Fashion retailers need to give staff more reasons to commit to a long-term working relationship
Staff churn in retail is thought to be about 15% annually on average, down from 30% in 2006, according to the Chartered Institute of Personnel and Development (CIPD). Anecdotally, fashion retailers in certain locations can experience turnover levels as high as 70% in stores and 30% in head office, which can have a big impact on the bottom line.
The CIPD estimates that costs for recruitment in the retail sector are £6,000 for an average staff member, and £9,000 to recruit a manager. With this in mind, it’s crucial that fashion retailers get a grip on why they struggle to hold on to staff, and examine what lessons can be learned from other sectors.
“Everyone’s working hard to improve retention rates. We know we lose too many people and there’s a war for talent going on, so it’s in our interest to ensure people are fulfilled and happy to stay with us,” says one fashion HR manager.
Stephanie Sewell, senior recruitment consultant at Fashion & Retail Personnel, thinks churn rates are too high due to limited career progression. “Turnover among store managers tends to be higher in London and the Southeast for this reason. If a retailer is seen as having a long-term future, turnover can be eased.”
Sales staff in the luxury sector are the hardest to keep, says Sewell. “But certain brands buck the trend. Louis Vuitton retains its sales staff and I believe this is due to the training it invests in,” she adds.
“At entry-level positions in head office, there is a higher turnover within fashion,” confirms Nicola Wensley, manager for buying and merchandising at recruiter Michael Page. “Fashion buying is deemed a glamorous, attractive career choice. However, starting at the bottom requires huge amounts of hard work and can be quite often removed from the product. Many actually underestimate the full scope of the roles and the tenacity and effort required to be successful.”
Merchandisers and buyers are also more likely to move on in fashion than in food because the expertise of these roles in fashion tends to be specific, not only to a product area but also within a sub-sector of a product – for example women’s knitwear, men’s accessories or kids’ footwear.
“In order for the ambitious to accelerate up the career ladder within a company, they may have to diversify away from their product expertise, which many buyers and even merchandisers are not comfortable doing. So in order to progress, individuals are often required to move companies to manage larger budgets and teams,” Wensley explains.
Seasonal sales figures are a clear indicator of who the best buyers and merchandisers are, and these individuals are frequently tempted away with attractive offers from other companies.
At the store level, there is a case for adopting similar retention strategies as are used in other sub-sectors of retail such as food. Grocers such as Tesco provide apprenticeship programmes to staff. Department store chain Debenhams has also invested in NVQ courses for store staff as it has found that this allows them to progress into more senior roles and has reduced the number of store supervisory roles for which Debenhams must recruit externally.
Now is a great time to work on retention strategies as economic conditions mean pay rises are likely to be low and staff more worried about job security. Recent anecdotal feedback to sector skills council Skillsmart Retail from large retailers suggests churn could now be as low as 10% while employees ‘sit out’ the economic downturn.
“Because of the downturn in recent years, the retail staff turnover rate is actually much lower now than it was a few years ago,” says Skillsmart Retail chief executive Anne Seaman. “With fewer jobs around generally today, many in the retail sector are staying in their jobs if they can. There are also signs of a trend for more young people to look at retail as a career option now that gaining a degree will be so costly, and graduate jobs are not always guaranteed at the end of a course.”
Store staff often work for retailers as a stop-gap, she adds, but the state of the economy means they are increasingly likely to stay put. “Wise retailers will be carefully tapping into this captive audience and encouraging people to think of retail as a long-term option.”
So what will entice people to stay longer as sales assistants, merchandisers and buyers?
Wensley at Michael Page sees clients pushing to reduce staff turnover by offering performance-related bonuses, and strong benefit packages that attract and retain the best employees. “Holiday entitlement, flexi-time and good benefits options persuade people to stay,” she says. “Also, if a retailer is perceived as having a long-term, secure future and a culture that values its people, then high staff turnover can be arrested.”
Fashion retailers are increasingly putting structured succession and progression programmes in place at every level of the business. Staff will then feel buoyed by a clearly defined career path and companies renowned for organic growth find that their employees are much happier. “Advice we provide to our clients around salary bandings and expected deliverables ensures fewer gaps in their organisational structure, and allows achievable career progress for their most capable and ambitious employees,” says Wensley.
Warren Bennett, co-founder of etailer A Suit That Fits, argues that career progression is perhaps even more important in a smaller retailer than a larger one: “For staff retention, progression is important. We’ve focused on it, and also have six-monthly appraisals with goals. It’s important for smaller retailers to over-index on staff development.”
In stores, apprenticeship schemes can give staff real purpose and a reason to dedicate their time and energy to the company, and statistics show that staff turnover for apprentices can be significantly lower than averages for the same age group. The Government is backing apprenticeships, and financial and administrative help is available. A good starting point for retailers is the network of Skillsmart Retail’s skills shops around the country, which are able to help companies of all sizes get started with an apprenticeship scheme.
Another retention strategy is to offer ‘fast-track’ career programmes, which set people on a clear path of progression. But even simply communicating about the potential opportunities within a company can give individuals a reason to feel motivated in what they do, and want to stay for the long term.
Financial incentives clearly help to reduce staff turnover too, although bonus schemes obviously depend on a company’s performance. John Lewis Partnership awarded an average of £2,500 in cash to its 76,500 partners in March. If you don’t make regular bonus payments, you must assess whether the package you offer is really competitive.
In July, Sports Direct announced what is thought to be the biggest-ever incentive scheme payout to staff – a collective bonus amounting to £88m shared between about 2,000 staff members across stores and head office. It’s estimated that each employee will receive £43,750 in payments spread over the next two years. The scheme was introduced in 2009, and was dependent on the company reaching high earnings targets. People who had worked for the sportswear retailer for two years were eligible, and Sports Direct says it is extending the scheme for another four years.
Bonus pays off
Sports Direct chief executive Dave Forsey says the aim of the bonus scheme was to ensure the whole group was aligned, and trying to meet the ambitious targets for the continued growth of the business. He adds there is no doubt the scheme has improved staff retention, and Sports Direct is committed to continuing with the next phase.
Looking ahead, the Institute for Employment Research predicts 214,000 retail jobs will be created between now and 2017, and 1.2 million jobs will need filling as people leave the sector. High street names have disappeared since the research was published, with thousands of jobs lost, but even so, many openings will need to be filled in the coming years. Keeping enthusiastic sales assistants, buyers and merchandisers, and giving them the skills and incentives to do a great job, will be crucial.
“And the longer employees stay in their roles, the more likely it will be that employers can afford to invest in retail-specific training,” concludes Seaman. “Better retention can have an impact on the whole industry, so it’s vital that we all pursue it.”
How can we entice people to stay in fashion retail?
* Performance-related bonuses
* Strong benefit packages
* Good holiday entitlement
* Apprenticeship schemes
* Staff training
Apprenticeships Earn while you learn
HR staff at fashion retailers tend to look enviously at the staff retention rates of their peers in the grocery retail sector.
The grocery sector invests heavily in its people to encourage them to stay, and in recent years apprenticeships have been used to help staff gain nationally recognised qualifications. Tesco launched its apprenticeship scheme in 2004 with a group of 30 learners. Since then 6,000 employees have been through the scheme and a further 3,000 people will be offered apprenticeships in 2011/12. Retention rates have improved in line with this investment.
Tesco personnel director UK and Republic of Ireland Judith Nelson says: “For many people, leaving school or college means an end to their education. Our apprenticeship scheme offers our employees the opportunity to continue learning while earning a living.”
However, apprenticeships are just as applicable in a small fashion business. Etailer A Suit That Fits has invested to make sure all of its customer service staff have NVQs.
It also takes on apprentices for a year in different areas of the business, such as customer services, logistics and client management.