Canada’s retail sector is entering 2026 with a growing labour paradox. While the industry has shed thousands of positions, many retailers continue to struggle to fill frontline roles, creating operational pressure across stores.
A new sector report from Altrum on human resources in Canadian retail notes that the industry employs nearly three million people nationwide, yet lost more than 28,000 jobs in March 2025 alone. At the same time, many retailers are finding it difficult to recruit and retain in-store staff, particularly for entry-level and supervisory positions.
The disconnect is partly explained by structural changes in the sector. Corporate and head office roles have been reduced in some organizations, while stores continue to face staffing shortages driven by wages, working conditions, and limited career progression.
The findings illustrate what could be described as a Canadian retail labour paradox, where job losses and hiring challenges occur simultaneously.
Turnover remains the industry’s most pressing issue
High employee turnover continues to define the sector’s labour challenges. According to the report, 42 per cent of retail sales associates say they are considering leaving their jobs due to low wages, volatile schedules, and lack of growth opportunities.
Retail’s annual turnover rate is estimated at about 25.9 per cent, more than double the national average of 11.9 per cent. This constant churn increases recruitment and training costs, while also affecting customer experience on the sales floor.
When experienced staff leave, retailers must repeatedly train new employees, creating a cycle that limits productivity and consistency.
Hiring challenges persist despite job losses
Recruitment has become more difficult even as some positions disappear. The report notes that only 47.9 per cent of recruitment targets were met in 2024, reflecting the growing difficulty of attracting staff to retail roles.
Vacant positions are having measurable operational impacts. Staff shortages are leading to longer customer wait times, declining satisfaction, and increased pressure on managers, many of whom are covering additional shifts.
Retail roles often struggle to compete with other sectors on pay and working conditions. Average hourly wages in stores range from about $15 to $19.75, depending on the province. Many roles are part-time or seasonal, which further reduces their appeal to workers seeking stable income.
Skills gaps widen as retail becomes more digital
The shift toward omnichannel retailing and digital operations is also exposing a growing skills gap.
Nearly 68 per cent of companies report that employees lack some of the skills required for their roles. At the same time, 45 per cent of retail workers say they feel unprepared for digital transformation due to insufficient training.
Retail employees receive an average of just 12 hours of training per year, which is often insufficient as roles become more complex and technology-driven.
As a result, experienced staff carry heavier workloads, while companies struggle to promote internally or improve productivity.
Employee experience varies widely across locations
The report also highlights the importance of consistent employee experience across multi-store organizations.
Only 16 per cent of retail employees say they love what their company stands for, while 37 per cent say they do not feel heard by their employer. Additionally, 67 per cent report high levels of stress related to workload.
Frontline managers play a central role in shaping employee experience. However, practices often vary significantly from store to store, creating inconsistencies that can affect engagement and retention.
Diversity gaps affect both hiring and performance
The report identifies diversity, equity, and inclusion as another critical challenge.
About 39 per cent of candidates say they have turned down a job because they perceived the organization as non-inclusive. At the same time, research cited in the report suggests that stores perform better when employee diversity reflects customer demographics, with potential sales gains tied to better representation.
This creates both a social and financial incentive for retailers to build more inclusive workplaces.
Recognition emerging as a strategic retention tool
Across all six major HR challenges, the report positions employee recognition as a key strategic lever.
Companies with strong recognition practices see voluntary turnover rates that are 31 per cent lower than those without such programs. Recognition also contributes to higher engagement and job satisfaction, with 78 per cent of employees reporting improved satisfaction when their efforts are acknowledged.
The report argues that structured recognition programs, tied to company values and supported by frontline managers, can improve retention, engagement, and performance across multi-site retail organizations.
A sector at a turning point
Taken together, the findings suggest that Canadian retail is entering a period of structural adjustment. Job losses in corporate roles are occurring at the same time that stores struggle to attract and retain frontline workers.
This Canadian retail labour paradox reflects deeper changes in workforce expectations, compensation structures, and the nature of retail work itself.
For many retailers, the next phase of competition may depend less on store formats or product assortments, and more on their ability to recruit, train, and retain engaged employees in an increasingly complex labour market.
