A mismatch between the hours employees want and the hours they work, coupled with weak retention, is creating an estimated £6.7bn cost exposure for the retail and hospitality sector, according to a new report from Retail Economics and Legion.
The report found 320,000 workers across retail and hospitality want more hours than they currently receive. It claimed that this underemployment was 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.
The report claimed that better matching of hours to the 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.
The research identified 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.
The report claimed that these groups had more to contribute if hours were matched effectively, and noted that they were costly to lose because of the experience, local knowledge and continuity they brought to stores and venues.
At the same time, the report stated that industry was carrying weak attachment among experienced workers who had 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 were at risk of leaving the sector across every broad region, despite average tenure of around eight years, claimed the report. “If those workers leave, employers lose local knowledge, team stability and the operating memory that helps stores and venues absorb pressure,” it said.
The research revealed that weak attachment among at-risk workers created a £6.7bn replacement-cost exposure, including:
* £5.1bn in training costs
* £1.6bn in lost efficiency while replacements build confidence and productivity
Replacement costs were highest per worker for more experienced cohorts, because these workers had greater accumulated operational value.
The report also 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, claimed the report, adding that workers were open to AI where it improved decision quality in practical areas such as shift swaps, rota timing and hour matching, but trust was 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
Marcus Beaver, Managing Director, EMEA at Legion, said: “There’s an obvious tension at the heart of this analysis. Today’s frontline workers expect flexibility: the ability to balance personal commitments whilst picking up the working hours they need. Retailers and hospitality operators are striving to optimise scheduling in order to unlock the full potential of their existing workforce. More intelligent demand forecasting and labour planning can further close the gap, meeting both business and workforce needs. This report proves the commercial case is substantial.”
Richard Lim, Chief Executive at Retail Economics, said: “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.
