United States: Seasonal Staffing Challenges for Delivery Firms as Retail Faces a Shift to Online and Mobile Shopping

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The famed “Black Friday” signals the start of what is globally the busiest retail month. Well known, is the fact that most retail businesses do as many (if not more) sales in the two months leading up to Christmas, as they do in the remainder of the year. Also widely known is the fact that many retailers bring in additional seasonal workers by the thousands to prepare to meet the added consumer demand prior to the holiday. Amazon added 100,000 employees; Walmart is hiring 60,000 employees, and Toys R Us plans to hire 40,000 employees. Many of these businesses began to advertise for openings and hire seasonal workers in October or November to guarantee that new employees were trained and ready to help regular full-time employees cope with the influx of work.

What is not often discussed is the struggle staffing agencies face to fill the open positions a tier or two upstream, primarily at manufacturing facilities. Their busy season, especially for those manufacturers of toys and other consumer electronics or popular holiday gift items, begins in the summer, and hiring starts as early as June. This means products will be on shelves for consumers ahead of Black Friday and “In Stock” for Cyber Monday’s shopping carts.

Between June and November, many manufacturers offer part-time or seasonal employment. But filling these positions has become increasingly more difficult for staffing firms with a smaller pool of candidates now than in years past. With the U.S. unemployment rate the lowest it’s been in years, and many people seeking long-term positions that offer benefits such as medical insurance, temporary or part-time positions are less attractive to candidates.

Returning to the topic of retail hiring, Black Friday may be losing its foothold to Cyber Monday as more and most consumers take advantage of the convenience of online shopping. These online purchases often offer deals that major online retails such as Amazon are able to extend to customers when operating not-open-to-the-public “fulfillment centers”, as opposed to brick and mortar store front locations. Amazon hired 25% more workers than last year while major retailers Macy’s and Target will add the same amount of workers as last year. Despite having online ordering capabilities, the majority of these retailers’ sales still come from customer facing stores around the nation. While the stores themselves do not need as many sales people and cashiers to staff them as in years past, the majority of seasonal hiring is seen once again, out of the customer facing environment, in warehouses as well as shipping and logistics.

Of those workers who do accept temporary engagements with both retailers and manufacturers ahead of the fourth quarter, some hope to transition into full time positions later; while the majority hope to supplement their existing jobs and incomes with some extra money for the holidays or to pay debts, such a student loans. With the increasing lack of consumer enthusiasm for doing holiday shopping at the traditional brick-and-mortar locations and malls, a shift in the types of positions available to these workers seeking part-time, temporary and seasonal engagements during the summer and fall in the United States has occurred over the past few years.

Cyber Monday sales were expected to hit a record $3 billion this year, capping what has been a banner year for online sales with an increase of 14% spent online on Black Friday, according to tracking on more than 4000 domestic e-commerce sites. What is more remarkable is that 30% of those sales were made from mobile devices this year.

Cyber Monday has quickly become Cyber Week with the new device and internet speed technologies made available to consumers over the past decade. More than 103 million people shopped online over the four-day weekend beginning on Thanksgiving Day, according to a survey commissioned by the National Retail Federation. That compares to the fewer than 102 million who ventured out into traditional retail spaces and shops over the same period. Smartphones are winning the weekend with 19% of sales being finalized on from consumer’s palms, up 66% from last year.

These shopping trends will greatly shape the future of seasonal hiring as more online deals and gifts are delivered to consumers’ homes as opposed to riding home with them in the back of their personal vehicles. UPS said it would hire the same number of seasonal workers this year, as last, while FedEx will hire 55,000 workers, an increase of 10% from last year. The decrease in sales and cashier jobs will shift more rapidly to an increase in fulfillment center and delivery driver jobs over the coming decade as the millennial generation ages, and older more traditional shoppers begin to purchase less from retail store fronts.

Many retailers will look to evolve and provide the customer experience consumers have come to expect when making purchases online. This means developers, to create apps and websites that make it easy for consumers to find and purchase products, speedy fulfillment by warehouse workers and safe, secure and above all else fast shipping by delivery firms around the country. With an unemployment rate that fell to 5.1% in August 2015 (during a spike in growth in e-commerce) many logistics companies can expect to raise starting pay in some regions year-over-year. This will help them to attract the candidates who are most qualified for the delivery and warehouse positions needed to cope with the additional holiday fulfillment.

Last year was the first year that employers in the shipping and delivery sector really felt the challenge as far as finding qualified workers.  Last minute cyber-shoppers forced many retailers to ship more packages than logistics companies and their workers were equipped to handle, right before the holiday. Some employers began hiring earlier this year and offering starting wages at $1.50 to $3 more per hour to attract the best of the qualified candidates. Logistics companies are raising starting pay by about 10%, especially in the cities that are home to the largest company’s primary package-sorting hubs. In some of these areas where talent is the scarcest due to saturation of the market (for example Louisville, Kentucky and Memphis, Tennessee), the unemployment rate is as low as 3% to 3.5%.

Some most established companies are offering mileage bonuses in addition to raises in wage to retain talent that could potentially be lured away by newer companies offering shorter commutes and higher pay rates to new employees. In September some analysts feared that many companies would struggle to find applicants for seasonal positions this year. Recent reports suggest that package delivery services are already experiencing delays due to inadequate staffing to meet the unprecedented spike in online shopping shipping this season. Some analyst suspect that the delays may be reminiscent of those experienced in 2013 when delays cause many consumers to wait until after the holiday to receive their packages and gifts.