The Future of HR in Retail: What's Changing and How to Prepare
Retail HR professionals are discovering new solutions to age-old industry challenges and emerging issues, including finding talent, improving retention, staying in compliance across locations and effective technology strategies. AI-powered tools are offering new avenues for growth.
Today's retail HR professionals are navigating a volatile time in the industry. Modern challenges require them to adopt AI-powered recruiting tools, track evolving compliance regulations and design a workplace experience that meets shifting workforce expectations. Deloitte research finds that two-thirds of retail executives plan to "allocate moderate-to-major investments toward workforce hiring, retention, and future-readiness in 2025."
With the right talent and technology, U.S. retailers can ride out seasonal fluctuations, manage teams across locations and adapt to e-commerce-driven staffing needs while complying with increasingly stringent employment regulations. Here's a closer look at how retail HR professionals are using strategy and technology to stay ahead.
Managing talent: AI-powered solutions challenge long-term industry problems
The retail industry is facing ongoing labor and talent challenges, with McKinsey reporting turnover as high as 60 percent in recent years. In response, HR professionals are using new generative AI solutions to improve hiring quality, boost retention and expand the skillsets of existing talent.
AI-powered recruiting platforms can help generate job descriptions, vet applications and manage applicant volume more effectively. For example, a talent platform can help predict best-fit candidates and accelerate the hiring process. However, use caution when relying on these tools. As noted in the ADP 2025 HR Trends guide, it's critical to retain human oversight. To manage bias and properly document hiring decisions, stay in compliance with hiring and AI laws while making the most of these solutions.
Retention of existing talent is also in the spotlight. Retail employees juggle demanding schedules, challenging customers and seasonal spikes, making burnout a recurrent issue. In response, many retailers are exploring well-being technologies that offer feedback, boost engagement and support healthier cultures. From task customization to best fit an employee skillset, to smart headsets that provide information quickly during difficult customer interactions, the goal is to reduce stress and decrease turnover.
New trends in the landscape also impact retail hiring preferences and management styles. Today's geographically-disbursed workforces require new approaches to managing remote hybrid, warehouse and customer services teams while delivering consistent experiences to frontline and other staff across different store locations. From hiring and payroll compliance to employee experience, retail HR professionals are innovating on location-based HR strategies and technology. For example, some are shifting eligibility requirements, moving from experience-based hiring to a more skill-centric approach, valuing micro-credentials in customer service or digital proficiency, indicators of success that translate across industries, over accumulated years of retail service.
Tools can bring data and turn it into insights that are helpful for the person in that moment in the payroll process. And it can allow things like bringing topics like compliance or data errors all together in one place while they're running the payroll.
Tonya James, VP of product management, ADP
Compliance is evolving
Compliance remains a top concern as well. While AI-tools can proactively track compliance changes at the local, state, federal and global levels (and alert HR staff of violations), their inclusion in the HR process requires careful management. Retailers using these tools, especially in high-volume hiring situations, should understand their programming, training and data application. It's also important to train staff and maintain a process manual outlining steps, decision-making criteria and AI-use vs. human oversight to prevent compliance violations.
And don't forget compliance within the areas of pay equity and transparency. Critics of the retail industry have pointed out the pay gap between hourly-wage employees and salaried corporate positions. Now, broader trends are encouraging retailers to post compensation in job ads, conduct proactive pay equity audits and communicate with employees about pay and benefits in specific ways. Retailers are also facing scrutiny in areas like scheduling, time-tracking, breaks and classification.
The right AI-powered solutions help retail HR professionals identify and manage such issues before they become problems. Consider the solutions at play in just one category: payroll. "With AI and Gen AI, it can be much more proactive, much more personalized," says Tonya James, ADP's vice president of product management. "Tools can bring data and turn it into insights that are helpful for the person in that moment in the payroll process. And it can allow things like bringing topics like compliance or data errors all together in one place while they're running the payroll."
With AI-powered tools and notifications, instead of discovering a data error or compliance change after the fact, payroll practitioners learn about threats mid-process. Issues can be resolved that moment, on a single screen. Across use cases, the technology has the potential to solve a variety of retail compliance challenges.
Integrating technology for better experiences and visibility
AI technologies can provide retailers with strategies and opportunities for improving their talent base. Deloitte reports that seven in 10 retail executives plan to invest in AI to build better client and employee experiences. Instead of treating technology as a separate issue, retailers are incorporating AI-powered HR solutions directly into their talent and compliance strategies. Gen AI solutions can support urgent retail issues like recruitment, workforce scheduling and targeted employee training, while making it easier to comply with a host of different regulations. The right technologies are also helping to improve the employee experience and "upskill" valued team members as needs evolve.
What's next for retail HR professionals
As the retail world continues to seek out staffing and technology solutions to stay competitive in an increasingly complex landscape, HR professionals play a vital role. From improving hiring and retention to developing cost-effective upskilling programs and managing compliance, there's a lot to do. However, new AI-powered solutions can help. Look for innovative new approaches to age-old industry problems and create a more flexible, resilient workforce for whatever comes next.
