Target (TGT) has devised a novel way to partially get around the looming (and likely severe) retail worker shortage for this year's all-important holiday shopping season.
Invest even more in the retailer's current workforce.
Target said Thursday it will hire fewer workers this holiday season. But, it will provide 5 million more hours to its existing workforce at a total cost of $75 million. The company said it would have store leaders "check in" with existing workers to understand their scheduling preferences, and offer them opportunities to work more if interested.
"Our strategy is only possible because of Target’s incredible team. We have worked to provide our team members with more consistent schedules, which means more consistent paychecks and a more consistent way to manage their life. Additionally, we are offering more hours to team members who want them and continuing our important investment in training and development. When we invest in and care for our team we know that guest service improves, turnover goes down and team members can more easily build rewarding careers at Target," said Melissa Kremer, Target's chief human resources officer.
Target's decision comes amid a sharp rebound in employment across the country as companies scale back up from the worst of the COVID-19 pandemic. In turn, employment shortages continue to wreak havoc on lower-paying industries such as hotels, trucking and retail. For retail, the worker shortage is expected to become more severe as the industry ramps up for peak holiday demand.
The U.S. retail industry will have a labor shortage of approximately 350,000 workers heading into November and December, according to a study from Salesforce. "Many workers are holding out for or leaving for higher wages, while extended unemployment benefits in some states and the gig economy have also had an impact," the study says.
As a result of the shortage, retailers will have to pay up dearly to secure the bodies they need.
"We predict that this shift to $15 per hour for store associates will continue into the holidays regardless of retailer size. Furthermore, we project that the median hourly pay for store associates will hit $19 per hour (up from $13.02 per hour in 2020) in the same timeframe. This means that U.S. retailers will, on average, spend an extra $3,000 per store associate between November and December. This strikes another blow to smaller retailers who are already struggling to hold on," the Salesforce study goes on to note.
Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
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