More Hours, Pay and Flexibility: What Target's Holiday Hiring Plans Say About the Labor Market for Retailers

Adam Jeffery | CNBC
  • Target said it anticipates that current store employees will work about 5 million more hours this holiday season, as it trims back seasonal hires.
  • The big-box retailer has launched an app that allows workers to pick up an extra shift on demand.
  • Other retailers are asking workers to take on additional hours and even reducing store hours amid the tight labor market, according to a survey by talent consulting firm Korn Ferry.

Target said Thursday that it is taking a different staffing approach this holiday season as it gears up for a rush of shoppers at stores and on its website: It will trim back seasonal hires and give more hours to existing employees.

In all, the discounter said it expects current store staff — about 300,000 people in total — will work 5 million more hours during the holiday season. That translates into more than $75 million of additional pay, it said.

Target still plans to hire about 100,000 seasonal employees — but that's smaller than the more than 130,000 that it hired for each of the past two holiday seasons, the company said.

The big-box retailer, which has more than 1,900 stores and about 350,000 employees, launched an app this summer that makes it easier for store workers to pick up an occasional shift. It allows staff to choose times or swap hours on demand, adjusting for other obligations like parenting or attending a college class.

"The pandemic highlighted our team members' needs for flexibility," said Target's chief human resource officer, Melissa Kremer.

Retailers, including Target, are preparing for a holiday season that's expected to be both busy and riddled with complications. Sales in November and December are projected to grow at least 7% year over year, according to three different forecasts by Bain & Co. Deloitte and Mastercard SpendingPulse. However, industry analysts say customers should expect to see fewer deals, more out-of-stocks and shipping delays as Covid pandemic-fueled supply chain challenges ripple across the globe.

Staffing has become a key challenge, too, as many struggle to fill openings and retain workers — a problem that could translate to emptier shelves, sloppier stores, longer checkout lines and other frustrations.

Korn Ferry, a talent consulting firm, earlier this month polled 176 U.S. retailers to see if the companies were having trouble hiring, and only 2% responded that it wasn't an issue.

When asked what companies were doing to staff up for the holidays, 74 businesses said part-time workers were being asked to take on additional hours; 63 said full-time workers were being asked to take on longer shifts; and 34 retailers said the hours stores are open are being reduced. Only 15 businesses told Korn Ferry staffing was not a problem.

Target's Kremer said the strategy of providing more hours to existing staff is part of a broader push to attract and hold onto high-quality workers. She pointed to a multiyear effort to raise the company's minimum wage, which began before the pandemic. Starting pay of at least $15 an hour went into effect in July.

This fall, Target also began a debt-free education assistance program, which covers college tuition and contributes toward graduate programs. Walmart already had a similar program and Amazon recently announced the creation of its own. Many retailers have also been hiking wages as well.

Target's chief stores officer, Mark Schindele, said the company has listened to employees and tried to cater to their preferences. He said many requested additional hours and more stable schedules, which in some cases qualified them for health insurance and other benefits. Another group sought more flexible jobs, so they could juggle child care, college classes or other aspects of life.

On average, he said, hourly employees are working nearly 15% more than they were a year ago.

Kremer said that over the past two years, turnover has fallen to a five-year low. The company declined to specify that rate, but said turnover is slightly higher this year versus 2020.

Schindele said about 24,000 staff members are "on-demand employees" — a pool of part-time workers that he expects will grow.

Craig Rowley, a senior client partner at Korn Ferry and head of the firm's retail practice, said he has spoken with a number of retail businesses recently that say they're having less of an issue hiring workers permanently, but that it's much harder to attract seasonal help.

That's due to a number of factors, Rowley said, but largely because many Americans are flush with cash and don't need to take on extra work to be able to afford gifts for their loved ones.

"I don't think you're going to see stores being open till midnight or 1 o'clock in the morning this holiday, when they can't get staff," Rowley said. "It's hard enough to get people to work during the day, and getting people to work the overnight shifts is going to be even harder."

Still, a number of retailers have laid out lofty hiring goals ahead of the holiday rush.

Macy's said it aims to bring on 76,000 full- and part-time workers at its stores, call centers and warehouses, marking a return to the department store chain's pre-pandemic levels of seasonal hiring. About 48,000 of those jobs are specific to the holiday season, the company said, while the rest are meant to extend on a permanent basis.

Kohl's hopes to bring on roughly 90,000 seasonal workers. The company said it is offering a first-of-its-kind bonus, of between $100 and $400, for all hourly holiday employees.

Walmart has not yet announced seasonal hiring plans, but said it is seeking 20,000 employees for permanent, supply chain roles like freight handler and order filler.

But according to Joel Bines, global co-leader of the retail practice at consulting firm AlixPartners, it's hard to keep a count of exactly how many of those positions end up getting filled.

"We don't have a good accounting of companies that said [they] wanted to hire 100,000 seasonal workers. Well how many did you hire?" he said.

Bines also doesn't think it's a smart strategy to rely entirely on a retailer's current workforce, as online orders come flooding in and shoppers pile into stores.

"You will absolutely exhaust your existing workforce if you don't prepare," Bines added. "The holidays are a eight- to 12-week season."

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