Luxury Brands Face A Retail Labor Crisis As 51% Of Employees Plan To Leave Their Jobs

Everyone in luxury recognizes that the retail store must be more than a place to buy products; it must be an immersive brand experience. The front-line retail brand employees are the ones who can make or break the customer experience.

However, a global survey among 12,000 retail employees working for 12 luxury brands found widespread luxury retail employee dissatisfaction. A staggering 51% plan to leave their current employer in search of opportunities where they have greater agency, feel more highly valued and have improved work-life balance, according to consultancy CXG.

Ultimately, the luxury customer experience (CX) is inextricably tied to the employee experience (EX). A dissatisfied employee inevitably leads to a dissatisfied customer.

The CXG research suggests luxury brands are failing at the one and they’d better fix it before it starts showing up at the customer experience level, or perhaps it already has, since Bain reports the luxury goods market contracted 2% this year, the first time since 2008.

“Our research shows that the luxury retail sector is at a critical juncture,” said CXG founder and CEO Christophe Caïs in a statement. “Luxury brands must refine their Employer Value Proposition (EVP) strategies to attract and retain top talent capable of delivering exceptional luxury experiences.”

Employee Experience Findings

CXG has just published a 50-page report, “The Advisor Effect: Driving Retail Success by Re-Imagining the Role of the Client Advisor,” that delves into the results of its Voice of the Team survey and presents strategies luxury brands can use to enhance employee engagement and help to recruit and retain retail talent.

Expanded Job Responsibilities

Retail employees are challenged by demands to excel in retail sales skills that increasingly require digital fluency, as well as to demonstrate high levels of emotional intelligence to serve and anticipate customer needs.

Retail employees are expected to engage continuously in person on the selling floor, to service e-commerce customers remotely and via social media. Specifically, they must:

• Engage digitally to cultivate and service their clientele online, make personalized recommendations remotely, manage return and exchange processes, curate social media content and conduct data analysis to identify trends and personal preferences.
• Build personal relationships by getting to know their clients’ lifestyles and preferences so that they can successfully deliver personalized, concierge services and provide after-sales support.
• Be the chief brand advocate through storytelling and expert in the brand’s evolving product line and overall luxury industry trends.
• Meet sales and business development targets and implement client retention strategies.

“The responsibilities of luxury client advisors have expanded dramatically. Modern advisors are now expected to engage in digital interactions and relationship management while mastering storytelling and customer relationship management (CRM) skills,” the report explains.

“This evolution necessitates a blend of emotional intelligence, adaptability, and technical prowess to enhance customer experiences,” it continued.

While increasingly luxury brands are demanding greater digital proficiency and engagement, CXG’s research finds that soft/emotional skills elevate a retail employee from satisfactory to exceptional. These skills are hard to measure in recruiting and difficult to teach.

“Advisors who are passionate, proactive and charismatic team players, relationship builders and conflict-solvers who can easily adapt and show empathy are those most likely to succeed,” it states.

Dissatisfactions

Perhaps the dissatisfactions luxury retail employees feel is caused by their employers placing a greater emphasis on the quantifiable hard skills and undervaluing the immeasurable soft skills.

Some 30% of the luxury employees surveyed are not happy in their day-to-day job. Only 38% feel they work in a motivating environment and fewer than one-third (31%) believe they have growth potential with their brand.

Over 40% feel a lack of empowerment in their jobs and 33% feel undervalued at work. And 61% feel their work-life needs greater balance.

The Luxury Institute, which conducts research specific to the luxury industry, confirms the high levels of employee discontent and adds context around the challenges front-line luxury goods associates are experiencing after the pandemic.

“They are bearing the brunt of customer anger and mistrust generated by low-quality products, unjustified pricing and poor client experiences,” shared Luxury Institute founder and CEO Milton Pedraza.

“They lament the robotic, scripted training or the lack of any training. It’s a perfect storm of negativity and the associates are the punching bag,” he continued.

Searching For An Off-Ramp

Feeling these frictions, some 51% of all those surveyed are looking elsewhere for job opportunities and it is even higher in the USA and France, where 60% in both countries are planning to leave their jobs.

“These high turnover rates are extremely problematic for the industry given the essential role of client advisors as competitive assets in the customer journey,” the report states.

And it underscores the point with a statistic that 68% of a brand’s VICs – Very Important Clients – follow their client advisor if they move to a new brand, according to Bain.

Implications

The potential for such a staggering loss of retail talent will be an equally staggering loss for luxury brands since Bain reports some 53% of luxury goods revenues are currently made through direct-to-consumer retail channels, more than double since 2010.

The news couldn’t come at a worse time for luxury brands, reflects John B.R. Long, who’s been a trusted retail advisor and executive recruiter with Korn Ferry, Russell Reynolds Associates, Bain and Accenture.

“Luxury is experiencing a downturn and when business is tough the demands on employees goes up, particularly on the front lines,” he said.

Hybrid Pay Approach

“Since the industry is commission-based, that means employees’ commission checks are smaller and in the store, it also sets up an environment where one is competing with fellow associates,” Long continued.

CXG suggests a better way to reward retail employees is not strictly commission-based solely on sales volume, but one that takes a “hybrid approach” combining sales metrics, customer satisfaction scores, repeat purchase rates and other indicators of customer loyalty.

“By removing the pressure to push high-ticket items, sales staff are empowered to focus on long-term customer satisfaction, fostering loyalty and improving team performance,” CXG’s Caïs wrote.

More Than Money

Besides offering employees the prestige of working for renowned luxury brands, opportunities to engage with high-profile clients and access to exclusive products, employers must also provide a path for career advancement, including global opportunities, and cutting-edge training and development programs.

“Retention requires a sophisticated, multifaceted approach beyond traditional compensation packages and basic career progression,” the report states.

“The challenge for luxury brands is to give their advisors the skills so they can excel at every endeavor and, at the same time, create an environment so enriching and rewarding that they would never consider leaving.

“In this sense, the luxury retail sector, with its unique blend of artisanship, customer service, and brand heritage, presents both special challenges and distinctive opportunities for talent retention.”

Trust Needed

However, CXG research points to a “fundamental misalignment between the brands’ perception of the work environment they provide and the basic perception of client advisors about the work environment they operate in.”

And this is leading to roughly half of luxury brand retail associates looking for an off-ramp to their current jobs, whether moving to another luxury brand or another industry – superior clienteling and customer service experience is in great demand across all industries.

Like retail employees everywhere, luxury retail sales associates want expanded career growth opportunities and greater rewards, both monetary and non-monetary, like personal recognition, flexibility, work-life balance and more meaning and purpose in their careers.

“I’m not surprised by CXG’s findings because surveys across all industries and institutions show that trust is at an all-time low between employees and employers.

“The only way forward is for employers to take responsibility to regain high trust of their team members with concrete actions that build high trust, not simply nice words and sound bytes,” Pedraza concludes.

See also:

Forbes5 Reasons The Luxury Market Decline In 2024 Won’t Recover In 2025By Pamela N. Danziger