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What Do This Year’s Holiday Hiring Expectations Mean for Retail?
Reuters reports that Macy’s plans to hire at least 38,000 employees for the 2023 holiday season, but this number is lower than last year’s hiring force, which was estimated at 41,000, and lower still than the 76,000 workers hired in 2021. Levels this low were last seen in the financial recession of 2008, according to a report by Challenger, Gray & Christmas, a global outplacement and career transitioning firm.
Bain & Company also “forecasts US retail sales to grow by 3% this holiday season, the lowest holiday growth rate since 2018.” According to their data, this would mean that US holiday retail sales growth remains below the 10-year average after being adjusted for inflation.
Furthermore, “US retail sales have been relatively slow in 2023, up 4.0% YoY, on a nominal basis,” and Bain & Company found that “growth has largely come from e-commerce, along with select in-store categories, such as health & personal care, general merchandise, and food & beverage.”
This paints a gloomy picture, as Reuters also estimates that this will be the slowest holiday season for retail since 2018. Student loan repayments are coming back into play, and many consumers are unsure of how inflation will continue to affect them as gas prices keep rising.
According to Bloomberg, Challenger, Gray & Christmas predict that only 410,000 jobs in total will be added by 2023’s fourth quarter, which is the lowest since 2008 with 324,900 added workers. And as hiring has slowed this year, labor costs are rising. “With inflation slowing, companies, particularly retailers, won’t be able to pass increased labor costs to the consumer as easily,” said Andrew Challenger, SVP at Challenger, Gray & Christmas. “This could lead to more cuts, rather than more added positions, as evidenced by the increase in job cuts in this sector.”
Another important data point to mention is how “companies have been slow to lay out seasonal hiring plans. US-based firms have announced just 38,000 plans so far this year, compared to over 258,000 by this point in 2022.”
But is there evidence for a positive outlook?
Deloitte forecasts that retail sales are expected to increase between 3.5% and 4.6%, with overall projected holiday sales totaling between $1.54 trillion and $1.56 trillion during the November to January period. This comes at a time when inflation seems to be either slowing down or on the decline, at least in some parts of the retail sector.
Deloitte estimates a better 2023 holiday season than Bain & Company, but only time will tell. Regardless, this projected increase is disappointing compared to last year, when retail sales grew by 7.6%, according to data from the Census Bureau.
Meanwhile, Fox Business reports that Amazon plans to hire 250,000 seasonal workers. Additionally, Amazon is investing $1.3 billion this year to raise pay for customer fulfillment and transportation workers, aiming for an average wage of over $20.50 per hour. In some areas, the hourly rate could reach up to $28.
Target intends to hire 100,000 seasonal employees, which is similar to its hiring plans over the past two years. Walmart’s latest announcement states that the company plans to hire 40,000 workers, which is less than last year when the company hired “150,000 mostly permanent and full-time associates, as well as 20,000 supply chain workers to help alleviate logistic bottlenecks.”
Overall, Target and Amazon seem more stable than some retailers, signaling that the holiday season may be fine for some but more financially challenging for others.
Discussion Questions
What does the variation in hiring expectations for the holiday season mean for the retail industry as a whole? What do you think is the primary reason some retailers are planning to hire fewer seasonal workers than normal?
Poll
Loading …BrainTrust
Dick Seesel
Principal, Retailing In Focus LLC
Jeff Sward
Founding Partner, Merchandising Metrics
The Macy’s comparison to 2008 (38,000 v 76,000) is somewhat misleading as Macy’s used to count the number of people hired and now count the number of positions they hire for. The latter is lower as it does not count the sometimes multiple people required to cover one position. However, in general, retailers are more cautious about holiday hiring both to keep costs under control and because demand will be more muted. This won’t be a disastrous holiday season but neither will it be a stellar one. Pressures are mounting on the consumer and spending will be constrained and cautious.
The forecast is cloudy for this holiday season, when you see Target and Walmart hiring trending in opposite directions. (Amazon is in its own stratosphere.) While unemployment and hiring trends continue to be healthy, there is still plenty of economic anxiety driven by high mortgage rates, resumption of student loans, and high gas prices in some regions. (I paid $6.50/gallon in Los Angeles last week, compared to $3.39 here in Wisconsin.) And don’t forget the threat of yet another government shutdown around Thanksgiving.
Especially compared to last year’s strong results, this could be a more muted holiday spending season and the mixed bag of retail hiring reflects that uncertainty.
I’ll agree with Dick about a muted holiday spending season. Higher interest rates, increased prices and fewer “must-have-it” products suggest a tepid holiday.
The dynamics of the coming holiday season have been unfolding for many months, and at this point the hiring numbers don’t sound the least bit surprising. They don’t sound gloomy…they sound realistic. Different retailers are hiring with different expectations. Sounds about right to me. Consumer and student debt are taking their toll. Inflation has outstripped earnings for many households. Retailers simply have to be realistic about their expectations. Now if only they were equally realistic when they placed their buys for this holiday season inventory many months ago. Buckle in.
It means that brick and mortar, while relevant, will continue to lose share to online. This Christmas season and beyond.
The labor market is still tight and according to the article the aggregated seasonal adds are approx 430,000 which might be hard to achieve. Walmart pulled a chess move playing a longer game: getting ahead of it early and hiring full-timers of about 150k and subsequently shedding about 10k workers in ecomm, warehouse, and corp. In the end they end up with a more committed employee and resources to deploy effectively.
Yes, I Agree with everyone else! Things are not doom but there are MANY variables right now that are NOT pointing in the right direction — HIGH prices –High Interest — Possible Gov’t shytdown- The job market overall is not bad — BUT people currently are NOT on easy street by ANY means !
The shifting hiring numbers reflect a pragmatic response to the prevailing economic conditions. In a landscape where consumer debt, inflation, and e-commerce growth are key influences, retailers must adjust their expectations accordingly. It’s a challenge but necessary for the evolution of today’s market.