Hay Group Survey Finds Retailers Brace for Cold Sales and Hiring this Holiday Season

PHILADELPHIA--(BUSINESS WIRE)--According to a recent survey by Hay Group, a global management consultancy, 72 percent of retailers predict holiday sales will be about the same or lower than last year. As a result, 57 percent of retailers are reducing staffing levels for the 2009 holiday season -- a dramatic shift compared to only 29 percent that decreased staffing levels last year.

“Retailers are doing what they can to survive the season, but more importantly, if the consumer decides to go on a spending spree this season, they are poised to respond fast with merchandise and staff.”

Hay Group’s survey, in its third year, analyzed responses from 25 top U.S. retailers including American Eagle Outfitters, Best Buy, Saks Fifth Avenue and Target in September 2009 to understand retailers’ plans for the 2009 holiday season.

According to the survey, 62 percent of retailers are seeing more seasonal applicants this year, however, 40 percent are hiring fewer seasonal workers, and 64 percent already have lower than normal staffing levels.

“With sales numbers down and consumers spending less, planning holiday staffing needs has been difficult for retailers this year,” said Craig Rowley, Vice President and Global Practice Leader for Hay Group’s Retail practice. “Retailers are doing what they can to survive the season, but more importantly, if the consumer decides to go on a spending spree this season, they are poised to respond fast with merchandise and staff.”

Among the highlights from the September 2009 Hay Group retail survey:

• Seasonal Worker Staffing Levels: Compared to last year, 48 percent of respondents are planning to hire the same amount of seasonal workers for the holiday season, and 40 percent are planning to hire five percent to 25 percent fewer workers. The majority of respondents (60 percent) indicate that the ratio of permanent to seasonal store employees is about the same as last year; however, 32 percent indicate that they plan to hire fewer seasonal workers and more permanent staff.
• Sales Expectations: Retail sales expectations are lower for this holiday season – 36 percent of respondents expect sales to be about the same as last year, and 34 percent expect sales to decrease by five percent to 25 percent. Some retailers (28 percent) remain optimistic this year and expect an increase in sales, however this is a drastic drop from the 60 percent of retailers that expected an increase in sales this time last year.
• Store Promotions: Retailers have changed their promotion strategy in response to current economic conditions, with 43 percent of respondents indicating that they will be running more promotions and/or deeper discounts this year. Stores have also shifted their focus from running the most store promotions on Black Friday (35 percent, compared to 45 percent last year), and will instead run consistent store promotions from now until New Year’s Day (43 percent of respondents). In addition, 13 percent of respondents indicate they will run the most promotions in mid December leading up to Christmas, and nine percent will run the most promotions on the day after Christmas.

“Retailers are planning for a challenging Christmas season, and to avoid the massive markdowns they had to take last year, they have reduced inventory and staffing levels to control costs,” added Rowley. “That said, retailers have their fingers crossed that they are wrong.”

About Hay Group

Hay Group is a global consulting firm that works with leaders to transform strategy into reality. We develop talent, organize people to be more effective, and motivate them to perform at their best. With 88 offices in 47 countries, we work with over 7,000 clients across the world. Our clients are from the private, public, and not-for-profit sectors, across every major industry and represent diverse business challenges. Our focus is on making change happen and helping people and organizations realize their potential.

For more information, including requests for interviews, please contact Gretchen Steinmiller at 212-840-1460 or gretchen@blisspr.com.