Retailers are preparing for the upcoming holiday shopping season with a significant reduction in seasonal hiring. According to the National Retail Federation (NRF), retailers plan to employ between 265,000 and 365,000 seasonal workers from November 1 to December 31, a steep decline from the 442,000 seasonal positions filled last year. This marks the lowest level of seasonal retail hiring in 15 years.
The decision to cut back on hiring comes amidst signs of strain in the broader labor market. Job cuts in the United States have reached their highest levels since 2020, prompting businesses to be cautious about adding new employees. Despite this pullback, the NRF projects holiday sales to exceed $1 trillion for the first time, with spending anticipated to grow between 3.7% and 4.2% compared to last year.
Consumer Sentiment and Economic Concerns
During a briefing, NRF chief economist Mark Mathews explained that the hiring expectations reflect the softening labor market, but he remains optimistic about retailers’ readiness to meet consumer demands. “We are confident that retailers will be prepared to meet consumers with the prices, with the goods, and the convenient savings and value they’re looking for this holiday season,” Mathews stated.
Despite diminished consumer sentiment, NRF economists believe that holiday spending will persist as shoppers prioritize seasonal celebrations. Mathews noted, “People save for it, they plan for it, they prioritize it, and we think that’s going to happen again this year.” However, concerns about rising prices persist, with inflation increasing in recent months, partly due to tariffs on imported goods. An analysis from the Federal Reserve Bank of St. Louis revealed that retailers passed approximately one-third of new import duties onto consumers during the months of May through July.
NRF senior economist Jack Kleinhenz emphasized that consumer concerns about inflation are significant. “All signals are consumers continue to be concerned about inflation and rising prices,” he noted. “Despite these concerns, I believe consumers are still willing to spend, even though their sentiment is at very low levels.”
Staffing Strategies Amid Reduced Hiring
While the number of seasonal hires is declining, some retailers have increased their permanent workforce in recent years, which may help offset the need for additional seasonal employees. Mathews pointed out that while hiring may be less, the rate of firing in the retail sector has also decreased. “You might see less hiring, but we are seeing less firing in the retail industry. Those two are running neck and neck,” he said.
In a different approach, Target is opting to ask its current employees if they wish to take on additional shifts before seeking new seasonal hires. This strategy reflects a broader trend among retailers to maximize existing workforce capacity in the face of economic uncertainties.
As the holiday shopping season approaches, the retail industry faces unique challenges. While hiring may be at a historic low, the expectation for strong consumer spending remains a bright spot for retailers navigating a complex economic landscape. With the holiday season traditionally being a key period for retail sales, many will be watching how these dynamics unfold in the coming months.
