Holiday shoppers browse in West Des Moines’ Valley Junction neighborhood in 2019. Holiday sales are expected to grow at a lower rate this year than in 2019 and seasonal hiring is expected to be mixed with those who are hired being focused on order fulfillment, not manning cash registers. File photo by Duane Tinkey

Sales this holiday shopping season are expected to be lower than last year. Large retailers are shifting their workforces to accommodate upward trends in online shopping. 

Whether it be shopping or seasonal hiring, significant changes are expected for the 2020 holiday season, driven by changes in people’s behavior and lost income as a result of the coronavirus pandemic.

According to consulting firm DeLoitte, retail sales during the November to January period are expected to grow between 1% and 1.5%, or around $1.15 trillion. That’s down from 4.1% growth in 2019, according to an article published by CNBC.

Consumers plan to spend nearly $1,000 on gifts, decorations, food and other items this holiday season, down about $50 from 2019, according to the National Retail Federation.

Those declines and the continued effects of the pandemic on the economy are why Iowa State University economist David Swenson is being bearish about his projections for the upcoming holiday season, and the subsequent hiring that typically happens.

“We tend to see building enthusiasm toward the holiday season on the part of shopkeepers and store behaviors and they start adding help, but I don’t know if that’s occurring because I haven’t seen it,” Swenson said. “Second, is a shift in consumer shopping preferences.”

During the pandemic, people have spent their money on other things and it’s unclear if that behavior will change during the holidays, he said. 

“They’re buying home improvements, spending a lot of money at grocery stores, spending a lot of money in general merchandise stores, they’re buying automobiles, and how that behavior is going to translate into that conventional holiday shopping behavior, it just doesn’t seem apparent to me given the way people are behaving right now,” Swenson said.

He also believes seasonal holiday hiring will be muted this year.

Big box stores that do hire will likely allocate those people to fulfillment of online orders and the drive-up and pick-up of those orders, with fewer stockers and cashiers as online shopping continues to trend upward, Swenson said.

“But I don’t believe that’s [anywhere] near the level of new employment we normally would have expected,” he said.

That could translate into other businesses that benefit from strong holiday shopping traffic, such as restaurants and movie theaters.

“It’s across the board because holiday spending extends beyond just gift shopping,” Swenson said. “A big fraction of that involves foot traffic or driving somewhere, and I believe that also is going to be much less.”

Retailers staffing up

In a news release and statement provided to the Business Record, Walmart officials said the company plans to hire 20,000 seasonal employees in its eCommerce fulfillment centers nationwide. Those are on top of the 500,000 employees the company says it hired since March to handle demands for essential items during the COVID-19 pandemic.

The combination of those workers will help Walmart meet the demands of the upcoming holiday season, officials said.

A Walmart representative did not say if seasonal hiring is up or down from previous years, but said the last time the company hired “large numbers” of seasonal workers was 2015.

According to its website, Target plans similar changes for its employees this holiday season, with twice as many employees being assigned to drive-up and order pickup. Target’s distribution centers will hire more seasonal employees than last year to manage items being sent to stores, and employees stationed at the front of stores will be focused on greeting customers and cleaning.

Ryan West, deputy director of Iowa Workforce Development, said data he has is unclear about the effect the pandemic will have on seasonal hiring this year. While Iowa has added 15,600 retail jobs since April, how that may translate into seasonal hiring is unknown, he said.

“We don’t really know yet because I think it will be dictated by how many of these retailers opt to push more of their products online,” he said. “It’s going to be an interesting dynamic. There’s a lot to be determined.”

While transportation companies, such as UPS and FedEx are preparing for record shipping this year because of the pandemic, seasonal hiring by the companies will remain about the same, representatives for UPS said.

UPS plans to hire more than 100,000 people nationally. FedEx expects to add 70,000 employees to help handle the peak shipping season, but officials with the company did not respond to email and telephone requests to answer whether that number is higher or lower than in years past. 

The holiday shopping season could be most marred, though, by economic hardship as numbers of COVID-19 cases and hospitalizations surge nationwide and in Iowa, Swenson said.

“I’m anticipating through the rest of this quarter, most households are going to have less money, not more money, than a year ago,” he said. 

He said some retail subcategories, such as clothing and shoe stores, have “suffered greatly,” during the pandemic, and he doesn’t see that improving much this holiday season.

“I don’t believe that will happen with continued high unemployment and lots of income uncertainty, and what looks to be the worsening of the pandemic that could peak in severity and health consequences perhaps around Thanksgiving,” he said. “The next two or three weeks don’t look great here in Iowa or the nation.”

With extended unemployment benefits set to run out and the absence of additional federal stimulus funds, the upcoming holiday season is setting up to be gloomy for many this year, Swenson said.

“It’s going to slow the recovery, it’s going to slow sales, it’s going to slow consumption across the board, and I’ve got to argue it will slow holiday shopping at a higher rate,” he said. “I don’t want to be a Scrooge and I don’t want to be a Grinch. … I’m just simply sad we’re in the situation we’re in right now. I would have hoped a few months ago we’d be in a better place economically and politically, but we’re not.”