The job market looks like it doing well right now. Unless you head to the mall.
Record numbers of store closings and a surge in retail bankruptcies, as well as the shift to online shopping, have forced retailers to slash jobs even as other employers scramble to find qualified workers.
The sector lost a total of 66,500 jobs in 2017.
General merchandise stores, the segment that includes department stores, were hit the hardest, losing 90,300 jobs, according to the Friday’s December jobs report from the Labor Department. Clothing stores cut another 28,600 jobs. Drug stores lost 18,400.
These job losses tend to hit the young, elderly, women and minorities the hardest. About 60% of department store employees are female, compared to 47% of workers overall. Minorities, the elderly and teenagers are also far more likely to find jobs in department and discount stores than they are elsewhere. Teenagers hold 8% of department store jobs, compared to 3% of jobs overall.
December retail jobs were bad, despite a generally strong holiday shopping season.
December is usually retail’s strongest hiring month to cater to the crush of shoppers. The Labor Department’s raw data shows that in December of this year retailers added 55% fewer jobs than they did in the same period of 2016. It was the lowest number of December retail hires ever, according to records that go back to the Great Depression.
“If you went into physical stores at a mall, shoppers were struggling to get sales associates,” said Greg Portell, lead partner in retail with consultant A.T. Kearney. “Many stores had ‘Help Wanted’ signs up; even the high-end retailers had service issues in their stores.”
Retailers had a hard time finding the temporary help they needed due to extremely low unemployment. Walmart, the nation’s largest private sector employer, announced it would give extra hours to its part-time workers rather than bringing on additional workers for the holidays.
In order to find the workers they need, Walmart (WMT) and some of the other healthier retailers have been raising the hourly wages they pay. especially for their starting positions, in order to find the workers they need. Many states are also raising their minimum wage. That rising pay is good for workers, but it can be a problem for the financially troubled retailers, forcing them can cut back on help as a result said Leon Nicholas, analyst for Kantar Retail.
Higher wages are also prompting greater automation in the sector, such as self-checkout lanes, which cuts down on the number of cashiers. Apps that help shoppers find items in the stores are convenient, but it can lead to fewer workers on the floor of a department store.
Of course a major part of the problem for traditional retailers is shoppers ordering online.
“A lot of those jobs are being transferred to fulfillment. Where I used to work in a store, now I’m working at an Amazon fulfillment center,” said Nicholas.
And the people fulfilling those orders are often counted by the Labor Department as warehouse workers or transportation workers, even if they work for a traditional brick-and-mortar retailer, let alone Amazon (AMZN).
So the job losses in the sector are likely to continue said Nicholas. In 2017, 7,000 store closings were announced, a record that was more than triple 2016’s number. And the trend will undoubtedly continue in 2018. Sears Holdings (SHLD), owner of both Sears and Kmart, said Thursday it plans to close more than 100 additional stores.