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Retailers are ramping up for the busiest in-store holiday shopping season since 2019, according to research from consultancy PwC. While that\u2019s great news for merchants and the economy, particularly after years of pandemic-induced shopping anxiety, this year\u2019s holiday season is rolling in with a new set of curveballs for retailers, not least of which will be staffing those busy stores while keeping costs in check.<\/strong><\/p>\n Also adding potential snags this year has been the Presidential election<\/strong>, which prompted many brands to delay both holiday hiring and marketing while the country\u2019s attention was focused elsewhere. And this delay is further compounded by a holiday season that\u2019s shorter<\/strong> than normal.<\/p>\n \u201cThis happens in election years \u2014 everything starts a little later because people are focused on something else,\u201d explained Kelly Pedersen, Retail Practice Leader at PwC in an interview with Retail TouchPoints<\/em>. \u201cMedia was so expensive to buy in the last six<\/strong> weeks that retailers didn\u2019t really advertise much, but now that the election is over, it\u2019s starting.<\/p>\n \u201cThe other issue this year, and why we\u2019re expecting more traffic in stores, is that we have one less week between Black Friday and Christmas,\u201d Pedersen added. \u201cIt\u2019s a compacted timeframe. A lot of the big sales are starting essentially a week later, and there\u2019s a week less to Christmas, plus there will probably be more traffic in-store because people are concerned about getting their stuff in time.\u201d<\/p>\n But if the last few years have taught retail professionals anything, it\u2019s how to plan ahead and stay nimble. Pedersen shared how retailers are adopting their holiday staffing strategies in light of the unique circumstances this year, including:<\/p>\n For the past few years, the big story around retail labor has been a lack of it, but Pedersen said that he\u2019s been hearing much less concern among retailers about finding the necessary staff this year. What is<\/em> causing concern are the trickle-down effects of measures put in place to entice workers back into the labor force and support them, namely hikes in the minimum wage and an increase in the number of full-time versus part-time positions.<\/p>\n \u201cI was just talking with a CEO, and he was talking about how the minimum wage in California is $19<\/strong> an hour now,\u201d shared Pedersen. \u201cAnd then they have to pay another $2<\/strong> an hour for insurance on top of that, so it\u2019s $21<\/strong> an hour for labor. Five<\/strong> years ago, it was 60%<\/strong> of that. So as retailers think about holiday labor, they\u2019re giving extra scrutiny [to the idea of] adding more dollars into the stores.<\/strong> California is an extreme example, but it just shows the caution that companies are taking with this. Everyone is kind of waiting to see if that holiday traffic is going to materialize into actual sales.\u201d<\/p>\n Adding to this uncertainty is the fact that the part-time versus full-time mix at many retailers has shifted significantly over the last few years, toward more full-time positions<\/strong>, said Pedersen. \u201cThe power has been with the workers the last two, three years, and they are demanding these things,\u201d he said. \u201cBut ideally, retailers don\u2019t want full-time staff in stores because the sales patterns in stores don\u2019t necessarily always match up to a full-time associate. There are peaks and valleys, and you want to staff at the peaks and have almost nobody in the valleys. <\/strong>Having more full-time staff handcuffs you because you can\u2019t go up and down with those peaks and valleys.\u201d<\/p>\n This impacts different types of retailers in different ways, according to Pedersen. For example, smaller specialty retailers that typically only have one to two<\/strong> people working at any given time can really feel the impact of that loss of flexibility. Big box retailers and grocers, in contrast, may be better able to absorb a move toward full-time shifts since they already run large staffs throughout most of the day \u2014 but because of those larger employee rosters, wage increases add significantly to operating costs. \u00a0<\/p>\n \u201cThe challenges with labor are not what they were three or four years ago, and I think we\u2019re in a relatively good zone this year in terms of availability,\u201d said Pedersen. \u201cThis year I see the conversation turning from, \u2018We can\u2019t get the labor\u2019 to \u2018We have to make sure we get the most out of that labor.\u2019\u201d<\/strong><\/p>\n Because of these financial pressures, retailers are remaining conservative in their expectations for this holiday season. \u201cConsumers say they\u2019re <\/strong>going to spend more<\/strong>, based on our research, but retailers are taking a more conservative view to this holiday season because of all these factors<\/strong>,\u201d said Pedersen. \u201cWe can never underestimate the impact of one extra day during a holiday season; it does make a difference. [And that conservativeness could also impact] inventory, especially coming after all the inventory issues the last few years. So many companies have taken a huge focus on right-sizing and are running leaner inventories. But if consumers do make a big splash this holiday season, and the retailer hasn\u2019t planned for it, there could be shortages, which will probably drive up in-store traffic even more.\u201d<\/p>\n In response, retailers are not only exercising caution about holiday hiring and other spending, but also working to maximize the efforts of the staff they have, said Pedersen, including:<\/p>\n 1. More specialization of in-store staff<\/strong>, with employees dedicated to singular tasks such as handling returns or picking online orders rather than jumping around between different duties.<\/p>\n 2. Shifting employees to stores<\/strong> where the traffic is, most notably mall locations<\/strong>, which are seeing a marked uplift in traffic thanks to the fact that younger Gen Z and Gen Alpha shoppers have decided that \u201cmalls are cool again,\u201d said Pedersen. As a result, many retailers are shifting existing staff and focusing hiring on their suburban locations.<\/p>\n 3. Focusing seasonal labor on administrative tasks so full-time employees can sell: <\/strong>\u201cWhat you\u2019ll see is a lot more seasonal labor handling more of the administrative things, like returns, [to allow the] people who know more about the product and the brands to focus on sales,\u201d said Pedersen. \u201cRetailers are trying to bifurcate the responsibilities, to make it more efficient and focus the people that are good at sales on selling.\u201d<\/p>\n 4. In-store encouragement to buy online<\/strong>, such as signage and kiosks that promote digital shopping opportunities in an effort to help alleviate pressure on store associates.<\/p>\n The election is over, yes, but for many retailers that just means the beginning of what could be a major shift in policies that impact their business. In particular, Pedersen said that retailers are keeping their ear to the ground with regards to President-elect Donald Trump\u2019s campaign promises to increase tariffs on goods coming from China and to crack down on illegal immigrants.<\/strong><\/p>\n While the potential tariffs have many executives worried, Pedersen said he doesn\u2019t believe that will be as much of a blow to retailers. \u201cMany companies already diversified away from China during the last administration when they put in tariffs, so I don\u2019t believe that\u2019s going to be as impactful in the retail space as it was previously<\/strong>,\u201d he said. \u201cFor example, one of the apparel companies I work with was almost 100%<\/strong> in China pre-2016, but they\u2019re less than 5%<\/strong> now because they diversified to Southeast Asia.\u201d<\/p>\n What Pedersen is seeing more concern about is the potential impact of mass deportations on the work force. \u201cA lot of discussions now with the new administration coming in is how is that going to affect the labor market, especially in the states where there\u2019s a big population of what might be deemed an illegal workforce<\/strong>,\u201d he said. \u201cIt\u2019s sort of an unwritten thing that happens. People produce documents, and so many of the people that are helping us in stores and restaurants are actually illegal, but even the employer [doesn\u2019t know].<\/p>\n \u201cThree <\/strong>of the biggest states with a large immigrant or illegal immigrant population are Florida, Texas and Arizona, and all three of those states also have been big migration states from the north and the east, so there are bigger populations there [now in general],\u201d added Pedersen. \u201cIn fact, in our holiday outlook, the biggest [spending] increases are all coming from the south, including Texas, because of these huge population migrations. If you talk to retailers, all their best store results are coming from Texas and Tennessee and Florida and some of these states because of all the people that have moved there. So I think these [immigrant considerations] are going to be the biggest thing [under the new administration] \u2014 how drastic will these measures be and what will the impact be on the workforce?<\/strong>\u201d<\/p>\n<\/p><\/div>\n![\"Kelly](\"https:\/\/www.retailtouchpoints.com\/wp-content\/uploads\/2024\/11\/1691428329964.jpg\")
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Retailers Take Cautious Approach to Holiday Hiring<\/strong><\/h2>\n
Strategies to Make the Most of the Workforce You Have<\/strong><\/h2>\n
Beyond the Holidays: Preparing for a New President<\/strong><\/h2>\n