Retailers Not Shopping for New Hires
Quentin Fottrell / SmartMoney
Store sales are up. The job market is improving. Oddly, analysts say, retailers aren’t hiring.
Store sales appear encouraging partly due to a warm winter and Easter falling two weeks earlier than last year, the Wall Street Journal reports. The Gap and Target showed improvements, while CostCo and teen fashion outlet Buckle fared less well. Meanwhile, jobless claims data released Thursday showed numbers fell to the lowest level in nearly four years last week. So why aren’t retailers hiring?
Big box and department stores have been employing stricter control of inventories instead of new workers, economists say. They’re also demanding higher productivity from existing workers. This shift “has long term implications for employment: fewer retail workers and less square footage,” says Patrick O’Keefe, director of economic research at J.H. Cohn consultants in Roseland, N.J. They’re also centralizing checkouts and introducing self-service machines, says independent retail consultant Jeff Green, which means a longer walk for shoppers in search of a till and less floor personnel.
Retail-sector job opportunities keep shrinking. In the five years prior to the recession (2003-2007), stores accounted for 13.6% of all private sector jobs, according to the Bureau of Labor Statistics; but during the jobs recovery – which began in earnest in March 2010 — the retail sector has only provided 9% of the total private sector gains. While auto and gasoline sales have shown some momentum in recent months, “recovery in the rest of the retail sector has been rather tepid,” O’Keefe says.
Department stores also appear to be experiencing a choppy recovery. During February, retail trade lost 7,400 jobs on a seasonally adjusted basis – taking into account the holiday sales. Jobs plummeted by 35,400 at general merchandise stores and by 25,000 at department stores. But sporting, book and music stores added 12,400 jobs. Investment blogger Andy Nyquist says warm weather has encouraged people to bulk up on their outdoor equipment and sports goods.
Still, with tentative signs of a jobs recovery underway, others say it’s too soon to know if the retail sector will underperform the overall jobs market. If department stores shed more jobs, it may reflect bigger changes in how people shop, says Betsey Stevenson, assistant professor of business and public policy in The Wharton School at the University of Pennsylvania. “I rarely shop in department stores anymore because I almost exclusively at discount retailers, Amazon, and boutiques.”