Navigating Retail’s 2025 Storm: 10 Reasons Why Workforce Management Is Key to Resilience and Growth

Retailers across the globe are facing a perfect storm of rising labor costs in 2025, economic uncertainty, and relentless pressure on margins. Inflation also remains stubbornly high, driving up operating costs across the board—from energy to transportation to wholesale goods. As labor becomes more expensive and complex to manage, many retailers are turning to workforce management software to optimize scheduling, control costs, and maintain compliance. Meanwhile, wage pressures are mounting, with minimum wage increases accelerating in many regions and growing calls for wage equity putting pressure on compensation across roles and locations.

Rising payroll costs due to increased tax burdens are becoming a factor for many retailers. For example, in 2025, U.S. employers are facing higher FICA-related costs due to key changes. The Social Security wage base has increased to $168,600, subjecting more wages to the 6.2% tax. Rising wages—from minimum wage hikes and inflation—also push payroll tax obligations higher. Meanwhile, the 1.45% Medicare tax has no wage cap. Additionally, in the UK, sharp increases in National Insurance Contributions and the National Minimum Wage have significantly driven up payroll expenses, making labor one of the largest and fastest-growing operational costs.

At the same time, consumer demand has become less predictable, impacted by shifting economic confidence and changing buying habits—particularly with the continued growth of omnichannel shopping. Retailers must now operate in a highly dynamic environment that demands agility, efficiency, and precision.

Retailers are being forced to balance a delicate equation:

• Meet rising service expectations across in-store and online channels
• Control labor costs amid increasing wage and tax obligations
• Retain hourly workers in a competitive labor market
• Stay compliant with national and local labor laws
• Adapt to fluctuating demand without overstaffing or understaffing

In times of economic uncertainty, businesses often delay investing in new technology—but for retailers with large hourly workforces, failing to modernize workforce management can be costly. A recent US study found that nearly half of all hourly employees are “very likely” to leave their jobs within the next year, with that number rising to 76% among younger workers. Meanwhile, in Legion’s 2025 State of the UK Hourly Workforce, 65% of managers still spend over three hours per week on scheduling, and more than half spend the same amount of time on time and attendance tasks—taking them away from higher-value activities like team development and customer service.

Investing in modern, AI-powered workforce management alleviates these burdens and helps retailers retain talent, engage employees, and drive better business outcomes—especially when every hour and every dollar (or pound) counts.

Workforce Management: The Strategic Alternative to Cost Cutting

Many retailers feel their only option is to reduce headcount or scale back operations, but modern workforce management (WFM) offers a smarter, more sustainable solution. Rather than cutting costs through workforce reduction, businesses can:

• Eliminate unnecessary labor costs
• Create optimized schedules that balance budget and staffing needs
• Increase productivity with AI-driven workforce management

Legion WFM, an AI-native platform, empowers retailers to optimize every hour of labor through intelligent demand forecasting, dynamic labor plans, and automated scheduling. By aligning labor with real-time demand and employee productivity, Legion helps retailers improve outcomes without sacrificing service or employee satisfaction.

10 Ways Legion WFM Helps Retailers Navigate Economic Pressure

1. Precise Demand Forecasting
Legion AI generates highly accurate, location-specific forecasts that factor in foot traffic, transactions, promotions, holidays, events, and even weather—in 15- or 30-minute increments. The system continuously learns and adapts, instantly updating forecasts and labor guidance to enable agile responses to changing conditions—while still allowing human oversight.

2. Generate Optimised Labor Plans
Legion AI automatically creates the most efficient labor plan possible by factoring in labor standards, employee data, preferences, and compliance rules—alongside real-world constraints like budgets and staffing levels. Managers can assign the best-suited work roles to meet labor demand while ensuring compliance. The result? The right person, in the right place, at the right time—without overspending.

3. Create Optimal, Employee-Centric Schedules
Legion automatically incorporates labor standards, employee preferences, availability, productivity, and compliance rules to generate best-fit schedules. A weighted Schedule Score highlights how well a schedule meets key objectives and reflects the impact of edits. Legion learns from manager adjustments, applying only those that improve outcomes for continuous optimization—achieving 96% alignment between business needs and employee preferences.

4. Maximize Revenue
Legion schedules top performers during peak periods and across multiple locations using built-in productivity metrics. By calculating and incorporating employee productivity, Legion ensures high performers are placed where they can drive the most value—boosting revenue without increasing labor hours.

5. Provide On-Demand Wages
Legion InstantPay allows employees to access a portion of their earned wages before payday—improving financial well-being, reducing stress, and increasing shift uptake. For businesses, this leads to greater engagement, better attendance, and faster fill rates for open shifts—without raising labor costs.

6. Unburden Managers
Legion WFM eliminates time-consuming tasks like scheduling, labor forecasting, timecard management, and compliance enforcement—cutting scheduling time by more than 50%. AI-powered automation generates optimal schedules that align with business needs and employee preferences, reducing manual decision-making. GenAI Assistants simplify workflows by surfacing insights and enabling quick updates through natural language, allowing managers to focus more on people and performance.

7. Engage and Retain Employees
Employee-centric scheduling incorporates individual preferences, availability, and work history. Employees can manage their schedules via a mobile app, swap shifts, and access earned wages instantly—giving them the flexibility they want while improving job satisfaction and retention.

8. Minimize Compliance Risk
National and local labor laws are automatically applied during schedule creation. Managers receive alerts for potential violations, reducing compliance risk and avoiding costly penalties.

9. Create True Bottom-Up Budgets
Legion AI generates accurate, location-specific labor budgets based on demand forecasts, wage rates, and labor policies. This creates alignment between finance and operations, with real-time tools to monitor and adjust labor spend—eliminating the need for mid-period reforecasting.

10. Fast ROI and Easy Implementation
Legion delivers fast time to value with a streamlined, scalable implementation approach designed for minimal disruption. A Pioneer launch phase enables testing and refinement before full rollout, ensuring a smooth transition and faster adoption. The fixed-cost model provides full transparency with no hidden fees, while Legion’s single code base and Control Center make ongoing configuration and updates simple for non-technical teams.

The Bottom Line

In 2025, the path forward for retailers isn’t slashing headcount or raising prices—it’s improving labor productivity and operational agility. Retailers that rethink outdated workforce strategies and embrace intelligent workforce management will be the ones that adapt, lead, and thrive.

Legion WFM provides the tools needed to succeed in a high-cost, high-expectation environment. By replacing outdated systems and manual processes with intelligent automation, retailers can control labor costs, retain top talent, and deliver consistently excellent customer experiences—emerging stronger, more resilient, and more competitive.

Ready to see how Legion WFM can help you navigate the year ahead? Schedule a demo today and discover a smarter way to manage your workforce.