How employee turnover shapes the staffing-performance relationship in retail stores

Purpose Motivated by the instability of the retail operational context, this study examines the marginal returns of sales associate (SA) staffing on retail store performance. Furthermore, we investigate how employee turnover moderates this relationship, aiming to provide insights into the strategic value of staffing sufficiency in driving sales and profitability. Design/methodology/approach Monthly data from 6,298 stores of a leading FMCG brand in China are analyzed through instrumental variable and control function method. Findings Results confirm that SAs significantly enhance store performance, subject to diminishing marginal returns. Crucially, we find that employee turnover positively moderates this relationship by increasing the marginal returns to SA staffing under retail operating conditions. Practical implications Our study reveals that moderate turnover may, under standardized retail routines and sufficient staffing, be absorbed without fully offsetting the value of additional SAs. This is because the dynamic flow of personnel stimulates the existing workforce, driving higher operational efficiency. Consequently, retail managers are advised to prioritize staffing sufficiency over merely minimizing turnover cost. Originality/value This study offers a novel perspective on the turnover debate. It is the first to empirically show that the relationship between staffing and store performance is altered by the rate of employee turnover. Our findings demonstrate that the contribution of an SA can be higher in high-turnover environments. This insight provides an explanation for turnover's effects, suggesting its ultimate impact is inseparable from a store's staffing strategy, thereby moving beyond its conventional perception as a purely negative factor.