Target’s holiday hiring growth coming from supply chain, not sales floor

Target is looking to hire more holiday employees this year, but the increase will come from behind-the scenes supply chain roles, not in-store customer service jobs.

The Minneapolis-based retail giant plans to hire more than 70,000 seasonal store employees this holiday season, the same figure as each of the past four years, spokeswoman Kristy Welker said in an email. The retailer is also adding 7,500 seasonal employees in distribution and fulfillment centers, an increase from 2015, she said.

Industrywide, stores have been hiring fewer employees during the holidays in recent years. In the final three months of 2013, retailers added nearly 787,000 workers to their payrolls, according to a report on retail holiday hiring from Chicago-based outplacement firm Challenger, Gray and Christmas. That was down 4 percent to 755,000 in 2014 and fell another 1.2 percent last year.

CEO John Challenger said he expects this year’s figure to be fairly consistent with last year’s.

Retailers are getting more efficient in seasonal hiring, tying employment levels to demand and calling in extra recruits as needed, he said. The kinds of jobs they’re hiring for are also shifting, with warehouse and transportation jobs replacing some in-store sales jobs, he said.

“As shoppers become more comfortable shopping on all the different devices that make it so accessible, you just don’t need as many people in stores,” he said.

Even some of Target’s in-store employees will be handling logistics as well as customers. About 30 percent of Target’s online sales are picked up at or shipped from a store, Target said Monday.

Other companies that ramp up hiring during the holidays have yet to report on their plans for the season, including Wal-Mart, Amazon and UPS. UPS is expected to announce its season hiring plans Wednesday.

While the shift to online sales means retailers need fewer employees in stores, some worry about finding enough behind-the-scenes workers to keep products moving through the supply chain, said Frank Layo, partner and retail strategist at consulting firm Kurt Salmon.

When a retailer ships products from warehouses to its stores, it deals with cases of goods. But when it starts fulfilling individual customer orders, it needs to handle each and every item, Layo said.

“To replace $100 million in sales in the store with $100 million online, you’re taking a hit on margins and transportation and with the extra labor required, we’re just exceeding the capacity in certain markets,” Layo said.

With unemployment relatively low, some companies competing for e-commerce fulfillment workers are trying to make jobs that can be repetitive and strenuous more appealing, Layo said.

Average hourly wages for a typical warehouse employee hit $15.80 this year – down slightly from a 2012 high, but up about 4 percent compared with 2013, according to a report from Kurt Salmon.

Some retailers also are trying to streamline training for warehouse employees, adding services such as on-site medical clinics or perks like raffles for top-performing employees with strong attendance during peak season, Layo said.

Many retailers also are hiring earlier to allow more time for training and “stress-testing” their distribution systems, Challenger and Layo said.

“There’s a finite amount of labor available, and it will be a challenge for some to find the labor they need to be successful,” Layo said.