Yes, new stores keep opening, but don't get too excited
Filed under: Company News, Economy, JC Penney, Wal-Mart Stores, Target Corp.
Even in this recession, some businesses are making hay -- including retailers. Store chains recently have been announcing plans to open locations and hire new workers. It looks like a recovery on paper, but in reality, it's more of a wash. The latest announcement came from Target Corp. (TGT) which said it will open 26 new stores in the next month, bringing on some 5,000 employees. Stores will open from Anchorage, Alaska, to West Palm Beach, Fla.
That follows an announcement from Kohl's Corp. (KSS), which recently opened 37 new stores, expanding into new California markets. Dollar General has stepped up the opening of its dollar stores around the country. And 7-Eleven expects to open 200 new stores by year-end.
It looks like growth, but most of these new stores are stepping into a large breach. Retail sales are flat this year -- in the best of cases -- and overall retail employment is down. These new store openings won't close the gap.
The retailers that are expanding are taking advantage of quirks of recessionary shopping, such as the death of rivals and shoppers trading down. Best Buy Co. (BBY) is filling the vacuum left by Circuit City, Kohl's is using the demise of Mervyn's to nail rival J.C. Penney Inc. (JCP), and Wal-Mart Stores Inc. (WMT) is taking on all comers for downmarket shoppers.
Even Target's management, while discussing second-quarter profits with analysts, said it's being careful about when and where it opens new stores. Next year's plans call for opening only 12 new units and closing or relocating three, so the net gain for 2010 would be 10 new stores at best.
It's wise to take these announcements with a grain of salt. They're cold comfort to the droves of retail workers who have been laid off in this recession as merchants cut costs. According to the U.S. Department of Labor, 1.81 million retail workers were unemployed in September, up from 1.28 million a year ago, raising retail's unemployment rate to 9 percent from 6.2 percent.
And even as holiday sales forecasts have turned more positive, stores aren't ratcheting up seasonal hiring. According to a recent survey by consulting firm Hay Group, 57 percent of retailers are cutting back holiday help this year. That's worse than the 29 percent who did so last year.
So, expect fewer people working on crowd control in stores the day after Thanksgiving. But since most holiday projections expect weak overall sales, fewer people will likely be fighting for the doorbuster specials, anyway.
It looks like growth, but most of these new stores are stepping into a large breach. Retail sales are flat this year -- in the best of cases -- and overall retail employment is down. These new store openings won't close the gap.
The retailers that are expanding are taking advantage of quirks of recessionary shopping, such as the death of rivals and shoppers trading down. Best Buy Co. (BBY) is filling the vacuum left by Circuit City, Kohl's is using the demise of Mervyn's to nail rival J.C. Penney Inc. (JCP), and Wal-Mart Stores Inc. (WMT) is taking on all comers for downmarket shoppers.
Even Target's management, while discussing second-quarter profits with analysts, said it's being careful about when and where it opens new stores. Next year's plans call for opening only 12 new units and closing or relocating three, so the net gain for 2010 would be 10 new stores at best.
It's wise to take these announcements with a grain of salt. They're cold comfort to the droves of retail workers who have been laid off in this recession as merchants cut costs. According to the U.S. Department of Labor, 1.81 million retail workers were unemployed in September, up from 1.28 million a year ago, raising retail's unemployment rate to 9 percent from 6.2 percent.
And even as holiday sales forecasts have turned more positive, stores aren't ratcheting up seasonal hiring. According to a recent survey by consulting firm Hay Group, 57 percent of retailers are cutting back holiday help this year. That's worse than the 29 percent who did so last year.
So, expect fewer people working on crowd control in stores the day after Thanksgiving. But since most holiday projections expect weak overall sales, fewer people will likely be fighting for the doorbuster specials, anyway.
D-Day for Harry Reid: Can he wrangle 60 votes for Senate health reform bill?
Fed stalls on Chinese bank deal, costs taxpayers $1.7 billion
Dell in a handbasket: Should founder Michael Dell resign?
Reader Comments (Page 1 of 1)
10-06-2009 @ 2:54PM
Margaret said...
According to this article, Retail has layed off many people which is unfortunate but retail jobs usually DO NOT PAY A LIVING WAGE no matter how you look at it. I work now for a retail store for $8.32/hour. I am semi-retired and have another source of income but for those who do not, retail salaries are NOT A LIVING WAGE! Another sad testimony to our current bleak economy! Retail and service jobs seem to be the only pathetic remnants of a once thriving economy that went down the tubes fast!
Reply
10-06-2009 @ 6:29PM
glandman said...
I agree with you... MOSTLY. It really depends, though, on what you mean by a "living wage." I assume that you are referring to what would be considered an acceptable lifestyle and living situation to middle-class 21st century Americans. It is true that most retail wages would not allow for a respectable lifestyle using that metric.
I am guessing you have not lived for extended periods of time in developing or third world nations -- actually living among the indigenous people, adopting their way of life. You might be surprised how little is actually NEEDED for subsistence living. But of course most 21st century Americans would not find such to be acceptable, whereas most of the world would view a wage between 8 and 10 dollars an hour to be opulent.
10-06-2009 @ 3:41PM
prete ryback said...
target shouls be closing stores, they are mainly junk and their so calles sales people either hide or no nothing, or it is not their job, who do they think pays their salary? 5 famous words---the customer is always right, without them they have nothing
Reply
10-06-2009 @ 6:29PM
D said...
Prete, maybe you should learn to spell and speak English before trying to make negative commentary on a store. For one, Target does not have "sales people" nor do they call their team members sales people... their title is "sales floor team member" for a reason, they are there to pick up the mess you and your 15 children made and assist you in finding something you may need... Can't find someone to help you? Get off of your cellphone, open your eyes and look for someone in red & khaki. Have fun shopping at wal-mart with the rest of the welfare cases...
Reply
10-06-2009 @ 7:32PM
MrDoughnut said...
They made a mistake building stripmalls with more of these stores just to regain tax ratables lost from the outsouring of good factory jobs. Their losing the tax ratables after these stores close due to the lost of customers who have lost their good jobs!
There was almost an entire stripmall closed down by me because the merchant's stuff was not in demand. Too much expensive stuff and duplication is not needed in a shrinking field of shoppers.
Reply
10-06-2009 @ 10:14PM
Ron said...
glandman said...
I agree with you... MOSTLY. It really depends, though, on what you mean by a "living wage." I assume that you are referring to what would be considered an acceptable lifestyle and living situation to middle-class 21st century Americans. It is true that most retail wages would not allow for a respectable lifestyle using that metric.
I am guessing you have not lived for extended periods of time in developing or third world nations -- actually living among the indigenous people, adopting their way of life. You might be surprised how little is actually NEEDED for subsistence living. But of course most 21st century Americans would not find such to be acceptable, whereas most of the world would view a wage between 8 and 10 dollars an hour to be opulent.
Of course these developing nations don't have grocery stores, so they don't pay $1.32 for a loaf of bread. They also lack apartments that charge $850.00 per month. They also lack paved roads, electricity, running water, and a lot of other things. Thus you are comparing apples to oranges.
Reply