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Employee turnover is one of the most important issues confronting retailers today. According to LinkedIn, the average retail turnover rate is one of the top turnover rates besides accommodation and entertainment.

High churn rates have an impact on retail companies at all levels, affecting productivity, engagement, and satisfaction. Brands are ill-equipped to handle expanding customer demands and respond to industry developments without a constantly engaged and agile workforce, pulling them behind the competition.

In this blog, we’ll look at the present condition of retail turnover, the reasons why so many people leave this industry, and the strategies to reduce turnover.

What is the retail turnover rate?

The retail turnover rate represents the percentage of employees who leave either to pursue other chances or in response to cutbacks or terminations at retail businesses. Turnover rates are often calculated annually or quarterly by companies. They can also quantify turnover for new workers to evaluate the effectiveness of their recruitment strategies.

How to calculate the turnover rate?

Before you begin calculating employee turnover rates, you must first determine the period for which you want to calculate – monthly, quarterly, or annually.

You will need to collect three pieces of information before calculating the retail turnover rate. They are:

  • Number of employees at the start of the period (N1).
  • Number of employees at the end of the period (N2).
  • Number of employees who left during the period (N3).

Then, you need to calculate the average number of employees (Avg) by using this formula:

Average number of employees = (N1+N2)/2

And to calculate the average retail turnover rate, you can use the below formula:

Annual turnover rate (%) = (N3/Avg)*100

For example, a retail business X has 150 employees at the beginning and 110 employees at the end of the year. And 13 people left during the period. Deduce, we have:

  • Average number of employees = (150+110)/2 = 130
  • Annual turnover rate (%) = (13/130)*100 = 10%

Average turnover rate in the retail industry

The average retail turnover rate can vary depending on the specific sector, job type, and geographic location. However, according to the report of BLS, the overall turnover rate for the retail industry was 60% (updated to February 2023). This high turnover rate results in high costs of recruiting, hiring, and training. Losing an employee is expected to cost 1.5-2 times the employee’s income (Linkedin).

On the other hand, each position in the retail industry has a distinct amount of isolation, which:

  • Hourly store staff have the greatest turnover rate at 65%.
  • The turnover rate for retail distribution positions is 23%.
  • Corporate positions have an 18% turnover rate.

Why is the turnover rate in retail industry high?

So we know that turnover is a problem in the retail industry, but why? A combination of several factors can contribute to high turnover rates. The reasons can range from immediate and visible consequences to long-term, subtle effects that accumulate over time.

Here are some key causes of turnover in the retail industry:

1. Lack of career opportunity

According to the McKinsey and Co. report, more than 40% of retail employees who leave do so for new career opportunities. On the other hand, more than a quarter of Gen Z and Millennial employees who want to change jobs cite a lack of opportunities and growth in their current position.

Although the retail industry may seem ideal for “casual” workers with limited career prospects, there are opportunities for advancement. Unfortunately, many store employees are unaware of these opportunities and lack access to resources to develop their skills.

People are less attached to your company and its principles if there is no clear path forward. If your employees cannot envision a long-term future with your organization, they will be less driven to perform well and are less likely to stay.

2. Poor working experience

Poor working experience can contribute to a high average retail turnover rate. When employees are unhappy with their job, they may be more likely to leave and seek employment elsewhere. Some common factors that can contribute to poor working experiences in retail include low wages, limited benefits, poor working conditions, and limited opportunities for career advancement.

For example, if employees feel that they are not being paid fairly for their work, or if they lack access to benefits like health insurance or paid time off, they may become dissatisfied with their job and look for employment elsewhere.

3. No flexibility

The pandemic has prompted many to reconsider their work approach, including those in retail. Despite having traditionally rigid shift schedules, the industry is recognizing the importance of flexible work arrangements to retain employees. Providing employee flexibility reduced attrition by 20% at Neiman Marcus which demonstrated that schedule flexibility is a key driver of success in the retail industry.

Furthermore, with many retail workers already sacrificing weekends and holidays, it's no surprise that they desire more flexibility. Retailers who ignore the need for flexible work options risk losing employees to competitors who offer a better fit for their schedules.

4. Inadequate ongoing instruction

Retail is a fast-paced industry, requiring ongoing training to keep workers up-to-date with new policies, product information, and safety procedures. Unfortunately, many businesses fail to provide ongoing training to their dispersed teams, resulting in ill-equipped store associates who struggle to provide quality customer service.

Lack of training also hinders employees from taking on additional work or covering shifts in other departments, which can exacerbate staff shortages and frustration. Without regular role-play training on safety and compliance, workers are left vulnerable and unsupported. Neglecting ongoing training risks alienating and losing key frontline workers.

The impact of high average retail turnover rate on business

High turnover rates can have a significant impact on the success and profitability of a retail business. However, the true cost of employee turnover is beyond the cost. It is also the employee experience and customer satisfaction.

1. Low employee satisfaction and engagement

High turnover rates in the retail industry can contribute to low employee satisfaction and engagement. When employees feel that turnover is high, or that their colleagues are leaving the company frequently, it can create a sense of instability and uncertainty in the workplace.

This can lead to a lack of motivation and engagement among employees, who may feel that their work is not valued or that there are limited opportunities for career growth.

Additionally, high turnover rates can make it difficult for employees to establish strong relationships with their colleagues and managers. This can lead to a lack of social support and a sense of isolation among employees, which can contribute to lower job satisfaction.

2. Poor customer service

When turnover is high, businesses may struggle to keep up with training, resulting in a lack of experienced staff to provide quality customer service. New employees may be less experienced with products and services or may not be as familiar with the company's policies or procedures, which can lead to mistakes, miscommunication, and confusion for customers.

Otherwise, high retail turnover rates can also cause a lack of customer service continuity, leading to customer frustration and difficulty in establishing personal connections.

3. Increase recruitment cost and time

When employees leave a business, the company must invest time and resources to find and hire new staff members. This can involve advertising job openings, reviewing resumes, conducting interviews, and performing background checks.

Businesses may need to spend additional money on advertising or recruitment agencies to find suitable candidates, and they may need to offer higher salaries or benefits to attract applicants.

How to reduce the average retail turnover rate?

We are now jumping into some best practices for reducing the average retail turnover rate. By implementing these strategies, retail businesses can help ensure a stable and productive workforce, and ultimately improve their bottom line.

1. Provide the chance for career growth

Providing opportunities for career growth and development is a key strategy for reducing the average retail turnover rate. One way to provide opportunities for career growth is offering training and development programs, such as on-the-job training, mentorship, or formal courses, which helps employees build skills and knowledge for new roles. This investment in employee development can lead to career growth opportunities within the company.

Another way is creating a clear hierarchy of roles and responsibilities with promotion opportunities at each level provides a path for advancement which can motivate employees to work towards their goals and see a future with the company.

2. Generate a positive working experience

A great work environment is a secret sauce to employee pleasure. Employees are more likely to be engaged and productive when they feel valued and appreciated. A healthy work atmosphere also fosters a sense of loyalty and commitment among employees.

Offering competitive compensation and benefits is a crucial approach to reducing employee turnover in retail. Businesses must be willing to offer fair wages in order to recruit and retain the best staff. Furthermore, firms should give benefits that fulfill their employees' needs.

One more strategy is to simplify employee’s manual tasks by using automation technology.

For example, businesses can implement point of sale systems that automate tasks like inventory management and order processing, reducing the amount of manual work required from employees.

3. Make the employee feel valued

When employees feel that their contributions are appreciated and that they are an integral part of the team, they are more likely to be engaged and motivated in their work, and less likely to seek employment elsewhere. Businesses can make employees feel valued by providing positive feedback and recognition for their work.

This can involve acknowledging employees' accomplishments publicly, such as in team meetings or company-wide communications, or providing individual feedback and recognition in one-on-one meetings.

In addition, businesses can provide opportunities for input and feedback to make employees feel valued. This can involve soliciting feedback through surveys or suggestion boxes or providing opportunities for open communication and dialogue with management.

4. Build a sense of business culture

Business culture plays an important role in the success of reducing the average retail turnover rate. Building a strong business culture involves establishing a clear mission and values to create a sense of shared purpose and identity.

Providing opportunities for team-building and socializing, such as outings or informal gatherings, can also foster a positive work environment and a sense of community among employees.

5. Encourage work-life balance

Encouraging work-life balance is a key strategy for reducing the average retail turnover rate. Businesses can offer flexible scheduling options, provide benefits that support employee well-being, and foster a positive work environment that recognizes the importance of work-life balance. By creating a supportive and engaging work environment, businesses can retain talented staff and reduce turnover rates.

Case study from companies about the success of reducing turnover rate

1. Costco

The average turnover rate of Costco is relatively low compared to other companies in the retail industry. According to data from Barrons, Costco's employee annual turnover rate was around 13%, which is significantly lower than the industry average of 60–80%. This low turnover rate is likely due to Costco's reputation for offering competitive compensation and benefits packages, including above-average wages, health insurance, and retirement plans, as well as opportunities for career growth and development.

Additionally, Costco has a reputation for treating its employees well, which helps create a positive and supportive work environment that fosters employee loyalty and retention.

2. Mark and Spencer

The average turnover rate of Marks and Spencer (M&S) is not publicly available. However, according to Glassdoor, M&S has an overall rating of 3.3 out of 5, with a 68% approval rating for the CEO, indicating moderate employee satisfaction and retention.

M&S has implemented initiatives to improve retention and satisfaction, such as "Family Leave" policies and increased focus on employee development. M&S also invests in creating an inclusive work environment through programs like "Inclusion and Diversity". Though specific turnover rate information is not available, these efforts may help improve employee retention at M&S.

3. Trader Joe’s

The company has a reputation for having a low turnover rate in the retail industry. Zippia reported that Trader Joe's had a turnover rate of around 11%, which is significantly lower than the industry average of 60–80%.

This low turnover rate is attributed to Trader Joe's commitment to employee development, recognition, and well-being, as well as its fun and engaging work environment. Trader Joe's offers competitive compensation and benefits packages, opportunities for personal and professional growth, and regular team-building activities to foster a sense of community among employees.


The average retail turnover rate is high, around 60%. This can be costly for businesses, but there are several proven tips to reduce it. These include offering competitive compensation and benefits, providing opportunities for employee development and growth, creating a positive work environment, encouraging work-life balance, and building a strong business culture.

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