launches its new whitepaper: Talent, convenience, and technology: The Retailer’s guide for 2022, which explores what consumers want from retail, what the current challenges facing the industry are, and what 2022 holds for the sector. The whitepaper is built on insights from two surveys: one of 2,021 UK consumers, and the second of 251 UK retail leaders.

What’s causing talent shortages in retail?
When it comes to the main factors causing talent shortages in the retail industry, Fourth’s latest data shows us that people making career changes out of the retail sector (38%), a lack of correctly skilled employees in the industry (37%), and burnout/poor mental health as a result of the pandemic (37%) are the major contributing factors.

However, these factors vary by company size, with larger retail businesses more likely to cite salary expectations being too high or competitive as the top factor causing talent shortages compared to smaller retail businesses. These changes in employees’ pay expectations are likely to be a direct result of the job insecurity and mental health ramifications that employees faced during 2020, with retail workers seeking more stability and safety in their work. 

Key hiring challenges for 2022
The talent shortages and the factors causing them mean that retail leaders plan to prioritise finding top talent and retaining them for the long-term in 2022. When asked about what will be the hardest part about hiring talent next year, retailers said finding candidates that will stay in their role long-term, not just for now (39%), hiring the best candidates before our competitors do (37%) and finding the top candidates among large volumes of applications (36%).

On top of the impacts brought on by COVID, issues stemming from Britain’s exit from the EU continue to cause issues for retail leaders. Since Fourth’s whitepaper, Post-Pandemic Retail: Retail Leaders’ Plans and Predictions for the Industry, released in June 2021, finding qualified candidates due to talent shortages caused by Brexit has increased as a challenge, from 31% to 35% and remains the fourth top hiring challenge in both surveys. Pharmaceutical retailers in particular cited Brexit as the top factor for talent shortages in their sector (41%), alongside career changes out of retail. 

In terms of hiring, finding qualified candidates due to talent shortages caused by Brexit is the top concern for clothing businesses (47%), second top challenge for grocers (44%) and automotive businesses (35%), and the third biggest hiring challenge for attractions businesses (35%) and sporting goods retailers (36%). It was also most likely to be an issue for larger businesses, with businesses between 4,000-4,999 employees and between 5,000 and 5,999 employees citing it as their top hiring challenge (67% and 56% respectively).

Retailers’ top operational challenges for 2022
Retail leaders’ top operational challenges for 2022 align with the themes of hiring and retention too: they are communicating consistently with all employees (35%), retaining my best employees by maximising staff engagement (34%) and attracting the right talent before our competitors do (32%).

These concerns differ when it comes to company size, however. Four in 10 (41%) smaller businesses with 500-999 employees were more likely to cite ‘retaining best employees by maximising staff engagement’ as a top operational challenge, while larger businesses surveyed were more concerned about stock, salary, and scheduling challenges overall.

Responding to this latest data, Sebastien Sepierre, Managing Director – EMEA, Fourth, said: “The data shows that retail leaders in the UK are continuing to feel the impacts of the pandemic and Brexit when it comes to talent planning and overall workforce management. The findings emphasise the need for retailers to use technology solutions to help better manage these challenges, improving scheduling and productivity, and engage with their employees. Implementing this technology, including that provided by Fourth, can help retailers manage all HR information and needs in one end-to-end solution, while also providing the data and insights for future planning.