In today’s complex environment, understanding the nuances driving associate behavior is not just an option — it’s an imperative. Chain drug stores must explore the strategies that simultaneously promote the factors driving retention while reducing the factors that influence decisions to leave.
It is no secret that the retail industry has long struggled with high turnover rates. Attracting and retaining a high-performing workforce is an especially complex challenge for chain drug stores, which often manage additional workforce considerations such as seasonality, regulatory requirements, and health and safety needs that differ from those of other retailers. In today’s complex environment, understanding the nuances driving associate behavior is not just an option — it’s an imperative. Chain drug stores must explore the strategies that simultaneously promote the factors driving retention while reducing the factors that influence decisions to leave.
In an ever-evolving labor market, this past year has seen significant shifts in attitudes toward work and employers. To monitor these trends, Lotis Blue Consulting has conducted longitudinal research that delves into the retail labor market and associates’ attitudes and motivations driving turnover behaviors. This article presents key findings and insights from our third and most recent round of research, the 2024 Future of Retail Workforce Study. Each round of research sets out to discover how the reasons for leaving a job change over time, how factors driving quitting and staying decisions differ by workforce and retail segment, and how the current macroeconomic environment influences retention.
To stay or to go? The employee value proposition is the answer.
To understand the factors driving “stay” and “quit” decisions, this research is anchored on the Retail Employee Value Proposition (EVP), which represents “the offering” to employees and the underlying psychological contract between employee and employer. The retail EVP model addresses seven critical dimensions of the employee experience with 30 underlying factors, ranging from compensation and benefits to leadership, culture and schedule flexibility. This robust data set includes objective feedback from over 3,000 retail associates from nearly 700 retailers to derive nuanced insights into the EVP factors that really matter.
Using a machine learning algorithm, built from these data, our model can accurately predict associated “stay” and “quit” decisions with 87% accuracy based on their attitudes about the underlying EVP factors; even with significant shifts in attitudes and labor dynamics over the last 12 months. Since Summer 2022, the number of associates leaving their jobs has decreased by 15%, from 26% of associates reportedly leaving a job in the last six months to only 11% in the most recent round of research. While this change suggests some stabilizing in the retail labor market, the number of associates considering leaving their jobs has increased by 7%, suggesting an underlying dissatisfaction that retailers will need to carefully manage.
There have been several key shifts in the factors influencing employment decisions that are contributing to these dynamics:
- Pay — Pay level satisfaction increased by 17 percentage points in its influence on quitting decisions, more than any other factor over the past 12 months. Pay level is not the only thing to consider, however, as pay fairness — associates’ perceptions of how equitably they are being paid both in comparison to co-workers and other jobs — is more likely to increase their chances of staying when viewed as favorable.
- Health and safety — With organized retail crime even gaining attention in the media, ensuring a safe workplace has now become a top priority for associates. Health and safety, which increased by 9%, has become one of the top three factors driving decisions to stay with their employer.
- Schedule flexibility — While schedule flexibility does not predict actual turnover or retention, when flexibility is challenged, associates are increasingly likely to consider quitting and become disengaged, a challenge that retailers have long struggled to mitigate.
While some EVP factors are consistently important, such as offering enjoyable work, the influence exerted by other factors differ greatly across retail segments. When we explored key differences in the decisions drivers for associates of specialty retailers, which include chain drug stores, a retailer’s ability to offer sufficient hours and adequate compensation, liking one’s manager, and feeling rewarded for their hard work matter significantly more to this retail population than the industry at large.
Unlocking the formula to the retail EVP
Above all else, retailers need to understand that it is not just the macroeconomic and cultural factors that affect their ability to attract and retain associates. There is an enduring psychological phenomenon that is often overlooked: What causes an employee to leave is different than what causes them to stay. Retail employers have a difficult push-and-pull, or balancing act, to conquer. They must provide an environment where there are more factors that make workers want to stay — offensive strategies to enhance retention — and fewer that make them want to quit — defensive strategies to reduce turnover.
Our research reveals that job factors create a magnetic force field that either uniquely attracts or repels associates. Factors that are on the “attracting” end of the magnet include an enjoyable, stable and safe job environment with strong co-worker relationships and sufficient hours scheduled. The other magnetic pole, the “repelling” end, reveals certain factors that are likely to push associates to quit their jobs, including limited opportunities for advancement, poor quality of management, less competitive educational benefits, low pay and poor sustainability practices.
Talent strategies must be comprehensive, but our study shows that some factors matter more in creating a compelling EVP than others. Surprisingly, 60% of the influence in stay or leave decisions are driven by just three of the seven dimensions of the EVP:
- The job and work environment, which includes factors like enjoyability of the job, health and safety, physical demands, and comfort of the environment.
- The company, which includes factors of reputation, diversity and sustainability practices.
- Leadership and culture, which include factors like relationships with co-workers, quality of management and whether associates feel a sense of belonging.
The reality is that all talent strategies in retail are going to have a short shelf life, and there is no one-size-fits-all approach to the retail EVP. Labor dynamics in retail have changed dramatically in the last 12 months with the tightening job market and stabilizing sales, and they will continue to evolve. Chain drug stores will need to keep pace, and consider the needs of their unique workforce.
By Aaron Sorensen, Alyssa Green, and Erica Grant
Originally published in Chain Drug Review, August 19, 2024
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