Calculating the Cost of Retail Employee Turnover – Time to Stop Accepting the Status Quo

The retail industry has experienced with high employee turnover rates of 80%, 100%, or even 150% for decades and many retail managers have come to expect that they will be spending an inordinate amount of their time recruiting, selecting, and hiring talent.  Without a doubt this is a frustrating course of events, but it does seem to be one that retailers have resigned themselves to living with the problem.

Many retail store owners and managers have paid lip service to the problem by saying that they understand that by practicing better recruiting practices, investing in stronger retail training programs, and implementing enhanced compensation plans they will be able to reduce employee turnover.  But…when it comes to allocating the budget and spending the money they often hesitate.  This may feel like the right decision when you look at retail cash flow and the immediate needs of the business, but in reality it just creates more employee turnover and even in the short term can be costly. 

There are many on-line tools that will assist you with calculating the actual monetary costs of employee turnover, but a good average after calculating the costs associated with lost sales, overtime, unemployment insurance, recruiting, and training costs can often exceed $5-$10,000.   But let’s look this from a different perspective….

How much extra work does it take to hit these milestones?  How much extra in marketing will you need to spend to find those extra customers?  How will you find all of those extra customers?  And, in reality, if you can achieve these milestones, how many months will it take?

If you are a retailer that is experiencing a challenge with employee turnover looking at the cost of turnover in this new way may make you rethink your investments in retail training and development, compensation programs, and performance management practices.

Would you like to learn more about how you can improve your company’s recruiting, hiring, and training and development practices?  Enroll in one of our retail management training courses or Contact us for a free one hour consultation so we can help you overhaul your retail customer experience.

–          David Goodwin is the Principal of the Retail Advocacy Group.  As a 30 year veteran of the retail industry he has hired, trained, and performance managed thousands of retail sales representatives and retail managers.  You can learn more about instructor-led, e-learning, and other training solutions for retailers at