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Retail Employment Stable, Thanks to Omnichannel Growth

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In the past few weeks, several department and discount stores have announced store closings that will result in the elimination of thousands of jobs. Macy’s said it will shutter five underperforming stores, putting 2,500 people out of work. Walmart’s Sam’s Club division plans to cut 2,300 jobs, largely due to a new system of staffing stores based on revenues. Target announced the elimination of 475 jobs globally. J.C. Penney plans to close 33 of its ailing department stores, resulting in the layoff of 2,000 employees.

Are big stores starting to unravel?

No, generally speaking. Retail employment, though shrinking, has been growing faster than total job growth since the middle of last year. In 2013, the retail sector added 381,000 jobs — 17% of the new jobs added in the U.S. economy. In November and December, retail employment grew by 77,000.

Many of those jobs were seasonal, however, and in January there was a net loss of 13,000 jobs in retail. However, the January month-end job total retail job count was 316,000 higher than at the end of January 2013.

What we’re seeing with respect to employment at retail companies is a shift in strategy. Many department stores and discounters, realizing that their online sales are growing much faster than sales at bricks-and-mortar stores, particularly as consumers increasingly use mobile devices to shop, are rapidly evolving their businesses to an omnichannel model that integrates physical and digital retailing.

Many of those companies who have been outsourcing their e-commerce operations to 3PL (Third Party Logistics) providers are now bringing those functions in-house, which will result in the hiring of people to staff new distribution centers, expanded IT and e-commerce departments, and the evolution of physical stores as mini distribution centers for online orders.

RetEmpOver 9,000 of the new jobs added in November and December were at department stores. Some of these were seasonal jobs, but most were not, according to many of the companies, who expect the hiring growth to continue. In January, an additional 2,000 jobs were added in the department store sector. Walmart, Dick’s Sporting Goods, TJX, Ross, Nordstrom, Kohl’s and many others have outlined plans to build large new omnichannel distribution centers, creating thousands of new jobs in 2014.

Macy’s has announced that although it is eliminating jobs at the five stores slated to close, it is opening eight new stores elsewhere, and expects to maintain its level of 175,000 employees this fiscal year. Macy’s website lists over 1,000 sales associate job openings, as well as hundreds more at the corporate level.

Amazon, the e-commerce retailer that started it all, is in the process of building five new distribution centers, reportedly near major cities, each of which could employ over 1,000 people, and is also adding staff to its existing distribution centers, many of which the company is expanding.

After trending down in the past year, specialty apparel employment has started to rise as well. In November and December, 12,000 new jobs were added in the sector. In January, a reduction of only 2,000 offset the holiday season gains. Although total employment in specialty stores remains 12,000 below the January 2013 level, employement in specialty retail is not expected to decline in the near future. Many specialty apparel retailers are beginning to use their stores as distribution centers, and are increasing store-level capabilities to accomplish this. Ascena Retail Group, parent of Dress Barn, Lane Bryant and Justice, has invested in software and people to implement order-online-pick-up in store and other omnichannel features such as tablet-based inventory tracking and product information systems in stores, as have Foot Locker, Michael Kors, Urban Outfitters and many, many others.

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There are exceptions to this trend toward increased staffing, however. It is doubtful whether JC Penney will be replacing store-level job cuts with additional staffing elsewhere. The ailing department store, whose sales have plunge by $5 billion in the past two years and are expected to total $12 billion in 2013, is struggling with some basic issues like how to get back the millions of customers who fled during the Ron Johnson era to competitors like Macy’s. And Sears, after closing 300 of its 2000 stores in the past three years, has not finished downsizing. It announced last week that it will close its flagship downtown Chicago store, and will eliminate 1,600 jobs in at Sears Canada.

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