Retail Sector Wages Are Rising Due to Higher Employee Turnover and e-Commerce Demand

Published: October 2020

 

 

Talk to us   Subscribe

With employee turnover rising among retailers, businesses must closely benchmark pay as they look to replace workers and, in some cases, ramp up hiring plans.


The COVID-19 pandemic has had a significant impact on the retail workforce. The sector has rebounded sharply from retail unemployment peaking at 18.6% in April then falling to 8.8% in August[1], but the industry is still recovering from an unprecedented number of layoffs and furloughs shortly into the lockdown period this spring.

Many retail companies used furloughs and layoffs to address declining business early in the pandemic. The third edition of our COVID-19 Pulse Survey, conducted from April 28 to May 1, found 62% of retailers in North America had furloughed part of their workforce and 27% reported having laid off workers while 18% were actively considering doing so. The positive news is that in more recent months, many retailers are planning on bringing their workforce back and stronger hiring practices have resumed. At the time of the fifth edition of our COVID-19 Pulse Survey, conducted from August 17-25, 70% of retailers reported that they plan on bringing back at least three quarters of their furloughed workforce within the next six months.

Figure 1 shows how hiring practices have progressed throughout the pandemic for essentinal and mixed essentional retailers with a trend toward normal and accelerated hiring.


Because of the high proportion of hourly support workers, the retail sector has always had greater turnover compared to other industries. Typically, we see retail turnover rates at 1.4 times the rate of other industries, but we’ve seen this rate accelerate during the pandemic. Retail turnover is now 1.5 times the general industry rate, according to our 2020 Salary Increase & Turnover Study – Second Edition.


While turnover is always costly to an organization through time spent recruiting and training employees and loss in productivity, a bigger impact on costs could be whether turnover is driving up wages.

Another factor influencing retail sector wages is the continued shift toward e-commerce, which has accelerated since the pandemic began. As of September 30, 2019, 17% of all retail new job postings were related to fullment and delivery roles. By September 30, 2020, the proportion of fulfillment and delivery jobs rose to 24% of all job postings. The median wages for fulfillment and delivery jobs is now 21% higher than store jobs.

While wages for store employees lag those for fulfillment and delivery roles, we found that median wages for all job roles are higher in regions with a large number of distribution and fulfillment centers. In other words, the data shows that where there is a concentration of fulfillment and delivery jobs in a region (i.e., more e-commerce activity), there is not only greater pressure on wages for those roles, but it also causes retail store wages to rise as well.



As the e-commerce business continues to grow, and a greater number of distribution centers create more fulfillment and delivery jobs, we expect an increase in offered wages for all types of retail jobs, including store roles. Organizations must continuously keep abreast of local market wage movements as the job market for retail workers is quickly changing.

Additional Resources

To help our clients best understand the real-time market for wages and jobs in the retail sector, we have developed a tool that tracks wages and job postings across metropolitan and micropolitan statistical areas in the U.S. Dashboard users can look at the current number of job postings and median offered wages for a given geographic area, and how the number of job postings and wages have changed year-over-year.

Click here to access the complimentary retail dashboard.

In addition, each month we will publish an infographic that highlights the top five fastest growing markets for jobs and highest offered wages, based on the fifty largest metropolitan statistical areas.

For questions about trends and topics in the retail and e-commerce sector, please contact the author or write to rewards-solutions@aon.com. 

 
[1] Bureau of Labor Statistics

Related Articles

General Disclaimer
The information contained herein and the statements expressed are of a general nature and are not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information and use sources we consider reliable, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

Terms of Use
The contents herein may not be reproduced, reused, reprinted or redistributed without the expressed written consent of Aon, unless otherwise authorized by Aon. To use information contained herein, please write to our team.



Talk to an Expert

Let us know how we can help and a member of our team will be in touch shortly.

Aon group companies will use your personal information to contact you from time to time about other products, services and events that we feel may be of interest to you. All personal information is collected and used in accordance with our privacy statement.

If you do not wish to receive these communications, please check here: