- Retailers are staring down a triple whammy of challenges this season including labor shortages, supply chain woes and inflation.
- The National Retail Federation projects sales between November and December will rise between 8.5% and 10.5% for a total of between $843.4 billion and $859 billion. The projection tops last year's numbers and would mark a new all-time high.
- Businesses large and small are hiking pay, offering bonuses and looking to meet customer demand with thin staffing.
Karen Hilt owns My Secret Stash in Traverse City, Michigan, retailing products from local artists and sellers— and business has been booming. Hilt's feeling optimistic about the upcoming holiday season, so much so that she's gearing up to open a second location.
But like many small business owners, she's staring down an ongoing labor crunch, and staffing the new store remains a challenge.
A recent poll from the National Federation of Independent Business found nearly half of owners it surveyed were experiencing either significant or moderate staffing challenges.
"Between both locations I have six, and I would love to have 10 or 12 workers. That would make me a lot happier," Hilt said.
To take up the slack she added, "I'm working pretty much seven days a week, morning, noon and night."
Hilt's upbeat holiday sales outlook is echoed by the National Retail Federation, which expects a roaring season, with sales during November and December projected to rise between 8.5% and 10.5% for a total of between $843.4 billion and $859 billion of sales. The projection tops last year's numbers and would mark a new all-time high, even as a triple whammy of labor shortages, supply chain woes and inflation hit companies nationwide.
"If retailers can keep things on their shelves, and that shippers can get the goods delivered to people's homes by Christmas, it'll be really a banner year for holiday spending," said Jack Kleinhenz, chief economist at the NRF, who noted the staffing issue hits not only retailers in stores and online, but in the supply chain.
Supply chain disruptions and worker shortages could put a crimp in the party. According to the NFIB, 48% of small businesses say supply chain disruptions are having a significant impact. Of those who rely on holiday sales for a significant part of yearly revenue, 38% anticipate such shortages will impact sales.
"We are seeing a shortage of workers in distribution and warehouse. Part of that is the timing of getting the products, even from the port, to the timing of these of these products getting into a distribution and warehouse area. They're juggling hours, they're juggling people, and people are working long hours," Kleinhenz said.
Retail job openings hit 1.3 million in August according to data from the Bureau of Labor Statistics, and Challenger, Gray & Christmas projects 700,000 workers will be hired this season. The retail sector added 35,000 jobs in October according to BLS. Amazon, Target and Walmart and others are looking for hundreds of thousands of workers and bumping wages, offering bonuses and more to recruit.
Baltimore-based Under Armour said it's entering the holiday season with more teammates than it's had in years past in its retail stores. The company has hired 1,000 seasonal workers and is seeking 1,000 more workers to be brought on over the next few months.
UA credits a new in-store incentive program for all retail employees, seasonal, full-time and part-time, that allows for bonuses monthly that can equate to 8% or more of their take-home pay— in addition to a $15 an hour starting pay, up from $10 an hour this summer, to its staffing success so far.
"We are in one of the most competitive environments that we've seen in a very long time, particularly in retail stores. I think that our decision earlier on in the year to increase that starting wage from $10 to $15, certainly helped us get ahead of the holiday hiring that we're in right now," Stephanie Pugliese, UA President of the Americas.
"The holiday season is always a big peak time for any retailer to hire and make sure that we have enough teammates to satisfy the consumer demand, it really is a long-term investment that we have in the talent of our business. We've built our plans around investing in that talent on the go forward."
Back in Michigan, Hilt said she isn't immune to the supply chain hiccups rippling through the industry, but as bigger retailers face a lack of product, she's positioned herself to succeed by selling local goods like house plants. Sales of plants really took off during the pandemic as homebound customers sought to spruce up their environments - and their zoom meetings.
"We are definitely beating our projections from years prior, and our customers are happy—we love that everybody's putting that focus into shopping local," Hilt said. "I don't have a lot of product hung up on a ship anywhere."
Still, she's paying well above minimum wage and offering extra perks like free lunches to workers. And most of all, she's hoping small changes will help make the customer experience better in the face of thin staffing.
"I feel like here's some lemons and let's make a whole bunch of lemonade," Hilt said. "Having some people come in and do the stock before or after we're closed, because if we do that when we're open, that is detrimental to the experience for our customers who are in front of us, who did take the time to come out and want to do some fun shopping. They want us to be present for them, so we're trying to just look a little more creatively."
CNBC's Betsy Spring contributed to this story.