Walmart, Target CEOs aren’t worried about hiring amid the holiday shopping rush
Florida, Miami, Walmart discount department store, check out lines.
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Walmart hired nearly 200,000 workers in its third quarter in a push to meet the expected high level of demand during the holiday shopping season.
Retailers from Amazon to Target have been raising pay, offering new benefits and more work hours for employees amid labor shortages and demand spikes. The pressure to add workers has only increased as the holiday shopping season, which typically starts after Thanksgiving on Black Friday and runs through January, is on the horizon.
In September, Walmart announced a plan to hire about 150,00 new U.S. store workers, most of which would be for permanent and full-time roles, to better prepare for the holiday season. Previously, the company said that it would hire 20,000 workers for permanent jobs in its supply chain facilities to meet the demand for delivery and curbside pickup.
Walmart CEO Doug McMillon said on the company’s third quarter earnings call of recent hiring, “That’s been done to meet demand.”
Bringing on seasonal workers
Retailers are expected to hire between 500,000 and 665,000 seasonal workers this year, compared to 486,000 in 2020, according to the National Retail Federation. That hiring period likely moved even into October as retailers announced deals earlier in the holiday season and encouraged shoppers to buy sooner than later amid inventory issues and shipping delays, NRF said.
Walmart has looked to hold on to its workforce and attract new job seekers through several methods. The company implemented three wage increases this year, with its last increase seeing more than 565,000 store workers get an hourly raise of at least $1. Its average hourly wage in the U.S. is approximately $16.40, Walmart said in September. Walmart also said in July that it would start paying 100% of the cost of college tuition and books for employees.
That mirrors what other retailers are doing to combat a tough labor market. Amazon, for example, said in September that it would look to fill 125,000 new positions nationwide, paying an average of $18 an hour and in some cases offering up to $3,000 as a signing bonus. Amazon has hired more than 450,000 workers in the U.S. since the pandemic began.
Target has taken a slightly different approach, trimming back its typical amount of seasonal hires and instead giving more hours to existing employees. While the company said it would still likely hire about 100,000 seasonal employees, that would be lower than the 130,000 it has hired in each of the past two years.
Instead, Target said it plans to have its existing store staff of around 300,000 work about 5 million more hours during the holiday season.
“We feel really good about our staffing going into the holiday season,” Target CEO Brian Cornell said on “Squawk on the Street” on Wednesday. “We’re offering our existing team over 5 million additional hours, an investment of $75 million, to make sure we’re first investing in our existing team, but we’ll also add 100,000 seasonal team members for the chance to start with us during the holidays, but hopefully, can extend that into 2022 and beyond.”
Cornell said Target’s worker retention numbers are “some of the strongest in our history,” which he credited to the investments it has made in terms of wages, perks and safety.
The NRF is forecasting that holiday sales between November and December will grow between 8.5% and 10.5% compared to 2020 to between $843.4 billion and $859 billion, which would set a record.
Retail sales rose 1.7% in October, with online shopping seeing a 10.2% gain from last year, according to the Commerce Department.
The impact of stimulus on hiring
McMillon said that the “most pronounced thing” Walmart saw in the months after government stimulus subsided was around hiring.
“Back when the stimulus dollars started to go away, the hiring situation changed faster,” McMillon said on the earnings call. “We saw people come back. In a matter of weeks, we were back to being staffed.”
That “step change” in hiring now has the company in “good shape for the holidays,” McMillon later said on CNBC’s “Squawk on the Street.”
“We’re not as concerned about that as we would have been saying two months ago,” McMillon said in response to a question about retailers finding workers right now.
Walmart reported revenue of $140.5 billion in its third quarter, up 4.3% year-over-year, thanks to a U.S. comparable store sales increase of 9.3% as more shoppers returned to stores.
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