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How employee health and financial wellbeing challenges are affecting retail industry labour shortages

Understand the link between employee health challenges and retail labour shortages. Find effective strategies to improve wellbeing and enhance operational performance.

The UK retail sector faces labour shortages, increased operational costs, and hiring issues.^[1] Headlines often focus on the shrinking workforce. However, there's a steady strain which is slowly eroding the retail workforce.^[2] Possible causes include long-term sickness, the mental health crisis, and frequent employee absence. Frequent staff shortages disrupt operations and damage service standards. This mounts the pressure on an already stretched workforce.

The UK-wide number of predicted sick days in 2024 is expected to be 158 million. The average daily pay rate is £139. Sickness absence could cost retail businesses more than £22 billion.^[3]

The pressures of working in retail organisations

Today's retail environment is more demanding than ever. This is especially notable amid economic uncertainty and rising living costs. Staff manage heavier workloads with fewer resources. We looked at the latest Retail Sales Index.^[4] It showed that nearly half of retail workers worked with a physical or mental health condition at the end of 2024.

At the same time, job insecurity is rising. The growth of e-commerce and internet retailers has really affected employee trust. HR and Risk Professionals responded to our 2024 People Risk Survey. 36% reporting “concern with negative organisational culture or work environment, tense team dynamics, and mistrust associated with ineffective leadership.”^[5] This instability and uncertainty fuels burnout, anxiety, and higher sickness-related absence. Employees aged between 35 and 54 saw the sharpest rise in presenteeism. This shot up from 41% between July and September to 53% in the final three months of 2024. Employees who fear redundancy or reduced hours are more prone to 'quiet quitting'. This inevitably impacts employee mental wellbeing and productivity.^[6]

Labour shortages are intensifying

These pressures are compounding labour shortages across the sector. Many retailers are struggling to fill vacancies. Fewer candidates are willing to step into high-pressure, customer-facing roles. This often forces businesses to rely on temporary or agency workers. Temporary workers often lack the training to deliver a service to a high standard. They also might not cover your trading hours.

The result? Overworked permanent staff and consumer needs not being met. This causes lost revenue from the lack of retail sales taking place. So how can you respond to these challenges?

Health, well-being, and safety

Employee health and safety is a staple of any people risk agenda. Organisations must broaden the scope of how they define well-being at work. Suicide, conflict, and burnout all trending in the wrong direction. This means psychological well-being now demands equal recognition with physical safety. Employers have a unique opportunity to advance health support for their employees. This means filling the gaps within traditional systems of healthcare.

Only 36% of respondents to the 2024 People Risk Report stated that they had “strong systems, controls, and culture to ensure safety and prevent workplace injuries and illnesses.” In addition, only 38% believe to have “initiatives to create a psychologically-safe workplace and address work-related causes of mental distress.”^[7]

These gaps in culture, systems, and initiatives are certainly cause for concern. However, addressing these and making moves to improve can help improve employee wellbeing. It can also reduce the impact of employee ill health.

Understanding workforce health risks

Traditional strategies like ramping up recruitment or offering overtime are no longer enough. You should address your workforce's underlying health risks to create lasting change.

Don't react to employees taking more leave due to stress. Instead take a preventative approach. Invest in workforce health and wellbeing. This starts with using data to clearly understand employees' health challenges. Many of these challenges are hidden or unrealised.

Today's workforce faces increasing rates of long-term conditions. Conditions like obesity, diabetes, and mental health issues are seeing a sharp rise. This is causing higher healthcare costs and greater absenteeism. Ultimately, this increases people risk for employers.

Targeted, condition-specific strategies

Move away from one-size-fits-all benefits and instead focus on condition-specific solutions. Your approach to employee health and wellbeing can provide real value. Examples include:

Musculoskeletal care: Early intervention for injuries through physiotherapy, ergonomic training, and workstation assessments.
Cancer screenings: Early detection programmes to address the rise in early-onset cancers.
Mental health support: Proactive services like counselling, resilience training, and crisis support.
Chronic disease management: Tailored health screening, education, and coaching for chronic conditions.
Health literacy: Programmes that promote awareness around creating a healthy work life balance.

These solutions can improve employee health and reduce absenteeism. It can also boost productivity and strengthen employee engagement.

Data-led decision making: from reactive to preventative

The resilience of any organisation depends on its people's health and well-being. Yet only 33% have made progress in designing work with employee well-being in mind. A holistic approach to benefits strategy makes a meaningful difference. You can offer “benefits that really benefit” and deliver the best return on investment.^[8]

Our colleagues at Mercer can help you move toward proactive workforce health management. They take a combined approach to create a detailed map of wellbeing needs.

Identifying key risks early allows you to:

Predict impacts on business performance.
Tailor benefits and interventions.
Allocate resources effectively.
Demonstrate genuine care for employee wellbeing, strengthening the employer brand.

Data-led wellbeing strategies connect employee health and business risk. This turns health investment into a driver of resilience and performance.

The Impact of Consumer Behaviour on Retail Strategies

It's important to understand how consumer behaviour affects employee needs. Online shopping is on the rise and customer shopping habits are changing. Department stores and traditional retailers must adapt their strategies to stay ahead.

In today's market, consumer spending is increasingly influenced by convenience and accessibility. This inevitably puts more strain on employees to meet consumer demand. Retailers must consider how to support their employees in meeting consumer demand. For example, door to door sales reflect a demand for personalized shopping experiences. But this kind of sales approach carries added risks and stresses for your employees. You could give employees more one-to-one time with their manager each week. This could be enough to increase employee engagement and enthusiasm for meeting targets.

The path forward

Now is the time to rethink how you approach employee health and resilience. A healthy, engaged workforce is essential in every sector. But especially where profit margins are tight, staff turnover rates are high and service is everything.

Use data to uncover hidden health risks and deploy targeted strategies. You can build a healthier, more productive, and more resilient workforce.

Wellbeing at the workplace affects every employee. Employers have a responsibility to look after their employees' physical and mental health. By adopting wellbeing strategies and meeting legal requirements, you can enjoy many advantages. These can include:

Better employee retention
Increased engagement
Improved productivity
Enhanced business performance.

If you would like to discuss any of the topics raised in this article further, please contact us.

Sources:

^[1] ^[2] theretailbulletin.com/insights-from-the-2025-state-of-the-uk-hourly-workforce-report-what-workers-want-part-one-23-04-2025

^[3] ^[4] workplacewellbeing.pro/sickness-absence-set-to-costs-uk-businesses-22-billion-in-2024

^[5] retailtrust.org.uk/number-of-retail-staff-working-while-unwell-soars-to-18-month-high

^[6] ^[7] mercer.com/people-risk-management

^[8] mercer.com/global-talent-trends

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How employee health and financial wellbeing challenges are affecting retail industry labour shortages