November means that we’re officially in the fall season. It’s time for pumpkins, apple pies, Thanksgiving, and the biggest shopping days of the whole year – Black Friday and Cyber Monday! It’s only fitting that as we head into the holiday season we take a look at employment trends in the retail industry.
Although the holidays generally signal low levels of hiring in many industries, it’s the busiest time of year for the retail industry. Many of the country’s largest employers are retailers. Wal-Mart Stores, which owns Walmart and Sam’s Club, employs roughly 2.2 million people worldwide and is the largest private employer in the United States. Target and Kroger are also among the largest employers in America.
According to the latest figures from the Bureau of Labor Statistics (BLS), the retail industry gained 35,000 jobs in September 2014. Food and beverage store added 20,000 jobs. Over the past 12 months, employment in retail trade has increased by 264,000. Unemployment in the industry was down from a year ago, at 6.1 percent in September 2014.
DCR TrendLine Retail Employment Index
As per the National Retail Federation, retail is the largest private sector employer in the country, supporting 42 million jobs and adding $2.6 to the national economy.
Impact of Minimum Wage Hikes
The minimum wage debate has been a major topic for economists, companies, politicians, and the U.S. population over the course of the year. Raising the minimum wage is one of the most buzzed about topics in retail employment for 2014. Some experts say that raising wages will help retailers earn higher revenues in the future, while organizations such as The National Retail Federation have lobbied against an official wage hike. Gap and Ikea are two retailers who have already announced increases to their own minimum hourly payments to workers.
DCR TrendLine Retail Trade Wage Index
Online vs. Brick and Mortar
Figures from the U.S. Census Bureau show a consistent growth in e-commerce sales, which equaled $75 billion in the second quarter of 2014, accounting for 6.4 percent of the total U.S. retail sales for that time period. Online sales are also promoting hiring surges outside of the retail industry, such as FedEx and UPS, which are adding over 50,000 employees each this year.
During the September 2014 back-to-school shopping season, U.S. retailers had their slowest sales since the recession ended in 2009. The back-to-school shopping rush is second only to the holiday season in its importance to retailers. Spending during that time period rose only 3.1 percent, according to Customer Growth Partners LLC, the smallest increase in more than five years. Store traffic declined 4.2 percent in July and slipped an additional 4.7 percent in August, according to ShopperTrak.
The e-commerce industry continues to grow. Sales from online shopping have grown 300 percent since the beginning of 2004, according to data from the Department of Commerce. In the third quarter of 2013, total retail sales increased 4.7 percent year-over-year, while e-commerce sales increased by 18.2 percent during the same time period.
Online retailers continue to introduce innovative ideas to increase speed of delivery, where brick-and-mortar competitors still have the advantage of same-day service.
“While the internet has been very effective at competing on price, it has not yet cracked the code of how to affordably get products to the end consumer on the same day they are purchased.” ~Randy Anderson, Head of CBRE Research – America
Consumer Time Spent Shopping, 2013
Source: A.T. Kearney
A study from the A.T. Kearney Omnichannel Shopping Preferences Study found that while digital retail is popular, physical stores continue to be customers’ preferred shopping channel. The study of 2,500 U.S. shoppers found that stores play a crucial role in online purchases, with two-thirds of customers purchasing online using a physical store before or after the transaction. According to the study, brick-and-mortar stores remain the foundation of retailing.
Recently, e-commerce companies that were once digital-only are announcing plans to debut brick-and-mortar stores. Nasty Gal, a popular online clothing store, announced plans to open a shop in Los Angeles, and beauty retailer Birchbox opened its first store over the summer in New York. And just in October 2014, online giant Amazon announced plans to open its first brick-and-mortar store in Manhattan.
Technology in the Retail Industry
Retail companies are investing in increasing their technology innovations to provide a greater customer experience. Macy’s has spent a lot of money in increasing its e-commerce technology over the recent years, pursuing a ‘digital/brick-and-mortar’ hybrid business model. The company is testing ideas like same-day delivery, smart dressing rooms, and image search, while also rolling out Radio Frequency Identification Technology (RFID) to better track the exact location of any given item in the supply chain or in-store.
Beacon, a new type of device that changes the way customers shop in stores and revolutionizes how retailers collect consumer data and interact with shoppers, is becoming more popular. A beacon is a small wireless device that constantly broadcasts radio signals to nearby smart phones and tablets. It can help trigger notifications and offers in retail apps, and to target shoppers when they are in relevant areas of stores. It also helps to collect real-time data from store registers, including shopper information, purchase data, and spending history. According to Business Insider Intelligence’s forecast, beacons will see triple-digit growth over the next few years.
Initiatives to Improve Customer Experience in Stores
Source: Business Insider Intelligence
The National Retail Federation (NRF) recently announced that U.S. retailers are expected to hire between 725,000 and 800,000 seasonal workers this holiday season.
“These holiday positions offer hundreds of thousands of people the opportunity to turn their seasonal position into a long-term career opportunity in retail.” ~Matthew Shay, President and CEO of The National Retail Federation
Seven of the country’s largest retailers will together add almost 400,000 jobs this winter, with Macy’s leading the nation with an expected 86,000 job openings.
Announced Seasonal Hiring Plans
Source: The Wall Street Journal
According to consultancy firm Challenger, Gray & Christmas, higher consumer spending and improvement in employment across the U.S. is motivating retailers to expand holiday hiring this winter. A recent study by Deloitte predicts that holiday spending will grow by between 4 and 4.5 percent year due to job growth.
“Compared to last year there are just a lot more people who have money in their wallets to spend. This means more traffic in the stores, and that means retailers need more people.” ~John Challenger, CEO of Challenger, Gray & Christmas
Seasonal Hiring in Q4