Although the retail sector remains under pressure — evident by the spate of store closures and announcements since the start of the year — the job losses across the industry have not been severe, says Ken McCarthy, principal economist and senior managing director at Cushman & Wakefield. In fact, some retailers are in an aggressive hiring mode.
Total employment in the U.S. retail industry has increased by 1.4 million jobs since 2010, according to McCarthy, who was quick to add that the sector has shed approximately 140,000 jobs over the past two years. The Bureau of Labor Statistics (BLS) reports a net loss of 11,700 retail jobs in March, which came on the heels of a revised loss of 18,500 jobs in February. (The retail numbers from the BLS exclude restaurants.)
“Store types that have seen substantial job losses include those that are most vulnerable to competition from the e-commerce industry, including electronics and appliances, sporting goods, apparel and accessories, and more recently general merchandise stores,” explains McCarthy. “While we would not characterize the job losses as that severe, those store types and product types that are most vulnerable to e-commerce are likely to remain under pressure.”
Ken McCarthy, principal economist, Cushman & Wakefield
According to Challenger, Gray & Christmas Inc., a global outplacement and business and executive coaching firm that tracks job cuts announced by U.S.-based employers, retail led all employment sectors with 46,061 announced job cuts through the first quarter of this year, including 4,860 in March. Still, that figure is 18.5 percent lower than the 56,526 job cuts announced in the first quarter of 2018. The Chicago-based firm adds that retailers have announced plans to shutter 4,048 stores so far this year.
“While retail is by far responsible for the highest number of cuts recently, the sector is also constantly hiring,” says Andrew Challenger, vice president of Challenger, Gray & Christmas.
Bucking the Trend
Home improvement is one sector of retail that is adding plenty of workers. In January, Lowe’s Cos. announced plans to hire more than 65,000 associates this year, including over 50,000 seasonal workers. The hiring spree comes as part of Lowe’s effort to position itself as the “go-to home improvement retailer for customers’ spring indoor and outdoor projects.”
Additionally, Lowe’s plans to hire nearly 10,000 permanent workers this year for a merchandising service team focused on inventory management. The Mooresville, N.C.-based retailer will also hire approximately 6,000 full-time assistant store managers and department supervisors to improve customer service, plus 500 technology workers such as software engineers and data scientists to help the company deliver on its omnichannel strategy.
In March, Home Depot announced plans to hire 80,000 associates at its approximate 2,000 U.S. stores and 100-plus distribution centers this spring. The company plans to add seasonal, part-time and full-time workers in a variety of departments, including overnight freight, garden, customer service and merchandising.
Amazon plans to build and expand Whole Foods stores across the country to put more customers within range of the e-commerce giant’s two-hour delivery service, The Wall Street Journal reported at the end of 2018. The push would bring Whole Foods to more suburbs and other areas where the grocer has quickly added customers since being acquired by Amazon in June 2017.
In the Rocky Mountain region, Whole Foods employees have visited potential retail spaces in parts of Idaho, southern Utah and Wyoming, where the grocer doesn’t have stores now, according to WSJ. Some of those spaces were about 45,000 square feet, slightly larger than the average Whole Foods store.
Overbuilding Concerns Persist
Ryan Severino, chief economist, JLL
Ryan Severino, chief economist for JLL, says there appears to be a strong relationship between store closures and job losses and that the retailers that have hit a wall run the gamut. Payless, Gymboree, Family Dollar, Gap, Foot Locker, Sears, Victoria’s Secret, JCPenney, and Henri Bendel are some of the big-name retailers to close either some or all of their stores in recent months.
“Some are higher-end, some are lower-end. We continue to be overbuilt and under-demolished in retail real estate in the U.S., and we would likely need to see that relationship between space and shoppers further right-sized for the era of online and experiential shopping,” says Severino. “That doesn’t mean all is gloom and doom. Some retailers could expand in such an environment, but clearly we haven’t reached equilibrium yet.”
Healthy Economy Boosts Optimism
While retail employment dropped in March, the job market as a whole showed renewed momentum. Total nonfarm payroll employment increased by 196,000 for the month compared with a gain of only 33,000 jobs in February.
“March’s strong rebound in overall hiring throughout the economy is good news after the seesaw employment growth in the past few months,” says Jack Kleinhenz, chief economist for the National Retail Federation (NRF). “It paints a picture of resiliency of the U.S. economy.”
“All eyes should focus on the wage growth we’ve been seeing since higher wages translate into increased spending,” he added. “Retail jobs reflect the pulse of the economy, and as the economy picks up retail hiring is likely to do the same.”
Average hourly earnings in March were up 4 cents over February to $27.70, a year-over-year increase of 3.2 percent.
It’s important to note that the NRF believes that government jobs data does not provide an accurate picture of the industry. The point of contention is that the agency counts only employees who work in stores, but excludes retail workers in other parts of the business such as corporate headquarters, distribution centers, call centers and innovation labs. That issue aside, the mood of the retail industry is that better days are ahead.
“Consumer confidence and consumer spending were down earlier in the year, so the retail numbers likely reflect merchants’ hesitancy to add to payrolls under those conditions,” explains Kleinhenz of NRF. “But it’s important to remember that the economy historically slows down in the first quarter. And there have been record numbers of retail job openings — more openings than retailers can fill — so the tough hiring market is also a factor.”
— Matt Valley