Monday, December 4, 2017

At the Low Point in the 2017 Christmas Shopping Season

In my own observations of weekend retail in a suburban area of Pennsylvania, there wasn’t the unusual quiet that can follow in the weekends after Black Friday. Traffic in retail areas was busy, if not quite so busy as I saw on weekends in November. This fits with the earlier observation of lighter-than-usual traffic on Black Friday itself. Shoppers have to shop, and if they did not get to the stores in November and are not placing orders online, then they will arrive in the stores eventually, and mostly on the weekend.

Macy’s defied conventional wisdom when it announced it would hire an additional 7,000 workers for its stores. It seems a nonsensical move to consider, coming after Black Friday, which could easily turn out to be the busiest day for department stores this season. It makes some sense if you look at the shopping calendar, however. In years past, the busiest shopping day has sometimes been the Saturday before Christmas. With Christmas falling on a Monday, the two days before could be unusually busy in the stores. Macy’s wants to make sure long lines do not send customers away. If that late burst seems somewhat unlikely in Macy’s case, it is only because stores have already seen strong traffic in November, so that not so many purchases remain to be made in December. There may be some bravado on the part of Macy’s as it tries to show confidence in the face of a difficult balance sheet.

If additional hiring at the tail end of the shopping season is questionable on Macy’s part, imagine the situation from the point of view of the workers. The job market remains weak enough that thousands of job-seekers will compete for the chance to work in a position in which they may have a chance to work only 21 hours, earning around $200 in total. For some of the workers, this may be the only work they have all year long. This could be a good thing or a bad thing, depending on the workers’ circumstances. On Black Friday I saw students and retirees who had been pressed into retail service just for that one day. If your schedule or health doesn’t permit you to work continuously, it makes some sense that you might work on days when you are most needed. For nearly all students, Black Friday and the weekend before Christmas fall on vacations, so work scheduling is not the challenge it would be on most weeks of the year.

While we await word on the fate of Toys ‘R’ Us, there is news this morning on its U.K. stores. The U.K. subsidiary is seeking approval from creditors to close at least 1/4 of its stores. In its statement, the company says its big-box stores are too large to function efficiently. The wording suggests to me that, besides closing some stores, the company is thinking of a future in which stores are about 1/3 the size of its largest stores currently.

That’s a sentiment that could apply even more so to the parent company in the U.S., where cultural trends work against big-box stores. The age group that includes the parents of most U.S. children tend to find big-box stores unfriendly, even alienating. This helps to explain why you may see more grandparents than parents in a Toys ‘R’ Us store. Store traffic could improve if stores were redesigned to make them smaller and more personable, more like traditional toy stores.