Online sales up, but retail hiring is down

Theh oliday shopping season apparently begins on Veterans Day.

Whynot? Every other American holiday is about shopping.

Online sales topped $1.3 billion on Nov. 11, a 9.1 percent increase over last year, according to Adobe Analytics. Adobe uses an artificial intelligence system called Sensei to sift through trillions of online shopping data points, effectively adding “retail analyst” to the list of jobs being replaced by machines.

Adobe’s data shows that all of those decorations hung before Halloween are coinciding with a consumer shift toward an earlier shopping season. Online sales topped $1 billion everyday from Nov. 1 to Nov. 11.

Online sellers, meanwhile, are responding by offering steep discounts earlier. Adobe reports that TVs have been marked down 10.8 percent since Oct. 1,

computers down5 percent and toys down9.8 percent.

Amazon this month demonstrated hows eriously it takes the competition for market share by unilaterally discounting items offered by third-party sellers. Without asking permission, Amazon discounted prices on hundreds of items, promising the sellers the price they advertised, while allowing the customer to pay less.

The goal for Amazon and other online retailers is to make the internet the first stop to shop. By offering discounts earlier, sell- ers may also avoid making more severe discounts later. This is the kind of thinking that could make Amazona $1 trillion public company.

Brick-and-mortar stores, meanwhile, are adjusting to the new reality. The number of seasonal workers hired by large retailers is down8 percent from last year, according to global outplacement firm Challenger, Gray& Christmas.

This is the second year of seasonal employment declines. In October 2015 retailers hired 183,300, while this October they hired only 136,700.

“The ‘Amazon Effect’ and consumers’ online shopping habits are definitely shifting seasonal job gains from traditional retailers to warehousing and transportation positions. New technology in retail also eliminates the need for some back-office operations, whichmay lead to less hiring,” said John Challenger, chief executive officer of Challenger, Gray & Christmas.

The “Amazon Effect” is also changing real estate markets in many part of the world, and changes will soon come to Houston.

Real estate experts in the city tell methat so far, Houston is playing catchup in terms of top-notch retail space. There are not enough grocery stores and other high-quality retail spaces available due to slow growth during the Great Recession. So far the market remains strong.

In other parts of the country and the world, though, there is a shift from building retail space and new emphasis on building warehouses and distribution centers for Amazon and other online retailers.

“Retailers are adapting by restructuring supply chains and, in turn, requiring warehouse and logistics facilities for multilevel purposes,” said Charu Lahiri, investment manager at Heartwood Investment Management .“These include e-fulfillment warehouses to prepare and ship orders; picking and sorting; returns; and last-mile delivery centers.”

Recently, I’ve written about how retailers are hiring people to work online and in stores. My colleagues have reported on Amazon’s new facility in the Houston area. These are good jobs, but more than likely, there will not be enough of these jobs to replace those lost in stores.

That’s because by definition, lower prices require lower costs, and labor is always one of a company’s highest costs, and the easiest to cut. Don’t ever believe that those low, low prices online don’t comeat a cost to someone.