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Expect fewer elves
Survey shows retailers are likely to hire fewer holiday workers this year.
November 25, 2002: 1:10 PM EST
By John Chartier, CNN/Money Staff Writer

NEW YORK (CNN/Money) - Ever get stuck on a long line in a store and wonder why only one register was open? If it happens this holiday season, you don't have to wonder. More than likely it's because the store in question has hired less holiday help.

Faced with cautious consumers worried about jobs, a potential war with Iraq and other uncertain economic news, retailers hoping to boost margins amid sluggish sales could reduce holiday hiring by as much as 25 percent this year, according to a survey by outplacement firm Challenger Gray & Christmas.

The survey, conducted earlier this month, shows that 63 percent of associations polled believe their members will hire fewer holiday season workers -- another example of just how worried retailers are that the season's sales, which typically account for half their annual take, could be among the worst seen in a decade.

Separately, a survey released Monday by the Consumer Federation of America showed that the majority of Americans plan to spend about the same amount on holiday shopping this year as last year.

Consumers, whose spending accounts for two-thirds of the U.S. economy, have been spending less at major retail chains, even though they have continued to buy homes and cars thanks to low interest rates and zero-percent financing deals. That behavior is leading many to believe that merchants will offer major discounts at the start of the holiday shopping season following Thanksgiving, instead of waiting until the week before Christmas.

"Retailers are being forced to turn into discounters at all levels, and that early transformation to a discounting posture is putting great pressure on profits," John Challenger, chief executive of the firm, said. "Retailers make a good percentage of their profitability in the last two months of the year. This year those earnings are going to be under real pressure. They'll be fighting to keep costs down."

Instead of hiring new workers, many are asking existing employees to work longer hours. But the hiring of fewer holiday workers is an extension of a trend that has been going on all year. Retailers hired 739,000 full-time and part-time workers for the January-October period between 1998-2000, Challenger said. For the same period in 2001, merchants hired 466,000 workers, he said.

Overall, unemployment is up in the United States, from a rate of 5.4 percent in October 2001 to 5.7 percent last month, according to the Labor Department.

That means more people are looking for work, but retailers don't want the help. On Monday, Wal-Mart Stores Inc. (WMT: down $0.41 to $53.35, Research, Estimates), the world's biggest retailer, and Federated Department Stores Inc. (FD: down $0.72 to $31.64, Research, Estimates) gave murky outlooks on the holiday season, noting that sales have been down.

"The bottom line is the hiring is not going to be there," said Diane Swonk, Chief Economist at Banc One.

Retailers mostly hired what holiday help they needed earlier than usual because the season is already shortened to a calendar shift that makes Thanksgiving a week later than last year.

"The bottom line is, you're going to be waiting in more lines," Swonk said.

However, Swonk notes all this is precautionary. Chains have been pleasantly surprised in recent weeks with better-than-expected October sales, and slightly better sales in the second week of November.

The National Retail Federation, the industry's largest trade group, is maintaining its forecast for a 4 percent increase in holiday season sales.

The NRF expects holiday hiring to be about flat compared with a year ago, which, given the effects of Sept. 11 last year, is not strong, but is not a decline.

"It seems like this year it hasn't been as much of a challenge for retailers to find good quality holiday help. It seems like this year there are a lot of people out there looking for part-time work as well as full-time jobs," NRF spokeswoman Ellen Tolley said. "It's a great opportunity for people to make additional income and get their foot in the door."  Top of page

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