Retail stores are struggling to remain afloat in today’s economy as consumers go online to do their shopping. Job losses are occurring at the most rapid pace in more than seven years.
According to a recent report, over the past two months, 60,600 retail jobs were lost, 39,000 lost in February, 29,700 lost in March. The losses have more to do with changes in buying habits than with the health of the U.S. consumer spending. With the Amazon Marketplace leading the online shopping world, brick and mortar stores like Macy’s and J.C. Penney have closed stores at an accelerated rate. They are experimenting with fewer employees to keep the remaining stores in full operation.
The retail industry is plagued with bankruptcy filings, most recently HHGregg and Payless ShoeSource, which unveiled its plan just this week to close about 400 stores. HHGregg entered into Chapter 11 bankruptcy and will begin liquidating its assets this weekend.
The job cuts in the retail industry are only a minor burden for the overall U.S. economy. Americans seeking to secure a job are facing painful challenges. Retail accounts for about one-third of the first-time jobs in the United States and with reductions and downsizing of the workforce, job access will be blocked for many.
Online shopping has become the new trend, as retail jobs decline and now only account for 10.9 percent of the workforce. According to principal of the Retail Economist, Michael Niemira, in 2000, the retail jobs accounted for 11.6 percent of the labor market. Experts expect more job losses due to more store closings in the coming months.
“It’s principally about the impact of online shopping and how consumers are shopping differently than ever before,” Niemira said. “It’s harder for the industry to consistently do well and make money.”
Friday’s U.S. jobs report contained the retail industry losses for February and March. The report showed that hiring in the U.S. dropped to its weakest pace in nearly a year, but the unemployment rate managed to reach its lowest level in nearly a decade.
Wal-Mart and Macy’s laid off a total of 34,700 workers last months and Clothiers shed 5,800. As retailers are struggling to stay relevant in today’s economy, online retailers, such as Amazon and Chewy.com are planning to add more jobs this year. Chewy.com plans to add an estimated 3,200 jobs, increasing its head count to 6,900.
More and more traditional retailers are expanding their online presence, which requires far fewer workers and less overhead expenses. According to a director at AlixPartners, LLP, Pete Madden, the labor involved in selling an item online through a distribution center can be an estimated 50 percent less than if it were sold in a store.