After the bloodbath that was the 2016 holiday season for major store chains like Macy’s (M) and Target (TGT) among many, it follows that job creation in the retail sector would be underwhelming in the aftermath.
But the U.S. Bureau of Labor Statistics job market report released on Friday showed it was an even bigger disaster than expected, with 30,700 jobs lost. Combined with similar job losses in February, the retail industry had its worse two-month job creation period since the depths of the Great Recession. And retail, which employs nearly 16 million Americans, was one of the very few industries to ditch jobs last month and certainly cut the most jobs by far of any industry.
In January, as the major retailers gave Wall Street their holiday season post mortems, one mass store closing announcement came after the other: J.C. Penney (JCP) was shedding 140 stores; Sears Holdings (SHLD) shuttering 75, Macy’s (M) paring its fleet by 100 locations. And specialty clothing chains have similarly been trying to get leaner, from The Gap (GPS) and Abercrombie & Fitch (ANF).
Adding to the considerable pain, countless retailers have been seeking bankruptcy protection in the last few months, taking advantage of a Chapter 11 filing to get out of leases and shut stores: Payless ShoeSource, hhgregg, BCBG Max Azria, Limited Stores, Radio Shack (for the second time!), Gordmans Stores, and the list goes on and on. Some of those have gone out of business, while those that remain have closed stores.
One of the biggest culprits of these retailers’ pain has been the unrelenting growth of Amazon.com (AMZN). Despite valiant efforts by many top brick-and-mortar chains, notably Walmart (WMT), Amazon along generate 53% of e-commerce growth during the holiday season, according to Slice Intelligence, padding its lead over the rest of retail. (Walmart’s e-commerce growth has sped up again, yet its digital sales remain a fraction those of Amazon’s.) Amazon announced 30,000 new part time jobs this week, a stark contrast to the drumbeat of bad retailer news.
Under enormous pressure from investors, retailers are cutting costs, including personnel, in a bid to hit earnings per share targets despite soft sales, thereby meeting projections and mollifying investors. The irony of course is that leaner store staffs will likely compromise store service and give shoppers more reason to go online. And many of them have made it clear, when they go online, they go to Amazon. Hello, vicious cycle.
Here is a list of major chains to have announced large-scale store closings so far this year:
J.C. Penney: 138 stores;
Macy’s: 68 stores (with another 32 planned in the mid-future);
Sears/Kmart: 150 stores;
Staples: 70 stores;
hhgregg: 88 stores;
The Limited: 250 stores;
RadioShack: 187 stores;
Wet Seal: 171 stores;
Bebe Stores: 170 stores;
American Apparel: 110 stores;
Gordman’s: 100 stores;
Abercrombie & Fitch: 60 stores.
Gander Mountain: 32 stores.
And we are only three months into the year.