Retail Jobs Picture Seems Merrier Heading to Holidays
With holiday sales predicted to be up between 2.8 percent and 6.5 percent depending on the source, you’d expect that seasonal hires would be somewhere around where they were last year, if not higher.
Retail hiring has picked up recently. According to a USA Today report citing Labor Department numbers, retailers added 17,800 jobs in October. The industry has been adding an average of 16,500 jobs per month so far in 2011.
The Kronos Retail Labor Index, which actually fell slightly in October, has been painting a positive picture of late.
September’s number was the highest in three years and October’s "was 12 percent above the average in the first quarter of 2009, indicative of the solid improvement in retail job market conditions," according to Chris Varvares, senior managing director and co-founder of Macroeconomic Advisers.
"The recent step up in hiring is a bit of a surprise in that it occurred when a lot of other indicators were still looking fairly soft," Mr. Varvares told RetailWire.
Admitting that it was "somewhat speculative," Mr. Varvares added, "The solid pace of hiring in September and October (up 7.7 percent from last year) could indicate more confidence on the part of retailers heading into the holiday season. We’ll know much more when we see November’s hiring in early December."
John Challenger, CEO of the outplacement firm Challenger, Gray and Christmas, said retailers hired 655,825 workers last year based on U.S. Bureau of Labor Statistics. Mr. Challenger told the Pittsburgh Post-Gazette he expects that number to remain around the same this year.
One factor that could be misleading when it comes to assessing retail seasonal hires are retailers outsourcing call center operations to companies such as TeleTech. The firm said it is hiring 4,400 seasonal employees, up 60 percent from 2010, as it gears up to handle customer service for retailers and others.
"Companies cut costs about as much as they can," Mark Grindeland, chief marketing officer for TeleTech, told USA Today. "What they all realize is that they have to grow revenue and create a great customer experience."
Discussion Questions
Discussion Questions: Do recent monthly job increases in retailing have any implications for sales this holiday season? Do you think outsourcing for call centers and other functions have distorted the true picture of retail hiring for the holidays?
Every expert forecast so far has predicted holiday sales either flat or slightly higher/lower than last year. While the experts are often wrong, the fact that there has been so much consensus among major research firms suggests that probably a lot of this hiring may reflect retailers beefing up staff in areas other than on-floor sales associates. This is not necessarily a bad thing but may just be another sign that shopping online has become a common way for Middle America to obtain goods.
I would look to inventory data as a better predictor of holiday sales, rather than labor. For labor, particularly in-store labor, I wonder instead if we are seeing the Apple effect — where retailers feel the need to provide more service in the store, maybe based more on traffic than expected sales, as they try to navigate the store implications of the cross-channel shopper (maybe not quite to the staffing model that Apple uses, but along those lines). Store sales haven’t been trending up lately, but someone somewhere predicted that online sales will grow 15% or so this holiday season. How much of that growth has a store component to it where the consumer used the store as a showroom? How much will having a high staffing level help a retailer convert those showroom shoppers? To me, those are the big labor questions of this holiday season.
In the midst of autumn, retailers want to believe that there will be an invincible holiday season. So they hire lots of people for the rush of customers they pray will come. Only December 26 holds the answer to whether or not their optimism was well founded.
Whether outsourcing for call centers and other functions have distorted the true picture of retail hiring for the holidays, the answer possibly lies in India.
With associate costs being the number one variable expense for 4-wall retailers, this could be an indication that retailers are expecting growth this holiday season. However, one data point does not a trend make. Retailers were also claiming recently that they would be less promotional this year — for about 5 minutes.
This season will be very hard to predict, although it’s hard to envision big growth.
I think we are in for a better-than-expected holiday season. Not great, but some modest single-digit gains are on the horizon. Retailers who plan their staff and inventory levels too conservatively do so at their risk. For all the gloom and doom in the headlines — nagging unemployment and housing problems, sovereign debt, political dysfunction — the reality is that spending has been relatively healthy all year despite surveys of consumer sentiment pointing in the other direction. Smart retailers will plan accordingly.
The growth of online retail will far outpace the growth of brick and mortar retail this holiday season. With that in mind, why would holiday hiring at retail come even close to the growth in forecasted holiday retail sales? Amazon needs considerably fewer people to support a huge increase in sales than Macy’s needs to support a small increase in sales.
The numbers can say what they want; retailers at the store level are doing more with a lot less. My network suggests that we aren’t expecting a great season but not a terrible one. Most of my field peeps are hoping for any incremental gain to put on the books. That said, seasonal hiring has been tight with more hours being directed towards permanents and producers.
Holiday sales projections seem to be a stimulus for people to feel better about their spending for the season. Then reality sets in — such as bills to be paid and heat for the home — and sales flatten. My guess is online sales will be the trend setter this season.
I see a lot of CIOs each week, and I have yet to sit with one who’s singing the blues about a disappointing holiday season. Every one of them thinks that sales will be up and customers will be buying. Happy Holidays!
I’ll take the optimistic role and say that the answers to the questions are no and no.
The outcome this season, if anything but negative, should be considered to be an overwhelming success.
I do have just one question. If a retailer outsources call centers and other functions and the outcome is hiring by the call center and service providers, are these not jobs? If not, what are they?
I agree with Richard. I think we’re in for a better Holiday than expected. As I visit malls and big box stores around the country, many are busy, some are very busy, but all are doing brisk business. Seems like retailers are ‘piking’ their numbers conservatively rather than being too positive and winding up disappointed. After the last three Holiday disasters, who can blame them?