Retail and hospitality are facing a growing workforce resilience challenge, shows a recent report published today (June 30), highlighting a mismatch between the hours employees want and the hours they work. Coupled with weak retention, the gap is creating an estimated £6.7bn cost exposure for the sector.
According to a new report from Retail Economics and Legion, there are 320,000 workers across retail and hospitality who want more hours than they currently receive. This underemployment is equivalent to 8.5% of sector employment and around £3.6bn in unrealised annual earnings potential, pointing to a sizeable pool of underused labour already inside the workforce.
A share of that gap is operationally addressable.
Better matching of hours to 103,000 workers who want fewer hours than they currently work could potentially rebalance around £0.9bn of earnings from workers wanting fewer hours towards workers wanting more, improving labour utilisation and income security while making better use of existing capacity before employers rely on further external hiring (Figure 1).
Underemployment is concentrated in strategically important workforce groups
The research identifies six frontline workforce personas, with hidden labour capacity concentrated most heavily among longer-serving frontline workers with deep operational knowledge, as well as workers balancing frontline roles with greater household and financial pressure.
Both groups matter commercially. They have more to contribute if hours are matched effectively, and they are costly to lose because of the experience, local knowledge and continuity they bring to stores and venues.
Weak attachment among experienced workers carries a heavy cost
At the same time, the industry is carrying weak attachment among experienced workers who have three or more years’ experience in the industry, impacting a fifth (21%) of the workforce.
Among longer-serving frontline workers with deep operational knowledge, more than half are at risk of leaving the sector across every broad region, despite average tenure of around eight years. If those workers leave, employers lose local knowledge, team stability and the operating memory that helps stores and venues absorb pressure.
Weak attachment among at-risk workers creates a £6.7bn replacement-cost exposure, including:
- £5.1bn in training costs
- £1.6bn in lost efficiency while replacements build confidence and productivity
Where resilience is breaking down
The report’s Frontline Workforce Index benchmarks the quality of the frontline work experience across five pillars: Schedule Stability & Predictability, Flexibility & Autonomy, Fairness & Transparency, Support & Enablement, and Wellbeing & Sustainability (Figure 2). It shows that flexibility is valued, but weak scheduling and lack of support can put pressure on retention over time.
The Index gives the sector an overall score of 65/100, pointing to a solid foundation with clear room to strengthen workforce resilience. The weakest pillar is Schedule Stability & Predictability, which scores 59, followed by Support & Enablement at 62.This reflects a wider process vs practice gap in the frontline model. Workers are relatively more positive about fairness and flexibility in principle than about the lived reality of schedules, hours and support.
The research found that:
- Half (52%) of employees receive their final rota only two to three days before it starts
- Nine in 10 (89%) have had shifts changed or cancelled with less than 48 hours’ notice in the last three months
- Less than one in five (18%) describe their schedule as very stable
AI-enabled workforce tools help employers strengthen workforce resilience. Workers are open to AI where it improves decision quality in practical areas such as shift swaps, rota timing and hour matching, but trust is essential for adoption.
Among frontline workers, the top conditions needed to feel comfortable with AI helping decide who works which shift and when are:- 53% want to be able to easily update availability and preferences
- 50% want clear rules and limits built into the system
- 42% want simple explanations
- 36% want the option of appeal or human review
Richard Lim, Chief Executive at Retail Economics, says: “Retail and hospitality are carrying a significant amount of hidden labour friction, challenging whether frontline models are stable, responsive and efficient enough to make better use of the workforce already inside it.
“The combination of underused labour capacity and weak attachment among experienced workers carries a real commercial cost, where workforce resilience is now a source of commercial advantage. Employers that improve rota quality, match hours more effectively and strengthen day-to-day support will be better placed to reduce avoidable churn, improve labour utilisation and deliver more consistent customer execution.”
The full report sets out a strategic playbook for employers focused on five actions: reducing avoidable rota volatility, matching hours internally before recruiting externally, designing workforce propositions around frontline personas, strengthening local execution, and using AI-enabled tools to improve decision quality and trust.
Fig 1: £0.9bn potential earnings from rebalancing workers’ hours from those wanting fewer vs. more hours
Source: Retail Economics, Legion
Fig 2. The Frontline Workforce Index: pillar scores and underlying measures
Source: Retail Economics, Legion