Despite the many economic headwinds still facing the U.S., much of the retail industry is anticipating a sharply improved holiday season compared to last year and is planning accordingly. Six of the largest store chains in America will together add more than 300,000 temporary workers during the season to account for the expected higher volume of shoppers. The National Retail Federation predicts that holiday sales this year will increase by 4.1% to $586.1 billion. After the severe damage the industry has suffered during the recession and its immediate aftermath, retail sales appear to be on the rise again.
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Each year, large American retailers add tens of thousands of employees during the holidays. Such retailers include Wal-Mart Stores Inc. (WMT), Target Corp. (TGT), Toys“R”Us, and Macy’s Inc. (M). These companies try to predict how well they will do months in advance in order to estimate how many more workers they will need to support the busiest shopping season. The announcements about temporary job additions usually come at the end of September.
Of course, despite the extensive advanced planning, retailers always run the risk their predictions will miss the mark. Shoppers may either stay away, or consumer activity may be better than expected. Stores do not want to be caught with too little or too much inventory or personnel. Excess inventory is sold off at low prices after year’s end. And those workers whose presence cannot be justified are laid off.
Large chains hire hundreds of thousands of people with the expectation that most won’t stay. Workers sign on because they need temp jobs. They often don’t have jobs at all and hope that a good holiday season will mean the temporary job can turn into a permanent one.
Several factors, however, may put a dent in the holiday shopping season. NRF President and CEO Matthew Shay warned that “the upcoming presidential election, confusion surrounding the ‘fiscal cliff’ and concern relating to future economic growth could all combine to affect consumers’ spending plans.” Despite these concerns, Shay remains bullish, stating that this year’s annual holiday forecast was the most optimistic one since the recession. “[O]verall we are optimistic that retailers promotions will hit the right chord with holiday shoppers,” Shay said.
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The Tax Policy Center, however, predicted that the average tax increase per household will be almost $3,500 next year if all of the current tax cuts expire. If this further affects consumer spending, Shay may find his organization overestimated, and the gamble retailers’ took by hiring so many additional people may prove unsuccessful.
24/7 Wall St. looked at the holiday temporary hiring announcements of six huge retailers — Walmart, Target, Kohl’s Corp. (KSS), Macy’s, Toys“R”Us and Gamestop Corp. (GME). Together, they will add at least 324,700 temp workers. We also examined how many people the same retailers added last holiday season. We then looked at their revenues for the past two years as of July 2012 to see whether their overall retail prospects had improved or not. We also reviewed their total employee base to determine how large their temp job additions are in relation to their permanent payroll. SEC filings provided the sales and employment data.
These are the six companies hiring for the holidays.
> 2012 added seasonal employees: 17,000
> Change from 2011: 2,000 less
> Last 12 months sales:$9.1 billion
> Employees: 44,000
Like many brick-and-mortar retailers, GameStop has struggled of late as more people purchase game consoles and video games online. Sales in the last 12 months were down 5.6% from the previous 12 months. The company is overhauling its business strategy to become a repairer and reseller of smartphones and tablets, especially Apple products. It believes that its retail presence of more than 6,600 stores around the world will help it achieve that goal. That strategy could reap dividends in the future. Wedbush Securities analyst Michael Pachter told the San Francisco Chronicle in August that GameStop could generate $1 billion in revenue over the next few years by reselling just 5% of the 230 million Apple devices owned by Americans.
> 2012 added seasonal employees: 45,000
> Change from 2011: 5,000 more
> Last 12 months sales: $13.8 billion
> Employees: 70,000
The 45,000 temporary employees Toys“R”Us plans to hire during the holidays will work in the company’s 876 U.S. stores and its 10 distribution centers. The retailer said its holiday staffing increase is partially to help the company with its new online offerings such as the “Buy Online, Pick Up in Store” program. These temporary jobs may turn into something more permanent as well. The retailer reports that about 15% of the 2011 holiday workforce continued to work for the company after the holiday season. Toys“R”Us said some of the seasonal jobs occupied by “high-performing employees” could once again turn into full-time positions.
> 2012 added seasonal employees: 50,000
> Change from 2011: N/A
> Last 12 months sales: $460.7 billion
> Employees: 2.2 million
Compared to Walmart’s 2.2 million employees worldwide the 50,000 temporary employees to staff company stores during the holidays comprise just a small portion. But it still beats out last year’s increase. In addition, the company said it would offer more hours to existing associates. The company can easily afford to add all these hires. Sales in the last 12 months have grown 6.7% from the 12 months before that. Although Walmart is the second-largest company in the U.S. by revenue, it has recently cut back on some things. Walmart began phasing out late-night greeters from its 3,000 U.S. supercenters in the past year, according to a Bloomberg news report in January.
> 2012 added seasonal employees: 52,700
> Change from 2011: 5,700 more
> Last 12 months sales: $18.8 billion
> Employees: 86,000
The majority of Kohl’s planned 5,700 temporary positions will be in the company’s 1,146 stores. Some, however, will work in its distribution centers, and more than 30 will be seasonal credit operating positions. The uptick comes despite the company’s disappointing financial results as of late. While competitor Macy’s sales in the last 12 months have risen by 4.2%, Kohl’s sales have risen just 0.9%. The retailer’s second-quarter profit fell about 20%, and the company cut its full-year profit outlook. According to retail analysts, the company discounted heavily some products to compete with rivals while it was unable to quickly restock popular merchandise, which hurt its results in the first half of the year.
> 2012 added seasonal employees: 80,000
> Change from 2011: 2,000 more
> Last 12 months sales: $26.8 billion
> Employees: 175,000
Macy’s plans to hire 80,000 people for the upcoming holiday season, according to the company. The temporary workers will help in “its Macy’s and Bloomingdale’s stores, call centers, distribution centers and online fulfillment centers.” Macy’s has been doing well recently. In the last quarter, profit rose 15.8% compared to the same quarter in 2011, and the company raised its 2012 profit outlook from $3.30 a share to $3.35 a share. Macy’s has trimmed costs in some places. The company closed five Macy’s stores and four Bloomingdale’s stores that were underperforming earlier in the year. Although more than 830 workers were affected by those closures, some of the employees had the opportunity to join other stores in the company.
> 2012 added seasonal employees: 80,000-90,000
> Change from 2011: 2,000-12,000 less
> Last 12 months sales: $71.3 billion
> Employees: 365,000
Target’s sales rose a respectable 4.2% in the last 12 months compared to the previous 12 months. But the Minneapolis-based company will only hire between 80,000 and 90,000 temporary employees for the holiday season, down slightly from the 92,000 seasonal workers it added last year. The retailer said it doesn’t need to hire as many temporary employees since 30% of last-year’s seasonal workers moved into permanent positions. In addition to the hiring for the 1,772 stores in the U.S., the company announced Monday it has started hiring for the first 24 Canadian stores, which will open in the spring of 2013.