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Retail sales and the hiring of seasonal workers should be good -- not great -- in 2006, in the eyes of industry and independent observers.
Holiday sales are projected to grow 5 percent over last year, according to the trade group National Retail Federation (NRF). That's less than the 6.1 percent growth racked up in 2005 but more than the average 4.6 percent annual increase over the last 10 years.
As for seasonal hiring, last year set a high bar against which this year's numbers will be measured. Hiring was robust for the 2005 season at 629,000 workers, representing a 20 percent increase over 2004 and the first time holiday hiring grew by more than 100,000 year-over-year in the past 10 years.
"This will be the fifth year in a row that we'll see an increase in seasonal jobs," says Dan Butler, a vice president at NRF in Washington, DC. Holiday hiring will surpass pre-9/11 levels for the first time, he expects. Individual retailers are loath to reveal any doubts they may have about sales and hiring, fearing those statements might become a self-fulfilling prophecy.
Retailers Enter Hiring Season with Hesitation
Observers outside the industry are less than bullish on the upcoming season. Holiday hiring this year will be steady or drop somewhat, according to a forecast by Challenger, Gray & Christmas, a Chicago outplacement firm.
"If retailers are budgeting for a tepid Christmas, that affects the hiring," says Eugene Fram, a professor of marketing at the Rochester Institute of Technology. "If a department was going to hire 10 people, they might now hire only eight or nine."
Some say retailers are overdoing their reluctance to hire. "Retailers have been overly conservative," says Anthony Chan, chief economist at JP Morgan Private Client Services in New York City. "Sales have been stronger than the hiring would suggest."
Still, big retailers can't afford to wait until the last moment to mount their hiring efforts. "Retailers take applications in September and October for jobs that will begin in November," says Butler. "They layer in the employees as seasonal business grows."
Some Sectors, Channels and Operations Stand to Gain
All retail sectors are not created equal, especially when it comes to holiday hiring.
"Online is a small but growing part of the total retail pie, so I would expect some increase in Internet hiring, and that will come early in the season," predicts Fram.
Holiday job seekers tend to first consider jobs like ringing up sales or restocking shelves, but other retail functions also ramp up for the holidays. "A lot of retailers who are online are building up staff for their distribution centers and fulfillment centers," says Butler.
And as the housing sector softens, certain retail areas may benefit. "Some sectors are negatively correlated with housing," says Chan. Thus, with home sales declining, "sporting goods, electronics and furniture may experience a bit of a boost."
Other sectors do disproportionate sales near year's end. "With beauty items, up to 40 percent of sales come in the holiday season," says Beth Ann Catalano, copresident of Twist New.Brand.Venture, a New York consulting firm. "Vendors will hire freelancers and put them in stores to help sell to the clients."
Retailers will do their best to keep workers happy this season, according to the NRF. "Retailers have set standardized schedules, so employees will know what hours they'll be working through the whole season," says Butler.
Will retailers stick with those schedules if business conditions change? If you're thinking about taking a seasonal job, don't bet all your holiday plans on it.
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