Retail Sales Rise as Retail Employment Tanks – Analysis of the Story

Retail Sales Rise as Retail Employment Tanks – Analysis of the Story

Retail Sales Rise as Retail Employment Tanks - Analysis of the Story

On Friday, the Labor Department’s March jobs report arrived with disappointing numbers. With its 120,000 increase in payrolls, the number represented the smallest rise in five months and below economists’ estimates. One small positive was the unemployment rate dropped to 8.2 percent from February’s 8.3 percent.

But after taking a closer look at the report, one glaring number was the retail employment number. It dropped by 34,000, representing its greatest decline since October 2009. Over the last six months, retail employment had been increasing by 11,000 on average.

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To further add to the retail gloom, according to a study by Business Journal from March U.S. Bureau of Labor statistics, retail employment in 45 states remains below 2008 numbers[]

With this sector hit hard for employment, interestingly enough retail stores are producing strong numbers with same store sales.

In a March 2012 comparison versus the previous year’s numbers, stores have reported healthy numbers. Revenues for stores open for a minimum of one year, which is an indicator of a retailer’s health, increased 4.1 percent for 22 retailers according to the International Council of Shopping Centers. This number fell in line with expectations but some stores such as Saks, Inc. and Limited Brands, they exceeded their estimates and subsequently changed their forecasts.

Take a look at these familiar names.

Costco Wholesale Corp. 6 pct

Target Corp. 7.3 pct

Kohl’s Corp. 3.6 pct

Nordstrom Inc. 8.6 pct

Macy’s Inc. 7.3 pct

Saks Inc. 6.3 pct

Good Weather, Feeling Positive

While retail employment drops as stores continue seeing gains, there may be a few explanations why shopping has been high.

Jack Kleinhenz, chief economist of the trade group, National Retail Federation, said of the recent retail store figures, “We had mild weather, which basically had consumers in the marketplace earlier.”  He also noted that retailers held off on the usual cuts that come after the holiday shopping season ends.

Even though the 34,000 decline was a large one for retail employment, the Labor Department did note on Friday that the amount of people unable to work from poor weather came in at 360,000 below average for the period from December through February. With temperatures 3.9 degrees above average during this time period, the country (well, the 48 contiguous U.S. states) enjoyed its fourth warmest win on record.

Consumers were ready to hit stores sooner than usual for lighter clothes and the new brighter options on this spring’s racks. Laura Gurski, partner and global head of A.T. Kearney’s retail practice, said, “Not only did we have nice weather, we’ve also taken a bit of a breather from the shocking economic news that we have had. There’s a calming down or feeling that the economy is settling in and starting to trend more positive from an American standpoint.”

 Higher Gas Prices Affect Shoppers

As some of the higher-end retailers reported positive numbers and altered forecasts, other retailers haven’t been able to see the high numbers. Lower-end retailers are hurt by consumers that don’t want to drive to their stores because of high gas prices. The drugstore  Walgreens and department stores such as Bon Ton Stores Inc. and SteinMart all saw March revenue declines in stores open at least one year.

Analysts are curious to see April’s retail numbers. With an early Easter holiday and spring breaks, numbers should quiet down and paint a more “realistic” picture.

And while this can help explain some retail store numbers, what can help change the retail employment numbers?

This is tougher but here’s few thoughts. As retail sales figures continue to grow, employers will add to staff or keep their post-holiday numbers. It will be a slow process but there’s opportunity to increase the numbers.

Wages need to rise as the pool of applicants is more educated and brings great skills and experiences. The face of the retail employee is changing and so are company’s expectations. This will draw additional jobs seekers and rid some of the negative stigma for retail jobs as a low-paying, uneducated field.

What do you think will change improve the dismal retail employment figures?

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