Retail & recession: How can HR teams keep employees engaged?
Retail and recession are in focus as the retail industry is under scrutiny due to low profit margins, layoffs, and economic instability.
The retail industry has been known to suffer a heavy burden of layoffs during these periods of economic decline. Retailers face immediate revenue reductions and consequent workforce cuts as consumers’ spending decreases. In fact, the retail sector is the second industry that is likely to be affected by redundancy during an economic recession in the UK.
Subscribe to TRBEven the biggest UK retail names are cutting back as the effects of inflation, energy costs, and brittle consumer confidence conspire against the sector. The BBC also reports that 2024 has witnessed a string of retail redundancies, as established brands such as Boots and John Lewis reveal mass staff layoffs and store closures.
As business leaders concentrate on survival, cutting costs, restructuring, and streamlining operations, one question dominates:
What about the employees who remain and are the lifeblood of retail?
A recession swiftly spreads across the high street, affecting stores, associates, managers, and support teams. Some want new opportunities, but layoffs mean workers must do more with less and worry about who will be next.
This post will look at:
- Why it’s so crucial to keep employees engaged in a down economy
- How loyalty in tough economic times defies logic
- What tactics commercial retail HR needs to start applying immediately to get their field force of employees prepped and ready to be motivated, loyal, and help their brand turn around.
Why talent retention matters more during a recession
It’s more crucial than ever to hold on to your best talent when times are tough. It’s perhaps tempting to cut back on employee engagement initiatives, yet in truth, holding on to and engaging your people is a fundamental survival mechanism.
Here’s why you should double down on employee engagement in retail during economic downturns:
- High turnover costs: Retail staff turnover is costly; between recruitment costs, lost productivity, and training, your business could be shelling out over 30% of annual salary. High-turnover sectors further compound the costs of talent loss, adding strain to already stretched budgets.
- Top talent is critical to eventual recovery: workers who know your brand, systems, and customers can help you through downtimes with fewer losses from retail sales and do it faster once demand returns.
- Internal stability boosts customer confidence: Properly staffed stores with engaged teams create trust.
- Increased productivity: Passionate employees always outwork those who are indifferent. They simply get more done with fewer resources.
- Stronger cooperation: Difficult circumstances frequently strengthen cooperation, team bonding, and resilience.
Learn how to create and foster a culture of retail employee engagement and recognition to increase talent retention and internal stability.
The paradox of loyalty: recession’s surprising effect
There’s a counterintuitive reality: Employee loyalty can increase during a recession. This phenomenon, the “stickiness” factor, arises because:
- Job security: With job security being a concern, holding onto what you have is the priority for most people. The fear of unemployment is making existing jobs more precious.
- Few external opportunities: When retail job postings decrease during downturns, employees have fewer reasons (or the ability) to look elsewhere.
- ‘Survivor guilt’ and bonding: Rooting for each other. Those who are left behind after layoffs may feel a sense of camaraderie or shared experience.
- Greater respect for stability: When everything else feels so up in the air, a steady job provides a feeling of stability.
This increase in loyalty has been observed in practice. For example, during the 2010 recession, U.K. retail employees demonstrated higher loyalty rates.
On the other hand, this increase in loyalty is not universal. In some workplaces, loyalty can fall if employees feel poorly treated or communication is weak, especially where layoffs are handled poorly or workloads increase substantially with no support.
Low-cost employee engagement ideas and techniques for retail HR
To effectively motivate retail employees, the key lies in fostering a sense of belonging and build a work environment that offers purpose, autonomy, well-being, social connection, and engaging incentives.
As retailers try to keep employees motivated despite redundancies and shrinking budgets, these employee engagement strategies can help improve employee engagement:
Start with transparent & empathetic communication
- Be honest: Share difficult news clearly and compassionately.
- Frequent updates: Transparent communication reduces anxiety, confusion and potentially damaging rumours.
- Active feedback channels: Encourage employees to share their concerns and address them directly.
- Explain “why”: Help your teams understand the business reason for making the decision.
Focus on internal mobility & development
It doesn’t take a lot of investment to build a strong culture of learning and provide professional development programmes in retail.
Examples of budget-friendly training program and development strategies include:
- Cross-training: Let staff test out other departments and implement cross-training across different divisions or roles, with a keen eye on each employee’s attitude and preferences
- Mentoring: Assign a junior employee to a seasoned manager for coaching and career development.
- Internal promotions: Hiring from within not only encourages employee loyalty but also often proves more cost-effective in the long term. If hiring from the outside, consider apprenticeships, which are usually subsidised by the government and allow you to cultivate and grow talent.
Allow flexible work arrangements
Flexible workspaces are one of the retail trends in recent years and help commerce withstand change through:
- Reduced or staggered hours: allow flexible working arrangements where employees have different start and finish times, rather than everyone beginning and ending their workday at the exact same moment.
- Shift Exchange and preferred slots: Allowing employees to exchange shifts with colleagues or select preferred work slots provides greater control over their schedules.
- Job sharing: It’s possible to save jobs and maximise coverage with two employees sharing one job.
- Remote options for office teams: If applicable, allow remote work, which can lead to better work-life balance and reduce overhead costs.
How can these measures boost employees’ morale? Greater flexibility provides better work-life balance, allowing staff to accommodate personal commitments, reduce commute stress and help individuals work when they are most effective.
Adopt cost-effective social activities to boost employee engagement
Little things make a big difference to employee experiences and to create a positive work culture:
- Team meals: Even a pizza night can help team bonding.
- Group challenges: Volunteering, cooking competitions, or a cycling challenge can create a sense of fun and cooperation.
Recognition and appreciation
A strong culture of recognition and reward is essential for employee satisfaction:
- Peer-nominated shout-outs (e.g., monthly “Retail Hero” awards)
- Personalised manager recognition: Verbal praise, personal notes, or public thank-yous
- Spotlights and employee-of-the-month boards: Use internal newsletters or cardboards to showcase standout performers.
- Retail awards: If the budget allows, nominating teams or individuals for Retail Awards supports morale and validates hard work.
- Recognising milestones: Celebrate work anniversaries or exceptional effort.
Employee rewards don’t have to be expensive to make an impact.
Mental health support
Retail is a high-pressure environment, especially during recessions. Mental health and well-being should remain priorities at all times.
Make mental health a priority through:
- Partnering with low-cost mental health apps or charities.
- Appointing a “mental health first aider”: A staff member trained to support colleagues
- Provide quiet rooms or decompress spaces: If possible, create a space for staff to reset. The role of HR retail teams in supporting staff well-being is essential.
Automate HR practices to focus on personalisation
The right HR tools can help streamline scheduling, onboarding, and regular employee engagement surveys.
This allows HR professionals to focus on more meaningful activities. In addition, HR teams can now leverage AI to enhance employee engagement by:
- Automating processes to free time to connect with people
- Leveraging real-time sentiment and feedback analytics to deliver personalised engagement programmes
Final Thoughts
You don’t need a big budget to show employees they matter. During a recession, the HR retail teams and leadership become even more important, as they need to demonstrate to employees that they value them. Whether it’s a simple gesture of appreciation or a thoughtful conversation, small acts can have a big impact.
Measuring and monitoring employee engagement alongside driving high performance are key aspects for any retail business trying to survive a recession. HR is the glue that holds a successful store together, keeping employees inspired, appreciated, and resilient even in the most challenging situations.
Discover how to keep your retail workforce motivated and engaged despite economic shifts and job uncertainty. The Retail HR Summit brings together top leaders and industry experts to equip you with the strategies you need. Register today.
