The Commercial-News, Danville, IL

November 25, 2012

Holiday sales essential for retailers’ bottom line, creates jobs

BY APRIL EVANS
Commercial-News

DANVILLE — The holiday shopping season is in full swing, with shoppers who braved Black Friday now recovering, assessing their trip and sharing their tales of trials and triumphs.

While the gift-buying season is fun for most, yet no doubt dreaded by some, sales during this time of year can make or break the bottom line for retail businesses.

To help capitalize during the biggest buying time, retailers make use of many strategies. Earlier than ever and longer sales, bigger price cuts, layaway, targeted advertising campaigns and hiring extra workers are just some of the methods being employed to help holiday sales along.

Holiday hiring

Having the right amount of help on the sales floor during the holiday rush is essential for maximum success for retailers.

Richard Feinberg, Purdue University professor of consumer sciences and retailing, said retailers are thinking about sales when they hire extra help for the holidays.

“The more likely a consumer is to find someone to help them, the more likely they are to find something to buy,” Feinberg said.

He said in most all cases when a customer leaves a store it’s because they couldn’t find what they wanted. The only way for an employer to counter that is with live people. More employees on the floor equate to more sales per square foot.

“They can achieve more,” Feinberg said of those who have more on staff. “Stores can choose to be a vending machine or they can be a value to the consumer.”

At Big R in Tilton, supervisor Randy Thornton said they’ve been gearing up for the holiday shopping season and Black Friday, in particular.

“We have done some hiring the past few weeks,” Thornton said. “We make sure we have plenty of help.”

Thornton said holiday hiring at the store begins by looking at their roster and seeing who has left since spring, which is a strong time of year for them with the lawn and garden season.

Positions recently filled were cashiers and clothing department personnel, all customer service spots.

“Clothing is our strongest department this time of year,” Thornton said. “We want to make sure there are plenty of people to help customers find what they need.”

In addition, Thornton said there have been occasions when they have brought in people to serve as greeters during the holiday shopping season. Usually, they were past employees brought in for key days.

The store has a strong Black Friday following locally, with its parking lot full well before doors open. As far as strategy for staff on that day, Thornton said it’s all hands on deck.

“Basically, if you’re working for Big R, you’re working on Black Friday,” Thornton said.

He said workers hired just prior to the holiday season are told that it may or may not become a permanent position, but in the two decades he has worked there he has rarely seen layoffs.

Instead, they may see reduced hours during traditional slow times for the store in January and February.

“Normally, we keep everyone,” Thornton said. “We try to keep people on.”

The National Retail Federation predicts that retailers have hired between 585,000 to 625,000 seasonal workers, which is about the same as 2011. In addition to the seasonal retail jobs, positions in transportation, fulfillment and manufacturing are indirectly created during the holiday season.

A number of big-chain retailers announced holiday hiring intentions earlier this fall. Here’s a list from www.247wallst.com:

--Gamestop, 17,000 seasonal employees, down 2,000 from last year.

--Toys “R” Us, 45,000 seasonal employees, up 5,000 from last year.

--Walmart, 50,000 seasonal employees, slightly more than last year, planned to offer existing employees more hours.

--Kohl’s, 52,700 seasonal employees, 5,700 more than last year.

-- Macy’s, 80,000 seasonal employees, 2,000 more than last year.

--Target, 80,000 to 90,000 seasonal employees, 2,000 to 12,000 less than last year, partly because 30 percent of holiday workers last year became permanent employees.

Overall, Feinberg said the hiring of seasonal workers helps fuel sales because those consumers then have extra money to spend.

However, on a national scale, seasonal hires are generally temporary, he said.

“These are seasonal hires and sometime in January, they’re let go,” Feinberg said.

Seasonal projections

Retailers are expecting slightly stronger sales compared to 2011. The NRF is projecting an increase of 4.1 percent, from $563 billion in 2011 to $586 billion this year. Holiday sales increased 5.6 percent from 2010 to 2011, but on average they have increased 3.5 percent each year the last decade.

Feinberg’s research at Purdue corroborated the numbers from the NRF. He expects an increase anywhere between three to five percent and said last year was an especially solid holiday season for retailers.

Feinberg said the yearly sales increases are “really remarkable” considering relatively low inflation and high unemployment. He said if unemployment numbers were closer to normal levels, retailers would have experienced even greater gains.

Something that could still affect the retail side of the holiday season is the aftermath of Hurricane Sandy on the East Coast. Feinberg said the East Coast represents 20 percent of all retail spending.

“The East Coast was significantly affected by the hurricane and it is still unclear how that will affect the spending season,” Feinberg said.

Events, such as the hurricane, have a huge impact on consumer spending and confidence, he said.

Feinberg said the holiday season accounts for about one-third of the total annual sales for retailers, but their retail profits may be even more than that.

NRF says that jewelry stores are the retail sector that depends most on holiday sales, with 27 percent of their annual sales in 2011 coming from the holiday season alone.

Online shopping

Shoppers continue to do more buying online. Online holiday sales are expected to increase 12 percent this year, totaling between $92 and $96 billion, according to NRF.

Feinberg’s research shows that consumers respond well to offers of free shipping, but then may go on to buy a more expensive product overall, because the Internet doesn’t always offer the best bargain.

He has also done research about Cyber Monday, commonly touted as the hottest day for online shopping deals once employees return to work after the Thanksgiving holiday. However, he said while there once was an increase on that day, it now is evenly disbursed from prior to Thanksgiving through the week before Christmas.

Feinberg said with better Internet access at home, workers can now shop online there rather than just at their workplace using their employers’ broadband access as they had to in the past. Work productivity issues now are spread out, rather than clustered to one Cyber Monday.

Feinberg’s research shows that consumers are expected to spend 45 minutes shopping at work on Cyber Monday, which translates into $1 billion in lost productivity.

He says 60 percent of consumers are expected to buy at least one item on the Internet this year.

The perfect present

The most popular gift might be a surprise, but it wouldn’t be a present if it wasn’t. Gift cards are the No. 1 present given, with more than 80 percent of shoppers planning to buy at least one during the 2012 season. Shoppers spend $150 average on gift cards in total, according to NRF.

Feinberg says that consumers who receive a card then spend an average of 256 percent above the face value of the card given to them when redeeming it.

And, NRF says men plan to buy more gift cards than women this year.

Department stores are the biggest gift card winners, followed by ones given for restaurants and then bookstores. Grocery/gasoline stores, discount stores, coffee shops and online merchants follow as the next popular categories for gift card gift-givers.

When you shop

While 40 percent of all holiday shopping is done in November, 20 percent is done in October, according to NRF figures. Just 17 percent of shopping is done during the first two weeks of December, with only four percent done in the last two weeks of the month.

In 2011, there were 226 million American shoppers out during Thanksgiving weekend, which encompassed Thanksgiving Day through Sunday. Nearly 29 percent came out on Thanksgiving, 86 percent on Black Friday, 75 percent on Saturday and 37 percent on Sunday during the biggest shopping weekend of the year.