It’s getting ugly for brick-and-mortar retailers.
Physical stores are struggling to keep pace with online retailers such as Amazon, and consumer trends are shifting away from their product offerings. Recent news has made this decline even more obvious.
Another sign of the struggles retailers face comes from the labor market. Neil Dutta, the head of US economics at Renaissance Macro, said in a note to clients on Thursday that the percentage of holiday hiring coming from the retail sector was at its lowest since the recession.
“Our figure plots the retail share of total hiring announcements during the holiday season, which we assume runs from September through December,” Dutta wrote, citing the Challenger, Gray & Christmas holiday hiring survey.
“In 2016, the retail industry accounted for just 41.4% of hiring announcements during this four-month span, the lowest share since 2009,” he wrote. “Interestingly, total hiring announcements for 2016 are up relative to last year, implying that other industries have picked up the slack.”
- Business Insider/Andy Kiersz, data from Renaissance Macro
This reflects the weakness in last month’s jobs report, which showed the first drop for retail employment in November in six years.
In fact, Dutta said, this raises the question of a “retail recession.”
However, the economist noted, this weakness in spending seems to be limited to the sector, as other categories of consumer goods have been doing swimmingly.
“In our view, retailers will have difficulty blaming slow holiday sales on the macroeconomic environment,” Dutta wrote. “After all, consumer confidence is strong and auto sales are running at a solid clip. New home sales have been holding up, too.”
So the American consumer may be doing just fine, but Macy’s, Kohl’s, Sears, and other physical retailers have a tough road ahead.