In recent years, due to multiple factors such as operational adjustments, recruitment challenges, and corporate cost-cutting, staffing levels at some retail stores have noticeably decreased. Since the peak of the pandemic, store operations have become increasingly complex, with omnichannel services such as online fulfillment, buy-online-pick-up-in-store, and delivery becoming part of daily routines. Meanwhile, many regions face more severe hiring difficulties due to rising wages and falling unemployment rates. Some retailers, under pressure on profits and margins, have significantly cut expenses, including reducing staff, often replacing labor with technology.

Neil Saunders, Managing Director of GlobalData, noted in an email: "Many stores are operating with far fewer staff than in the past, with overall reductions in both headcount and hours. Macy's is a typical example, with current staffing per store down about 18% compared to 2019." This phenomenon is not isolated. According to data from the U.S. Bureau of Labor Statistics, overall retail employment has declined and is expected to fall further: as of March, the retail unemployment rate was 5.1%, compared to the overall rate of 3.8%. Over the next decade or so, the industry is projected to lose nearly 77,000 jobs, a decline of 2%, while the average growth across all industries is expected to be 3%.

However, experts warn that operating stores with leaner staff is often a mistake, even as retailers apply new technologies to tasks previously done by humans; most companies should strengthen, not reduce, their workforce. For example, a survey by Theatro, which provides communication technology for frontline employees, showed that over 40% of respondents believe the in-store shopping experience is "less enjoyable" than before the pandemic, with 60% attributing this to insufficient staffing.

Saunders said: "Cutting store labor is an easy lever to pull because it improves the profit and loss statement immediately, but the problem is that it triggers a host of hidden drawbacks, such as hurting employee morale, reducing customer satisfaction, and ultimately damaging revenue."

Technology and People Are Not Opposed

As global attention focuses on the social impact of artificial intelligence, retail executives have begun planning AI investments. Machine learning, AI technologies, and existing tools like RFID are helping retailers accelerate and optimize tasks such as inventory management, pricing, and theft prevention, which would be slower and less accurate if done solely by humans. Self-checkout is the most visible example of expanding technology use in stores—it has become a mainstream checkout method in grocery stores and appears in discount stores, big-box retailers, and apparel shops. But self-checkout also illustrates that technology cannot easily replace human labor, as companies like Five Below and Target have learned at a cost.

Consumers do appreciate self-service options, but expectations for customer service have risen since the pandemic. Research by Theatro and the Customer Management Practice shows that if retailers invest in self-service while ignoring its impact on customers, "they may see short-term gains, but will ultimately face significant problems," said Mario Matulich, President of the company, in a video conference. He added: "Our research indicates a serious disconnect between customer expectations and what brands actually deliver in self-service experiences."

Nikki Baird, Vice President of Strategy at Aptos Retail, noted in a video conference that deploying any technology can create complications, especially with customer-facing technologies. "If consumer-facing technology fails, who do customers turn to? They go to store employees, so the problem ultimately lands on staff. In that case, does technology really improve anyone's life?" Nevertheless, she also mentioned that many store employees welcome technology; Scandit research shows that 40% of retail workers feel employers ignore their technology needs, and about a quarter have considered leaving due to tedious tasks and frustrating technology. Jason Souloglou, CEO of SeeChange Technologies, emphasized in an email that the view that AI and other technologies mean stores can reduce staff is a misconception. Tractor Supply is an example of embracing AI to enhance customer service; its CEO, Hal Lawton, said at this year's National Retail Federation big show that AI is used to alert staff about long lines or help customers access information. Souloglou said: "AI frees employees to engage in higher-value tasks and use creativity, critical thinking, and problem-solving skills to explore new growth opportunities."

Understaffing Leads to Problems

According to the latest data from the U.S. Bureau of Labor Statistics, overall unit labor costs in retail rose in 2022, and annual productivity fell for the first time since 2008, though most sub-sectors saw productivity gains. GlobalData's Saunders pointed out that retail work has become more complex. "Picking online orders, handling curbside pickup, and managing pickup counters consume significant hours. In stores like Walgreens and Target, more products being locked up also adds to employee burdens, often creating labor strain."

Lee Peterson, Executive Vice President of Thought Leadership and Marketing at WD Partners, has long retail experience and recalled: "Since I entered the industry, no matter what anyone says, the first number cut is always the payroll. For example, 'Do we really need 100 people to restock? Cut it to 75 and see how it goes.' Cutting people is easy and takes effect immediately, but it's a huge mistake." He mentioned managing the company's best-performing store and receiving a call to cut payroll: "I said, 'Are you kidding me? I can't even keep up with the sales floor, can't keep the store clean, can't serve customers, and you want me to cut staff?'"

Experts point out that understaffed stores are more susceptible to theft and miss key opportunities for customer interaction. Peterson said: "Cost of sales rises slightly, but shrinkage may decrease to compensate. People steal, so you have to prevent it. An unmentioned advantage is that having people on the floor reduces theft. If no one is there, it's a free-for-all for thieves." Baird believes labor productivity is an important factor in cost control, but retailers should value in-store customer interactions. "If you consider interactions—whether at the employee or brand level—you can use that to understand cross-channel engagement. When customers talk to staff in the store, that's the highest level of interaction and should be treated as a top metric."

The Path to Hiring and Retention

A year ago, hiring platform Checkr found that 74% of retail employees were looking for new jobs or considering switching. Reasons vary. Late last year, David Johnston, Vice President of Asset Protection and Retail Operations at NRF, testified before the House Homeland Security Committee that organized retail crime and fear of injury or death are major factors in the industry's hiring difficulties. NRF's written testimony stated that retail has 543,000 job openings, citing a "clear labor shortage," and described retail jobs as "well-compensated" and "the foundation of successful careers." However, other research finds that pay is a primary concern for employees, with safety not being the top issue. In recent years, large retailers like Walmart and Target have raised starting wages to around $15 per hour, with some jurisdictions mandating even higher levels. Costco leads in this area. But even these wages remain below living wages in many regions. A U.S. Census Bureau report from December 2022 showed that real median earnings for retail salespeople were not significantly different from 2010. Cashiers earn the least, with median earnings of $27,174, nearly only half the median for full-time, year-round workers. Adia, a division of staffing firm Adecco, noted that the retail labor shortage partly stems from low pay.

WD Partners' Peterson said bluntly at the January NRF event: "To every retailer, on employees I have only two words: raise pay. Raise pay, raise pay! The more you pay, the better employees perform—that's the bottom line." He praised Costco for well-compensated, happy employees, and Ace Hardware stores for having ample, helpful staff. But experts note that some retailers, after raising wages, reduce hiring numbers or shorten shifts to control costs, which undermines job appeal and affects operations. Generous pay is important, but employees have other considerations. Scandit research shows that understaffing itself is a major reason for leaving; work-life balance, competitive pay, and easy-to-use technology are the top three drivers of retail employee loyalty. Customer Management Practice research, however, shows pay ranks fourth, behind good managers, flexibility, and career development opportunities. Peterson also believes that brand is crucial to many potential retail employees, with popular brands having an advantage in hiring.

Aptos' Baird said retailers recognize that stores should be adequately staffed. "But the question is more about 'where does the money come from?' Part of the reason we're in the current predicament with theft, self-checkout, and so on is that wages have risen while labor budgets haven't, and the natural result is that many retailers reduce shifts—someone has to give."