Benefits Have Become a Leadership Priority for Retailers

Benefits Have Become a Leadership Priority for Retailers
July 21, 2026 17 mins

Benefits Have Become a Leadership Priority for Retailers

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Leading retailers are using data, analytics and governance to align workforce investments with business priorities and strengthen.

Key Takeaways
  1. Employee benefits have a significant impact on performance, employee experience and financial outcomes across the organization.
  2. Leading organizations are using data and analytics to enable more confident decisions and greater visibility into costs and outcomes.
  3. Organizations can create greater value by strengthening governance and taking a more sophisticated approach to financing.

Intro:
Hello and welcome to this Industry Insight episode of On Aon, where we explore why employee benefits are becoming a top priority for retailers — not just an HR issue, but a crucial factor that can influence cost, performance and customer experience.
Here are Aon’s Tom Bowman and Matt Duffy to discuss how better data and smarter spending can help retailers manage their finances, support their people and build greater resilience.

Tom Bowman:
Hello, and welcome to the latest industry insight episode of On Aon. I'm Tom Bowman, Aon's Global Retail and Consumer Goods industry leader. And today we're looking at one crucial area of decision making for the retail sector and its impact on the overall success of retailers at the moment — which is employee benefits.

So, first of all, if I step back a little bit and look across our retail clients globally, it's a sector that is experiencing real pressure at the moment. So that comes in form of thin margins, cost pressures, technology transformation, and of course workforce complexity. And it's happening all at once.

And one of the consistent themes that we're seeing is that organizations are having to think much more strategically about how they support their people through these kind of challenges.

And so one area that is increasingly important, but is actually often under discussed is employee benefits.

Not in the sense of plan design detail, but more as a lever for ongoing cost, workforce strategy, and overall business performance.
And I am thrilled that we're joined today by an amazing employee benefits expert to guide us through this topic. So I'd like to introduce Matt Duffy, Chief Commercial Officer for Global Benefits here at Aon. Really pleased to have you with us today, Matt.

Matt Duffy:
Thank you, Tom. Delighted to be here. So, thanks for having me.

Tom Bowman:
So historically, organizations often view benefits as an administrative necessity, but increasingly we're hearing this topic of benefits discussed right up in boardrooms or finance committees; much more in the context of strategic workforce approaches. Matt, what would you say has changed recently to drive some of that?

Matt Duffy:
Yes, great question. So I think the biggest thing for me is the shift that benefits is no longer viewed solely as an issue for HR to manage and solve. In today's organizations, particularly if you look in in the retail sector, they're increasingly recognizing that benefits really sit at that intersection of workforce strategy, financial performance, but also risk management. And so on one side you've got organizations which are really challenged with managing double-digit healthcare cost increases, growing expectations from their employees around what they expect from their employer and that increasing competition for talent.

And then on the other side, you've got CFOs and other business leaders who are under extreme pressure to improve productivity, manage costs, and deliver predictable financial results.

And benefits touch all of those areas.

And I often say to business leaders that benefits have now become one of the largest workforce investments that organizations make, secondary only to payroll.

And yet historically they've received far less attention and far less strategic oversight.

And I guess if you look specifically at retailers, the stakes are even higher. You've got lots of large frontline populations, high turnover levels. You've got operations in multiple countries around the world with varying cultures, different demographic mixes - that mix of full-time, part-time, seasonal and gig workers.
So just relatively small improvements in workforce wellbeing, retention or absence can have a significant impact on operational performance.

And increasingly we're seeing organizations ask a different question, which is not how do I look after, not how do I administer benefits, but they're asking how do we use benefits to support incremental business performance?

And so I guess, Tom, you're our leader in this field from an industry perspective. What do you see when organizations don't tackle this strategically?

Tom Bowman:
Yeah, spot on Matt. And look, the consequences can, I agree, be really significant in reality. Retail's obviously incredibly reliant on execution across the board. For example, store standards are absolutely key to retaining loyal customers, particularly when there's so much choice available now to consumers. And so even one or two poor experiences when it matters most for those shoppers can be the difference between either retaining or losing a really valuable customer.

If stores or distribution centers aren't properly staffed, then that can show up directly as an impact to the customer experience or productivity of the workforce and therefore ultimately the sales at the end of the day.

And so when employees don't feel supported, then absence, turnover of staff and disengagement will often increase.

So that's not just a people issue. It's really, much more structural than that, I would say.

And the other challenge I would talk about is fragmentation. So we find that often with global retailers, they've built their benefits programs inorganically over a long time.

And as time progresses, it means that operating in different markets will often result in working with different providers or offering different financing arrangements. And so therefore they can end up with lots of different employee experiences.

And not only therefore do you get this lack of consistency, you get a lot of unnecessary complexity and therefore cost, which results in a really unoptimized setup.
Anything else you'd add to that? What have I missed?

Matt Duffy:
No, spot on. I think about a lot of that, when you look at a number of retailers that have grown, they've grown by acquisition or they've maybe grown just by entering a market at pace and therefore that also adds to some of that complexity, fragmentation and inconsistency around the world.

I think there's probably three other risks that leaders often underestimate.

And the first is cost. Organizations spend a huge amount of money on providing benefits to employees. And particularly when you look at healthcare — that cost is only increasing year on year based on medical inflation continuing to grow at double-digit, well just under this year, at 9.8% globally, and trending typically at three times general inflation. It's a significant cost that continues to increase significantly. And that's before you consider specific claims, incidence, or experience, within an organization.

The second is volatility. So many organizations don't realise that benefits are also a risk financing challenge. How you finance those benefits, how you finance them more effectively around the world can have a really significant impact on that cost from a sustainability, and predictability perspective.

And the third is around data. So without visibility into claims, utilization, apps and program effectiveness, it's really difficult to know whereabouts to invest or where that significant investment you're making is getting the best return.

And we hear a number of people within our organization say: clients are coming to them saying, how can they confidently know and decide where to best invest every single dollar of that investment to get the best return?

So we see organizations that are making the best progress or greatest progress in these areas are increasingly bringing other parts of the organization into the conversation.

So it's not just something that sits, as it has traditionally, with HR. We see them bringing in risk, we see them bringing in finance, we see them bringing in treasury and helping them to make those decisions as a collective, rather than managing them in silos.
So that internal collaboration is really key. So these are the three key things I'd call on additionally, over the fragmentation and inconsistency.

Tom Bowman:
Yeah, very good. And just for those listening, Matt, this may sound very compelling, but I would say potentially overwhelming, given what you've just described. What do you describe or how do you articulate where organizations can make a start on this? So tackling the first step on the journey, when it comes to benefits?

Matt Duffy:
The things we've already touched on, but you don't have to tackle it all at once. The best thing is just making a start, knowing where you're starting, but ultimately where do you want to get to? So what does that desired end-state look like? You don't have to do everything at once and you don't have to do it by yourselves. There are people out there that can support you. There's people that have been on this journey before.

So I think the first thing really is around visibility and understanding. So, understanding what benefits exist. What have you got and where? How much are they costing? How are you financing them? How do employees appreciate them? Are they participating in those benefits? And what kind of emerging claims or emerging risks are you starting to see?

And so in many cases, just simply creating that visibility starts to uncover opportunities, or potentially risks, that were previously hidden.

So it's amazing how many multinationals that I speak to now that they're spending tens of millions of dollars every single year on benefits, but still have no idea what they're spending and what their return on investment is. So that's the starting point. Get visibility, get an understanding of what you've got and where. And then the second is implementing a really strong, robust governance model. So if you look at leading organizations, what would they be doing from a best practice perspective? They'd be establishing clear global principles, while still allowing local flexibility, agility, and autonomy where appropriate.

So this isn't about doing everything the same or making every country identical. That's not possible, particularly when it comes to employee benefits based on local legislation and local typical norms and prevalent benefits and the balance between state and private provision. But it's about creating consistency where it matters, about making sure that you have minimum standards and a consistency when it comes to offering benefits and managing that risk around the world.

And then the third step, once you've got that visibility, you've got the governance in place, is then really looking at the financing. And how do you do that in a more, in a more joined-up, more effective way? And that's often where you see the most significant value creation.

So we've already spoken about the huge amount of money that's being spent, but typically it's being spent locally. There's a real opportunity to bring this together and aggregate that spending, really leverage economies of scale in that significant spend and really help these — particularly retailers — who are spending large amounts of time managing procurement, supply chains and on operational costs, apply those same principles to the way that they manage their benefits for their employees around the world.

And there's new opportunities available for them as well, particularly when you look at things like multinational pooling or potentially captives, both really great opportunities, depending on what end of the journey you are, or the attitude to risk within the organization. Because they can really help reduce that volatility that we've already mentioned, help improve predictability, to have much more sustainable, predictable cost, really capture that scale, potentially retain some of the underwriting margins that they're currently passing on to insurers by transferring the risk to the market. They can retain more of that risk internally and then reinvest some of those savings into the employee benefit programs to give more back to their employees.

So that's why you can see this has become much more a broader collaborative conversation across the enterprise within our clients and becoming a much more strategic item that CFOs, risk and treasury teams are helping to support.

Tom Bowman:
Brilliant. Thanks, Matt. And just one thing I would add to that. There's so much discussion, over the last five to 10 years, but never more so than now. I've got to add technology and data to that list. Particularly for retail companies, have investing so heavily in tech on a couple of levels. There's both improving efficiencies day to day, but also the ever important improving personalization of what they're offering to customers.
How many employees at the moment are spending their day behind a desk? It's really not many. And so people are increasingly expecting the same kind of experience from benefits as they get from the apps that they're using all the time, every single day. The key is simplicity, digital first, mobile first, and also accessibility: accessibility is really key to everyone that's working across the different employee groups.

And I know that one area that Aon has been investing heavily is in data and the analytics. How would you say that's changing the conversation that you're having with retailers at the moment?

Matt Duffy:
I guess in a word: transformative. So you've already touched on a really important part there, which is the employees. There's a lot of focus on the employee experience and actually how do you put the benefits into the hands, physically into the hands, through mobile-enabled devices and apps to be able to access benefit information. But actually, we've also focused very heavily on the employer perspective. Yeah, I think that's a really important part now where organizations have previously measured activity whereas now they're really looking to measure outcomes.

And so questions like which employee populations have the greatest needs, which benefit programs are delivering the best value? What's driving our healthcare costs? What are our absence rates like? How do they vary country by country? How do they vary by population? What wellbeing initiatives can we implement? Which have we implemented? Which ones have worked? Which have improved outcomes? All of those questions require better data to answer them. And as we know, and you've already touched on retail organizations are incredibly sophisticated at using customer data.

And so they expect the same from us when it comes to helping them support these key decisions and helping their internal customers, their employees. And they're really looking to adopt that same mindset when it comes to managing this significant expense and getting the best return out of that benefit spend and also delivering the best experience to their employees.

So organizations that we see really leading in this space, they're utilizing claims analytics, they're benchmarking their benefits, they're segmenting their workforce and they're using predictive insights to really make significant, smarter decisions around where to invest to get the best return. And that's really then creating that much stronger connection between benefit spend and business outcomes. So Tom would be really keen to get your view on where you see this going and what the future is specifically within the retail sector.

Tom Bowman:
There's so much transformation generally in retail. I see that actually benefits is going to represent a similar trend or acceleration of those current themes that we're seeing in other parts of the retail transformation activity.

So first thing I'd call on I can see greater personalization. We've touched on it today, but we know different employee groups have different needs. And so the future is absolutely not one-size-fits-all benefits.

This is about targeted investment based on individual requirements of either specific people or workforce groups: lots of investment there. I also see focus on flexibility and affordability coming down the line. So particularly important for people newer to the workforce, such as frontline populations, or people looking to be more mobile. I think increasingly, employers are valuing the benefits that they can access straight away. They understand them, they're really clear, and they can use them immediately.

And then the third one to touch on again is technology. We're going to see continued investment there. So benefits will they'll become increasingly digital and more mobile. And they'll be integrated much more. I think there are opportunities now to integrate more with other broader workforce experiences, whether that's pay or staff scheduling and other aspects of the overall HR experience. Anything you'd add to that?

Matt Duffy:
Yeah, probably again three things. There's a theme throughout today, actually. And I think the first one is around that smarter financing. So, yeah, we've moved beyond traditional methods of pure broking and just trying to squeeze the lemon. There's much more opportunity now to adopt a more sophisticated approach by using multinational pooling more effectively, by potentially using captives, as we've already touched on, and other mechanisms that are really there to improve control, reduce that volatility, and deliver a much more predictable, longer term, sustainable approach to cost management.

The second would be that collaboration across the enterprise. So that integration between HR, finance, risk, treasury, and most of the sophisticated, more advanced organizations that we're working with, they no longer see benefits purely within the domain of HR. It's definitely something to tackle collaboratively across the organization.

And third is around that you get more targeted, effective investment in the workforce. So rather than spreading investment really thinly across lots of populations across the organizations, it's around really leveraging that data that's available to them, interpreting the data, using the insights from that data to make the decisions, to get the best impact on talent attraction and retention, productivity and business performance.

So to answer that question: if I spend where should I spend my dollar, euro or pound most effectively to get the best return to the organisation?

Tom Bowman:
Thanks, Matt. We are coming to the end of our time today, sadly. Let's give it some final thoughts.
I think from my perspective, if there was one message I would leave listeners with today, it would be benefits are no longer simply a cost of employment. They are now much more of a strategic lever that can actually influence workforce performance. And that then improves employee experience that then drives real benefits, both on operational resilience and also the real financial outcomes of an organization, is how I would put it. Matt, yourself?

Matt Duffy:
So I'd ask people to take away thinking, this doesn't all have to be tackled at once, like we said. Let's at least make a start. Think about where you want to get to. Don't start with trying to redesign everything in one go. Start with getting better visibility to start with. Understand your data, understand your costs, understand your risks. Once you have that foundation to make much smarter decisions around what's the right governance approach for you, what's the right financing approach and ultimately how you're going to deliver the very best employee experience. And those organizations that are really creating that the best value today, they're not necessarily spending more. They're just spending it smarter. And so it's about making those informed decisions.

Tom Bowman:
Wonderful. Very well put. Thank you, Matt. All the very best.

Matt Duffy:
Cheers, Tom, enjoyed it.

Outro:
Thanks for tuning into the latest episode of On Aon. If you enjoyed this episode, don’t forget to like, share and subscribe wherever you get your podcasts and be sure to visit Aon.com to learn more about Aon.

We’ll be back next week with another episode — our Global Insight — when we’ll be talking about the latest political, economic and financial news impacting businesses.

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