Retailers and hospitality companies face unprecedented challenges due to economic pressures, rising tax burdens, and an increase in employee turnover. According to 2025’s State of the UK hourly workforce*, 63% percent of hourly workers plan to leave their jobs within the next year. This number increases to 79% for workers aged between 18-24.
This staff turnover has a significant financial impact, with replacement costs ranging between PS1,500 to PS3,000 for each employee. High turnover is not only a financial loss but also disrupts the operations and negatively impacts customer experience (CX). It can also destabilise teams. This bleak future is not inevitable. Businesses can revolutionise frontline employee satisfaction by leveraging AI-powered automation.
The hourly workforce is becoming more unstable due to economic and regulatory changes. Recent fiscal measures have increased financial pressures for employers, such as the UK Chancellor Rachel Reeves’ reduction of the employer National Insurance (NI) threshold from PS9100 to PS5,000. The British Retail Consortium warns such policies could result in the elimination of up to 160,000 retail part-time jobs within the next three year period, limiting opportunities for young workers who make such a significant contribution to the retail industry.
The macroeconomic challenges are further depressing business confidence. The Federation of Small Businesses reports confidence levels at their lowest since the pandemic, with tax burdens and weak economic growth identified as major barriers. These pressures are passed down to hourly workers and store managers, leading to increased workloads and financial insecurity.
The UK’s inflation, which peaked at 10.1% in 2023, is continuing to put pressure on both consumers and businesses. Retailers are forced to raise prices or cut staff due to rising labor costs and shrinking margins. Cutting staff can have the opposite effect, resulting in a lower level of service and increased customer dissatisfaction. The traditional response of raising prices or cutting staff is not sustainable.
Poor management of frontline staff undermines operations
Most retailers still use outdated tools like spreadsheets to manage scheduling, attendance, and time tracking. The time managers spend on administrative tasks is often inordinate, leaving little room for team development and customer engagement. This disconnect between the business and its employees leads to dissatisfaction amongst staff, which can lead to turnover.
Hourly workers’ expectations are changing rapidly. Flexibility and financial wellbeing are key factors in job satisfaction. Gen Z and Millennials are particularly likely to quit jobs that do not allow them to control their schedules. Earned Wage access (EWA) is a benefit that younger workers are increasingly interested in, as it allows them to receive their earned income prior to payday. However, employers are not implementing these programmes despite their demand. This is a missed opportunity to increase both loyalty and retention.
AI-powered workforce automation
AI-driven workforce automaton is a lifeline in this difficult market for businesses that are trying to manage costs and overcome retention problems. Intelligent solutions can be transformative by addressing inefficiencies and enabling flexibility, while fostering financial wellbeing.
AI-enabled systems for scheduling employees reduce the need to manually coordinate employee rosters. These systems are able to predict employee needs, optimize labour allocation, and take into account employee preferences. They create equitable schedules which increase transparency and trust. Automation allows top performers to be scheduled at peak times, while balancing the workloads of employees.
Mobile self-service platforms enable employees to better manage their schedules by enabling real-time flexibility. These tools enable workers to easily swap shifts, request extra hours and update availability. This autonomy improves the work-life integration and reduces administrative burden on managers.
AI integration also streamlines administrative tasks such as payroll management, compliance monitoring and timekeeping. This allows managers to focus their attention on strategic priorities, like staff engagement, training and customer service.
Bridging communication gaps
While technology is an important piece of the puzzle in retaining top talent, it is also crucial to address communication gaps. Many workers say that better recognition of their hard work will enhance their job satisfaction. AI-driven platforms facilitate real-time performance feedback, offer personalised insights, and provide automated rewards. This creates a culture of trust and appreciation.
Benefits & ROI
AI-powered workforce automation can deliver significant benefits to businesses. It boosts efficiency, increases employee satisfaction, and reduces operational costs. Intelligent scheduling systems improve labour allocation through aligning employee preferences with business needs, ensuring fairness. Employees can manage their own schedules with real-time flexibility tools, which promote a better work-life balance. This increases retention and fosters a healthier workplace. Automating administrative tasks like payroll and compliance tracking allows managers to focus their attention on strategic priorities such as team engagement and customer services.
The software reduces the costs of high turnover through initiatives like EWA and flexibility. The software also reduces the inefficiencies that are caused by manual processes. This is done through reducing manager workloads, errors and enhancing operational precision.
Retail and the next generation of retail talent can’t wait to get started
Employers must adapt, or else they will face rising turnover rates, shrinking pools of talent and increasing operational costs. Businesses can achieve greater efficiency by embracing AI-powered automation of their workforce. They can also offer flexible, supportive and safe work environments, and gain a competitive advantage in a volatile labour market.
Businesses that prioritize intelligent scheduling, employee autonomy, and financial wellbeing will be the ones to lead in reshaping hourly employment.
This transformation is about more than just surviving the crisis. It’s also about breaking the cycles and creating a loyal, resilient and engaged workforce for the future.
*Legion Technologies research 2025 UK Hourly Workforce.
