Toys R Us is joining Wal-Mart and other major retailers making bets that they’ll need extra staff for the holiday shopping season.
The toy retailer -- which hired about 40,000 seasonal workers last year and retained about 15 percent of that number after the holidays ended -- said Tuesday it will take on 45,000 seasonal employees in the U.S. this year to deal with the upcoming holiday season.
Last week, Wal-Mart Stores said it plans to hire roughly 50,000 seasonal workers during the holiday season, slightly higher than the number of employees it hired last year. Other retailers, such as Kohl’s and Target, have also announced plans for holiday-season hiring this year.
A rise in holiday hiring is seen as an indication of the retail sector’s expectations for holiday shopping season sales, which are vital to retailers because they account for around a quarter of annual retail sales in a typical year.
This week, outplacement firm Challenger, Gray & Christmas said it expects holiday hiring to be up this season from last year’s levels. The retail industry hired just over 660,000 seasonal jobs last year. This year, Challenger expects retailers could add almost 700,000 workers. But that level of seasonal hiring is still below pre-recession levels.
While 57 percent of retailers plan to hire seasonal workers at the same level as 2011, 36 percent say they will be hiring more workers this year -- up from 10 percent in 2011, according to a survey by Hay Group. The management consultancy polled 14 major U.S. retailers in order to gauge retailers’ plans for the 2012 holiday season.
Retailers’ holiday sales projections and hiring plans show they are more confident in economy, Hay Group said. Seventy-five percent of retailers expect an increase in holiday sales this year, according the survey.
“Retailers are betting big on the 2012 holiday season,” and they are “calm and cool, rather than concerned,” heading in, said Craig Rowley, who is head of Hay Group’s Retail Practice. After four years of economic turbulence, retailers have figured out how to operate in an uncertain business environment, he added.
However, with the economy still in the doldrums and unemployment stubbornly high, forecasts for holiday shopping this year are cautiously optimistic.
Retail sales in the fourth quarter of the year, which includes the holiday sales period, are expected to grow at a 4 percent annual rate, down from a 6 percent rate last year, according to a report from retail consultancy Kantar Retail.
The past two holiday shopping periods benefitted from a pickup in job growth in October that largely continued through the end of the year, but that sort of boost to the economy isn’t likely to take place in 2012, noted Frank Badillo, Kantar’s senior economist.
This fall, consumers are likely to feel more worried about the future, which will be fed by uncertainty surrounding the U.S. elections, unsettled U.S. tax and spending policies, and no clear resolution to the ongoing European debt crisis.
One area of strength will be e-commerce, Badillo added. He expects online sales to grow 14 percent in the fourth quarter, down slightly from the 15.8 percent page seen in the final quarter of 2011. That’s still robust growth, even though online sales only represent about 5 percent of all retail sales, he added. By contrast, brick-and-mortar retailers will see sales growth of 2.9 percent in the fourth quarter, down from 4.7 percent in 2011.
One retailer who will benefit the most from this trend will be Amazon.com, according to Badillo, who said Kantar expects the web-based retailer to become the most shopped retailer for the 2012 holiday season, surpassing the current leader Wal-Mart.
“Amazon is on a trajectory in terms of online sales that should see it surpass Wal-Mart this year,” Badillo said.
“Online is still very strong and far and away the strongest retail channel in terms of growth,” he continued. “It’s driving much of the price pressure for big-box retailers; sales growth has been flattening out here for them, or in some cases going negative.”
Indeed, e-commerce tracking firm eMarketer predicts 2012 will see a fourth consecutive year where online holiday sales (defined as sales in November and December) will grow in the mid-to-high teens, after plummeting 8.2 percent in 2008 during the depths of the Great Recession.
eMarketer also estimates that online holiday sales will account for 24.3 percent of the $224.2 billion in U.S. retail e-commerce sales forecast for all of 2012.
