During a normal holiday season -- one that is not complicated by a global pandemic -- retailers and logistics companies must compete for the best workers. And even though it's not a vertical market or industrial sector, when it comes to the basic act of hiring, Amazon puts its competition on notice, and in many cases, forces them to react.
A recent example of the company's competitive hiring strategy was Amazon Career Day, a job fair in September, where Amazon advertised 33,000 openings. These openings included regular staff positions and temporary seasonal workers for the end-of-the-year holidays.
The e-commerce giant emphasized that some of the regular staff positions it expected to hire would fetch salaries of $150,000. This incentive attracted a lot of attention.
Within days of the job fair, Amazon's competitors in both retail and logistics started to promote their own hiring events. These companies bragged about their high number of available positions and accompanying generous salaries.
The 2020 seasonal hiring trends in retail and logistics are, of course, unusual because of the impact of COVID-19. Many Amazon competitors also adjusted their holiday hiring practices.
- Walmart said it planned to hire 20,000 seasonal workers for its fulfillment centers. This marks the first time in five years that the retailer did any significant holiday hiring.
- FedEx projected it would hire 70,000 seasonal workers, a 27% increase from 2019, to handle what is predicted to be another record year for delivery services.
- United Parcel Service (UPS) planned to hire more than 100,000 people for seasonal jobs and anticipated a large number will transition to permanent roles after the holidays.
- Macy's hosted a national holiday hiring event in September in an effort to fill more than 25,000 full-time and part-time jobs at fulfillment centers around the country.
Another shift among retailers, whether online or brick-and-mortar, is to move away from Black Friday promotions and the corresponding crowds. Instead, retailers are scheduling specials and promotions throughout the holiday shopping season rather than cramming them all into the day after Thanksgiving.
Both Amazon and COVID-19 put pressure on competitor hiring
The pandemic and the corresponding economic fallout hasn't hurt Amazon's e-commerce business, or any of its other business units. Amazon's success forces competitors to respond, even if it's something as basic as hiring.
Take the runup to hiring for end-of-year holidays, for example, when e-commerce, logistics and other related businesses are slammed by orders, fulfillment and distribution challenges. Automation is great, but people tend to wrap gifts better than machines and can more diplomatically determine whether a customer should receive an exchange or a refund.
And while Amazon heavily publicized its positions with six-figure salaries to pressure its competitors, there's another parallel dynamic this year, according to Sucharita Kodali, a Forrester analyst who tracks the retail industry.
Amazon's competitors are paying a bit more this year, she explained, but that's not only to try and keep up with Amazon. "I think hazard pay is an issue this year, due to COVID-19," Kodali said.
Workers in places with significant public contact have demanded to be paid more to compensate against the risk of exposure. "It's something that is bigger than Amazon," she added.
Pandemic boosts warehouse and delivery hiring
COVID-19 will also impact shopping habits. In 2019, online shopping accounted for 20.1% of total holiday sales.
Bill ThorneSVP of communications and public affairs for NRF
During the pandemic, online and other non-store sales have increased, and retailers are planning for a greater portion of their sales to come from e-commerce this year, according to information provided by the National Retail Federation (NRF). Retailers and logistics companies must modify their workforces this year and find the right mix between in-store and warehouse employees to meet the surge in e-commerce shopping.
"Much of the hiring will likely be for the warehouses and e-commerce distribution centers this year," Forrester's Kodali said. "But I'm not sure how well the stores will do with all the social distancing in place."
For last-mile delivery services, FedEx estimates that 95% of all e-commerce orders in the U.S. are delivered by FedEx, UPS and the U.S. Postal Service. While a host of startups will chip away at that, the pandemic will ensure the delivery market continues to grow.
Impact of retail and logistics hiring
It's important to track how Amazon and its competitors behave before and during the holidays because these companies affect national and global economies. Seven of the country's 10 largest employers are in retail or logistics. These companies employ the following numbers of people:
- Walmart: 2.2 million
- Amazon: 798,000
- Kroger: 435,000
- Home Depot: 415,700
- FedEx: 389,500
- UPS: 377,640
- Target: 368,000
Retail hiring for fourth-quarter demand is as predictable as the tides. Retailers generate anywhere from 20% to 40% of their annual revenue in November and December. The stakes are high since the success of the holiday shopping season has repercussions beyond Dec. 25 and the first quarter of 2021. Compensation, budgets, hiring and the future of the retail enterprise itself all hinge on whether the company meets or exceeds last year's sales.
Retailers generated $729.1 billion in holiday sales in 2019, according to the NRF. Last year, the retail industry employed an estimated 562,000 individuals to fill holiday positions during November and December, according to NRF research.
"This has been one of the most challenging years our industry has ever faced, but both consumers and retailers have shown their resiliency," said Bill Thorne, SVP of communications and public affairs for NRF.
"Consumers are shopping and spending again, retail sales have seen a V-shaped recovery, and retailers have proven that they can offer a safe shopping experience." And while retailers are optimistic, the virus still needs to be brought under control and recent progress on a vaccine can only help, he added.
The organization postponed the release of any 2020 holiday data, including seasonal hiring. The disruption caused by the pandemic has resulted in unprecedented swings in many economic variables, particularly employment, the NRF said.
Beyond the holiday season, the pandemic will influence how e-commerce companies hire or adjust the size of their workforce. "Retailers like Walmart and Target are likely thinking of their own plans for increased hiring," Forrester's Kodali said.
Meanwhile, companies that are struggling will need to be more cautious about staffing because they don't have solid data to help forecast the next 12 months.
"We've never had a year like this, and we've never had a holiday season like this," Kodali added. "Too many retailers have no idea what to expect and the most they can do to not overspend on labor is to push sales to the e-commerce channel."
And that's great news for Amazon, since it can be the price leader and quite likely the fastest deliverer as North America's leading e-commerce retailer, and likely won't over-hire during (or after) the holidays.