Holiday retail hiring falls below expectations

It was supposed to be a happy holiday for workers looking for retail jobs during the industry's busiest time of year, but the reality didn't live up to the expectations.

And now, making matters worse, several retailers are looking to start off the year with hefty job cuts, according to outplacement firm Challenger, Gray & Christmas.

Employees assist shoppers at the check-out counter of a Toys R Us Inc. store in New York.
Peter Foley | Bloomberg | Getty Images
Employees assist shoppers at the check-out counter of a Toys R Us Inc. store in New York.

After a record-breaking hiring spree in October, the industry could add as many as 800,000 jobs during the last three months of 2014, the firm estimated. The last time that happened was 1999.

Unfortunately, weak Black Friday sales, coupled with other factors such as a big shift to online shopping, led to a slowdown in hiring in November and December, with employers adding 23,000 fewer workers than during the same two-month period a year earlier, Challenger said.

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All told, retail employment rose by 603,200 in November and December, down 4 percent from the 626,200 workers added during the same period in 2013, according to the firm's analysis of non-seasonally adjusted government employment data.

Overall, holiday hiring during the final three months of last year resulted in 785,200 workers' being added to retail payrolls, which was 1,000 fewer than 2013's 786,200.

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"The Bureau of Labor Statistics data will be adjusted over the next couple of months, so the final tally may end up exceeding last year's total. Even if that occurs, though, hiring definitely fell short of the expectations based on the strong hiring numbers we saw in October," said John Challenger, chief executive officer of Challenger, Gray & Christmas.

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Heading into the holiday season, the bar was high. Hiring in 2013 was the most robust since 2000. And the retail sector grew by 182,000 jobs in October, the largest October employment gain in Labor Department data going back to 1939.

It's also important to consider that these figures may not represent retail's entire contribution to the nation's jobs picture. As more retail sales shift online, the sector may be boosting jobs in other areas such as shipping.

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"Between FedEx and UPS alone, nearly 150,000 holiday workers were added to the economy," Challenger said. "If the retail sales and hiring data tell us anything, it's not that consumers are spending less; it's that they are spending differently."

As retailers adjust to this new reality, underperforming stores are being shuttered. Since the start of this year, there have been several significant job-cut announcements, including 2,500 resulting from the closure of 14 Macy's department stores. J.C. Penney is closing 40 stores, resulting in 2,250 job losses. Young adult clothing retailer WetSeal announced that it is closing 338 stores and cutting nearly 3,700 jobs.

"Undoubtedly, there will be more job cuts in the coming weeks and months. RadioShack, for example, is expected by many to announce more store closures and job cuts, as it continues to struggle," Challenger said.