The strength of retail sales in the fourth quarter of each year is a benchmark for how well the U.S. consumer economy is doing. Over the past 10 years, the number of jobs added by retailers has been a partial proxy for the retail economy. And the consumer economy remains over half of gross domestic product (GDP).
Although not all retailers have released what they plan to do for the holiday season, we can make an educated guess on what to expect. So far only Target Corp. (NYSE: TGT) has come forward and said that it plans to hire 100,000 employees for the holiday season, which is up from last year’s 70,000, an increase of over 42%.
According to Challenger Grey the 2016 employment numbers weren’t so hot:
Employment in the sector grew by 672,700 workers during the three-month holiday hiring period of 2016, according to an analysis of government employment data by global outplacement consultancy Challenger, Gray & Christmas, Inc. That was down 9.0% from the 738,800 jobs added in 2015.
This marked the third consecutive decline in holiday employment gains. The 2016-holiday hiring total was the lowest since 647,600 jobs were added to retail payrolls during the closing months of 2010, when the economy was in the first year of recovery following the Great Recession.
So even though last year set the bar relatively low, Target among others could signal a new direction. As the U.S. broad markets are hitting all-time highs, it makes sense that retail stocks would be recovering into the fourth quarter.
Looking at the current trends, e-commerce has been growing incredibly over the past few years, and this has been seen especially with the explosive growth of Amazon.com Inc. (NASDAQ: AMZN). Many other companies have been looking to develop their omnichannel and e-commerce platforms to deal with this competition, and last year they seemed too slow for the Amazon monster. However, with more companies developed now, it could be a more level playing field and retail might actually win this quarter.
In terms of adding employees, there will always be an increased demand for labor for brick-and-mortar during the holiday season. And with e-commerce continuing to develop we can expect some of this holiday labor force to be shifted over to more picking, packing and shipping positions. It’s just a matter of time before these retailers come forward with their hiring expectations.
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