Sep 16, 2019

More job losses are likely in brick-and-mortar retail

Reproduced from IIF report; Chart: Axios Visuals

The strong U.S. labor market continues to add jobs, but the retail sector has been moving in the opposite direction.

Why it matters: Brick and mortar retail is likely to keep shedding jobs for the foreseeable future because of an "efficiency gap" between traditional stores and e-commerce, according to economists at the Institute of International Finance.

What it means: IIF's economists assert that it takes significantly fewer employees to deliver the same amount of product for e-commerce businesses, meaning they will continue to deliver better profits and push out old-school retailers in large stores.

  • "This efficiency gap has persisted because ongoing job losses in brick-and-mortar retail are only just keeping pace with falling market share, which unfortunately means that downsizing is likely to continue for some time," IIF managing director and chief economist Robin Brooks and economist Jonathan Fortun say in a report published Thursday.

Details: They highlight a few key trends in the labor market between traditional and online retail.

  • "Job losses in the retail sector have been a persistent feature of the US labor market."
  • "This downsizing has so far only offset falling market share of 'brick-and-mortar' retail, and therefore not helped close the persistent efficiency gap that exists versus e-commerce."
  • "Department stores need 8 employees to generate $1 million in sales per year, while electronic shopping & mail-order houses, the category that captures e-commerce in the establishment survey, need as few as 0.6."

Go deeper

U.S. job openings and hiring both slowed in August

Data: U.S. Bureau of Labor Statistics; Chart: Axios Visuals

The U.S. job market remains strong, with more job openings than unemployed people seeking a job, but companies are starting to put some hiring plans on hold.

The big picture: The U.S. had 7.05 million job openings at the end of August, the Labor Department reported on Wednesday, but after torrid increases over the past 2 years, the number of jobs businesses have to offer is beginning to turn lower, but not because firms are filling the positions.

Go deeperArrowOct 10, 2019

U.S. retail imports are surging ahead of new tariffs

Data: National Retail Federation, Hackett Associates; Chart: Axios Visuals

Ahead of expected tariff increases on consumer goods from China, imports at the nation’s major retail container ports are expected to hit their highest level of the year in November.

Why it matters: The report is the latest data point to show that President Trump's trade war is spurring an increase, rather than a decrease, in buying from China and other foreign exporters. The pace of imports at retail container ports has consistently risen during Trump's time in office.

Go deeperArrowOct 10, 2019

Forever 21 files for bankruptcy

Shoppers walk past a branch of Forever 21 store in central London. Photo: Steve Taylor/SOPA Images/LightRocket via Getty Images

Forever 21 said in a statement Sunday night it had filed for Chapter 11 bankruptcy protection and would close a number of stores in the U.S. and across the world. Most stores in Asia and Europe will close, but it would continue operations in Mexico and Latin America.

Why it matters: The Los Angeles-based "helped popularize fast fashion in the United States with its bustling stores and $5 tops," the New York Times notes. Per Axios' Future reporter Erica Pandey, the trend is increasingly coming under fire because it’s creating uncurbed waste and exacerbating retail's environmental harm.

Go deeperArrowSep 30, 2019