Retail’s staffing crisis: why jobs are disappearing and what’s next

Across the UK, retail employment remains 5% below pre-pandemic levels, according to Deputy’s Big Shift 2025 report. The decline is steady, pushed along by automation, e-commerce, and shifting worker expectations. In contrast, London’s hospitality sector is booming – fuelled by the city’s night-time economy, now worth a quarter of all consumer spending in the capital. 

Fast food chains, cafés and restaurants are hiring. Retailers are not. Job growth in hospitality is up 2% year-on-year, with London outpacing even New York and Los Angeles. Shift workers are chasing stability, better wages, and predictable hours. Retail, once a dependable landing ground for young workers and part-timers, is losing ground fast.

At the same time, one in four retail workers are thinking of leaving their jobs altogether, so the questions facing the sector are no longer about returning to pre-pandemic norms. They are about survival – and whether retail can build a future that matches the pace of change in how, when, and where people now choose to work.

But there’s also a quiet paradox. Square UK’s 2025 Future of Retail report found that 52% of retail leaders say hiring has become easier.

The problem at hand is that retail jobs haven’t bounced back. In fact, potential retail workers have found roles in other industries. According to Deputy’s Big Shift 2025 report, UK retail employment is still 5% below pre-pandemic levels. The usual suspects (automation, e-commerce, and rising wage expectations) are pushing workers out of shop floors and into other industries, like hospitality. Once that switch has been made, many aren’t coming back.

“The fortunes of the retail sector are rapidly deteriorating,” warns Deputy’s report. “The future depends on balancing automation with the need for human-centric service and operational roles.”

But there’s also a quiet paradox. Square UK’s 2025 Future of Retail report found that 52% of retail leaders say hiring has become easier. Yet that doesn’t mean jobs are being filled sustainably – or that workers are sticking around.

Samina Hussain-Letch, executive director at Square UK, puts it plainly: “Retail can often be viewed as a temporary or seasonal job. So it’s important that retail leaders implement better career path frameworks and staff development.” Without that investment, talent won’t return. It’ll keep flowing toward sectors that offer better hours, clearer progression, and less uncertainty.

Some 93% of retail leaders now use automation in at least one part of their business, according to Square’s report.

Retail is learning to staff differently – not necessarily less, but smarter, through structured micro-shifts. Unlike unpredictable gig work, these shifts offer flexibility without sacrificing routine. For workers, that means greater stability. For businesses, it means more control during peak hours and staff gaps.

According to Deputy’s report, 41% of shift workers believe micro-shifts will improve job stability. It’s a middle ground: not the rigidity of 9-to-5, and not the chaos of last-minute scheduling.

“Structured micro-shifts are emerging as a key strategy,” Sejal Daswani, the chief people officer at Deputy, says. “They offer retail teams the flexibility they want while giving businesses the consistency they need.”

Technology is making scheduling micro-shifts possible. Some 93% of retail leaders now use automation in at least one part of their business, according to Square’s report. And where they see the most value isn’t in replacing staff – it’s in reducing the burden.

Hussain-Letch at Square puts it this way: “Technology has emerged as the backbone of retail resilience… not to replace the human element, but to enhance efficiency by automating routine admin tasks such as staff scheduling, rota management, and team communications.”

The benefit goes beyond shifts; predictive analytics help managers anticipate busy periods and schedule accordingly, while smart shift-swaps reduce friction. What’s more, unified tech platforms cut down the number of apps and logins staff need to juggle.

While headlines often focus on the amount of jobs lost, 93% of UK retailers now use automation to actually reduce admin, not headcount.

As Flip’s chief product technology officer, Luke Talbot, points out: “Tech can’t replace people, but it can take some of the pressure off… From a tech perspective, the real productivity breakthrough is when these tools are brought together as part of a unified user experience.” Retailers need to find, retain, engage, and effectively deploy their staff, so micro-shifts and smarter tools are helping retailers achieve these goals.

While headlines often focus on the amount of jobs lost, 93% of UK retailers now use automation to actually reduce admin, not headcount. The aim isn’t fewer people, according to Square UK’s report. The reasons given are because automated systems require less paperwork, fewer headaches, and more time for the work only humans can do.

That efficiency is showing up in tools like automated onboarding, shift planning, and AI-powered internal search. These systems save time and also bridge gaps between new and veteran staff, creating smoother handovers and smarter scheduling.

Knowing this, Talbot warns that the bigger risk isn’t automation – it’s fragmentation. “Tech can’t replace people, but it can take some of the pressure off,” he says. “From a tech perspective, the real productivity breakthrough is when these tools are brought together as part of a unified user experience.”

It’s about a streamlined and cohesive experience, not innovation. This means fewer logins, less friction, and a work environment that provides staff with quick access to what they need. Retailers like M&S are leaning into this shift with care. As Franklin Parcel’s Will Kogan points out: “M&S has introduced automated shelving robots to support staff rather than replace them, showing that innovation should enhance – rather than eliminate – human roles.”

According to Square UK’s report, not one of the 12 retention initiatives surveyed is used by more than 38% of retail leaders.

The rules are changing, and has been clearly demonstrated, doing nothing isn’t an option. Retailers are already feeling the squeeze from wage hikes and tax pressures. Employer National Insurance contributions are rising, zero-hour contracts are under review, and the National Living Wage has gone up. In simpler terms, each shift costs more in every sense.

“Retailers are rethinking work structures and benefits to make roles in the sector more sustainable and attractive,” says Hussain-Letch. “Technology is playing a key role… but thoughtful policy changes are just as critical.” Businesses that stay ahead of the curve are already adjusting. They’re embracing flexible shifts, better team communication tools, and career development plans. But that’s still the exception.

According to Square UK’s report, not one of the 12 retention initiatives surveyed is used by more than 38% of retail leaders. And only 27% have established career paths for staff, which is a glaring gap considering that younger workers are seeking stability. Many are also chasing higher wages and more predictable schedules in hospitality and healthcare.

“Ignoring employment law changes is a risk retailers can’t afford,” says Kogan. “Staying ahead of legal shifts and proactively adapting policies will prevent compliance issues while boosting employee retention.”

Failing to adapt means losing talent, incurring penalties, and watching competitors pull ahead. The cost of doing nothing? It’s already showing up on the balance sheet – and the rota.

Retailers that adopt hospitality’s staffing model — aspects such as flexibility, cross-skilling, concierge-style service — stand a better chance of staying competitive.

If you want to see where retail could go, look at where hospitality already is. London’s night-time economy is booming. Hospitality jobs are up 2% year-on-year, according to Deputy, with the capital outperforming New York and LA. It’s not just about pubs and clubs – it’s cafes, late-night dining, and fast food. Roughly 25% of all consumer spending in London now happens at night.

Retail hasn’t followed – yet. But there’s plenty to learn. Retailers that adopt hospitality’s staffing model — aspects such as flexibility, cross-skilling, concierge-style service — stand a better chance of staying competitive.

As Kogan notes: “Borrowing elements from hospitality, such as concierge-style service, could help retailers stay competitive. Micro-shifts can also help manage workforce shortages… improving flexibility and morale.”

And the shift isn’t just cultural, it’s structural. The rise of micro-shifts, predictive staffing, and better team communication has helped hospitality flex with demand. Retail can do the same. Even the tech overlaps. “Digital solutions are supporting operations,” Hussain-Letch adds. “Flexible shift arrangements and improved communication tools ensure teams are well-informed and connected to the wider business.”

In other words: night-time lessons aren’t about staying open later. They’re about building staffing strategies that fit the real rhythms of customer behaviour – not the old retail calendar.

The retailers who survive won’t be the loudest, they’ll be the smartest. Those that are flexible, tech-savvy, future-facing. Just like their customers.