Labor is the single largest line item in most retail and eCommerce operations, and the one most likely to spiral out of control during disruptions. After navigating wage hikes, high turnover, and peak-season overtime in 2025, many operators are rethinking how they approach workforce budgets in 2026.

The goal is no longer simply cutting costs. It’s about making labor spending smarter, leaner, and above all, more predictable. Here’s what that looks like in practice.

Build Flexibility Into the Budget

One of the biggest budgeting mistakes operators make is planning for labor as if volumes will remain steady. But anyone who worked through last year’s Peak Season knows better. Order surges, returns spikes, and absenteeism can all drive costs higher than expected.

In 2026, smart operators will budget with flexibility in mind. That means leaving room for variable headcount, overtime cushions, and scalable labor support. Predictable budgets don’t mean rigid; they mean realistic.

Focus on Retention, Not Just Recruitment

Turnover is expensive. Between hiring, onboarding, and training, replacing an employee can cost far more than keeping one. Yet many operators still fail to budget for programs that improve retention.

In 2026, building retention into the labor budget will pay off. That includes investing in cross-training, recognition programs, and clear advancement paths. Retention spending may feel optional, but it’s a proven way to cut the unpredictable costs of constant recruitment.

Use Data to Forecast More Accurately

Guesswork has no place in 2026 budgets. The operators leading the way are digging into past order volumes, turnover patterns, and absenteeism trends to forecast labor demand with precision.

Budgeting based on data, not assumptions,reduces last-minute hiring scrambles and overtime blowouts. If you’re still setting labor budgets without workforce analytics, you’re leaving yourself exposed.

Balance Automation With Labor Costs

Automation isn’t free. While robotics and AI tools can offset some labor expenses, they come with their own costs: implementation, maintenance, and ongoing integration. In 2026, budgeting smarter means understanding where automation adds real ROI and where skilled labor is still the better investment.

Operators who treat automation as a supplement, not a silver bullet, will achieve the leanest balance.

Partner for Predictability

Many operators rely heavily on temp agencies during peak, only to end up with unpredictable costs and inconsistent labor quality. In 2026, more companies are turning to workforce partners who offer predictable pricing models and customized staffing strategies.

This approach doesn’t just stabilize costs, it improves output by creating consistent, trained teams that can flex with seasonal demand.

The Bottom Line for Operators

Budgeting for labor in 2026 isn’t about cutting corners, it’s about planning smarter. By building flexibility, focusing on retention, using data to forecast, balancing automation, and partnering for predictability, operators can take the chaos out of labor costs.

When your labor budget is predictable, everything else in the operation runs more smoothly.

About iJility

At iJility, we help operators in retail and eCommerce design workforce models that bring predictability back to labor costs. From cross-training to scalable staffing strategies, we focus on stability, cost control, and employee engagement, so you can plan smarter in 2026.

Want a more predictable labor budget this year? Schedule a discovery call today.