Story first appeared in Bloomberg Business Week.
Applicants weren’t deterred by the heavy rain that fell in San Francisco when local Jamba Inc. outlets opened their doors for the smoothie chain’s first nationwide summer job fair on March 27.
There were many stores that were packed, and the managers were interviewing under tents out in the rain. Even with the bad weather they had a great turnout. The Emeryville, California-based retailer is opening new stores and looking to fill 2,500 positions across the country.
Other merchants, including specialty retailer Mattress Firm Holding Corp., also plan to add jobs this year. The Houston-based company says it’s looking for 200 workers to beef up its sales and corporate staffs as it expands. The response of such companies is easing concerns about an April 6 U.S. jobs report that showed retail employment declined by about 34,000 in March from the previous month.
As shoppers spent money on goods ranging from electronics to clothing and furniture, retail sales rose last month by 0.8 percent, the Commerce Department reported yesterday. The increase was almost three times higher than forecast by economists in a Bloomberg survey. Receipts at chain stores climbed 4.1 percent from a year earlier, the International Council of Shopping Centers reported.
Sales Creates Hiring
Growth in sales tends to create hiring. The strength in first-quarter retail spending means we should see a meaningful snapback in retail hiring this quarter. This also means that businesses will be researching retail worker's compensation insurance rates to accommodate all the new workers.
Stores will be adding jobs this year, not unlike what was seen on a year-over-year basis last year. There are concerns out there, but on the other hand there’s momentum in hiring and in spending.
That momentum sometimes has been slow and uneven. Last month’s drop in retail payrolls was the biggest decline since October 2009, and merchants have regained only a third of jobs lost in 2008 and 2009, according to the Kronos Retail Labor Index, a measure of the health of the sector’s labor market prepared by Macroeconomic Advisers LLC.
Retailers have been adding about 35,000 employees a month, on average, for the past six months. While that’s below the pre-recession average of 55,000 in 2006 and 2007, it’s sufficient to see a slow rise in retail employment. The retail sector over the last three months has trended higher at a very solid pace.
One in Four Americans
The numbers are important because retailers employ about one in four Americans, according to their trade group. Retail sales accounted for 50 percent of consumer spending in 2011, Commerce Department data show.
Investors have driven up their shares as spending increases. The Standard & Poor’s Supercomposite Retailing Index, which includes Macy’s Inc. and Gap Inc., has gained 17 percent this year through April 16 compared with 8.9 percent for the broader S&P 500.
Varvares and other economists call the March payroll report an anomaly caused by the mild winter. Balmy weather in much of the country might have coaxed shoppers out in January and February, leading merchants to add or retain workers in those months at the expense of March hiring.
Low-Employment Sectors
Still, the first-quarter sales rally won’t necessarily translate into a hiring boom. Some of last month’s growth was due to higher gasoline prices and expansion in low-employment sectors of the industry, including deep-discount chains Dollar Tree Inc., Family Dollar Stores Inc. and Dollar General Corp.
Large stores have become highly efficient at managing their workforce, for example scheduling staff only during peak shopping hours.
Internet-based sales expanded faster than brick-and-mortar sales, growing by 9.3 percent in March from a year earlier compared with 6.5 percent, the Commerce Department reported, as online retailers, including Amazon.com Inc., continue to raid traditional merchants’ customer base. Retail-trade employment, long term, is not growing.
Industry Changes
Industry changes are evident. Some large department stores are restructuring to adapt to more-nimble competitors and changing shopper demand. Plano, Texas-based J.C. Penney Co. this month said it will eliminate nearly 1,000 positions. Sears Holdings Corp., based in Hoffman Estates, Illinois, plans to close 62 of its 4,010 stores in the first half of the year and has not estimated the number of jobs lost. Richfield, Minnesota- based Best Buy Co. will shutter 50 big-box locations, the company announced in March, cutting 400 jobs in its corporate and support areas plus an unspecified number of store personnel.
Others are aggressively expanding. Macy’s, the owner of its namesake and Bloomingdale’s chains, said in February that it may hire 4,000 new employees this year, matching the 4,000 positions it added last year.
Ulta Salon Cosmetics & Fragrance Inc., based in Bolingbrook, Illinois, plans to hire 2,000 employees this year to staff 100 new stores and a distribution center for its makeup and hair-care products.
The optimism extends to smaller merchants, too. South Moon Under, a privately held mid-Atlantic fashion retailer, has seen 15 consecutive months of improved sales at its 15 stores, climbing back to pre-recession levels last year. Now the Berlin, Maryland, company plans two new locations and will add 50 people to its 325-person staff in the coming months.
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