Retailers scale back hiring as worry grows about slowdown
NEW YORK — After going on a frenzied hiring spree for a year and a half to meet surging shopper demand, America’s retailers are starting to temper their recruiting.
The changing mindset comes as companies confront a pullback in consumer spending, the prospect of an economic downturn and surging labor costs. Some analysts suggest that merchants have also learned to do more with fewer workers.
The nation’s top employer, Walmart, said it recently overhired because of a COVID-19related staffing shortage and then reduced its head count through attrition. In April, Amazon said it, too, had decided that it had an excess of workers in its warehouses. And FedEx, whose customers include big retailers, said late last month that it was hiring fewer people.
In addition, new data shows that retailers in recent months have been scaling back sign-on bonuses and are no longer relaxing job requirements — a sign they no longer feel compelled to expand their applicant pool, according to the labor analytics company Lightcast. And Snagajob, an online marketplace for hourly work, reports that job postings in retailing have been slowing in the past couple of months, though they remain up from a year ago.
Retailers “are going to take a conservative view of what’s possible and what’s necessary because the price they will pay for being wrong will be minimum if they run out of goods and don’t have enough staff, and massive if they wind up with an inventory glut and they have too many people employed,” said Mark Cohen, director of retail studies at Columbia University and a former CEO of Sears Canada.
The easing of retail hiring is happening in a labor market that has undergone volatile swings throughout the recovery from the pandemic recession of 2020.
Early on, companies such as Amazon, Target and Walmart that provide necessities and goods for the home stepped up their hiring to meet a crushing demand from online shoppers. At the same time, stores such as Macy’s and Nordstrom whose clothing lines were considered nonessential by many at the time, temporarily laid off workers during nationwide lockdowns.
The pullback in retail hiring comes against the backdrop of a still-robust national job market. On Friday, the government reported that America’s employers added 372,000 jobs in June. The unemployment rate for June remained 3.6%, for a fourth consecutive month, just above the half-century low that preceded the pandemic and a sign that the demand for workers, economy-wide, is still strong.
The job market became extremely tight starting in the spring of 2021, after the country emerged from the lockdowns and people, many of them newly vaccinated, were eager to shop and dine out again.
But shifting consumer behavior is already weighing on retailers and other types of businesses. Netflix and Peloton have announced layoffs, while technology behemoths like Facebook’s parent Meta Platforms Inc. and Uber Technologies say they have moderated their hiring plans.
Such a pullback, if replicated elsewhere, might herald a broader scaling-back of hiring across the economy and, eventually, help slow the economy and ease high inflation.
With online shopping slowing, some affected retailers are retrenching.
Amazon, which doubled the size of its operations and nearly doubled its workforce in the past two years, is letting some of its warehouses leases expire and deferring construction on others, according to CEO Andy Jassy. The e-commerce giant also reportedly plans to sublease its excess space. Experts say Amazon and others may decide to find uses for their excess labor as the holiday shopping season approaches.