Small, independent toy stores are struggling to compete against the big box retailers.
With a 120,000-square-foot store dedicated to everything Christmas, and catalog orders coming from around the globe, it takes a lot of manpower to operate Bronner’s Christmas Wonderland.
In a typical year, Bronner’s would have upward of 750 employees working at “the world’s largest Christmas store,” based in the small Michigan town of Frankenmuth.
This year, amid the tightest labor market in decades, they’ve struggled to get their headcount up to about 560, said Wayne Bronner, the president and chief executive of the store.
Bronner has increased pay, and he’s offering his workers unlimited overtime and bonus pay for Saturday night and Sunday shifts. Almost anyone who wants a job is hired, Bronner said. He hopes he can get through the next six weeks or so without burning out his workforce.
“It’s a unique year. People just are not available. And we’re not the only ones feeling it,” Bronner said. “It’s pretty much epidemic throughout the whole country.”
One year after the COVID-19 pandemic forced retailers to take extraordinary measures to protect their customers and employees from the deadly virus, many hoped the emergence of vaccines would lead to a more normal holiday shopping season this year. But while analysts are expecting high demand and record retail spending this year, the 2021 holiday shopping season is shaping up to be anything but normal.
In addition to the labor shortage, retailers are struggling with continued supply-chain delays, inflation at a three-decade high, increased gas and energy costs, skyrocketing wage growth, and increasing crime — shoplifting, counterfeiting, fraud — that takes a bite out of their profits.
President Joe Biden claimed last month that his administration “is working around the clock to move more goods faster and strengthen the resiliency of our supply chains,” though some critics have noted that Biden is actually pursuing new, counterproductive policies that would make the nation’s transportation system even worse, and that his infrastructure package could divert resources to irrelevant make-work projects. Biden has also claimed that his Build Back Better spending plan is actually an anti-inflation measure, although many researchers say the bill is structured in a way that could add to inflation next year.
Bronner said he’s seen product and shipping costs rise, but it’s the worker shortage that has been most difficult for his business. The store needs more people on the sales floor, he said, and they’re experiencing delays producing and mailing out personalized ornaments.
“We’re still hiring,” he said. “Normally we would have quit a month ago.”
Retailers big and small are facing similar hiring struggles. Target is hiring about 30,000 fewer workers than normal this year, the Associated Press reported. Macy’s is asking its corporate workers to volunteer for shifts in stores folding clothes and restocking shelves, part of its “Holiday All Hands-On Deck” strategy, according to the Washington Post. Kohl’s is offering signing bonuses of up to $400, while Amazon is offering bonuses of up to $3,000.
A recent report by the workforce management firm UKG found that 68 percent of retail stores struggled to meet sales goals over the summer because of the labor shortage, and 88 percent of retailers are concerned about burnout and fatigue during the holidays. The report found that 75 percent of retailers said customer expectations are higher than they can deliver this year.
According the report, 39 percent of retailers reported that workers are fleeing the industry for higher pay, 36 percent said prospective employees still fear catching COVID-19 at work, and 29 percent would rather stay home and collect unemployment benefits.
The labor-force participation rate was 61.6 percent in October, down from 63.3 percent in February 2020, before the coronavirus pandemic. Many business owners expected to see a significant number of people return to work after the federal government’s extended unemployment benefits ended in early September. Bronner said it’s possible there are still lingering impacts from those $300 weekly federal benefits.
“I think the federal government needs to stay out of it,” he said. “I think they’re providing a lot of incentives for people not to work.”
Jack Kleinhenz, chief economist for the National Retail Federation, said there has been a big pickup in retail hiring in recent weeks. But there are more openings than available workers.
“We have 1.3 million openings, and if you look at the number of people that have applied for unemployment who are former retail workers, there’s 880,000. So, we have more than one position open for every person,” he said. “We’re making a dent into it, but it’s an uphill battle.”
Sallie Kashiwa, owner of Timbuk Toys in Denver, Colo., said she, too has struggled to hire for this holiday shopping season. She’s had to shuffle staff between her three stores and her warehouse, prioritizing making sales over other duties. Kashiwa said she unloads pallets and labels products while her warehouse workers are deployed in the stores.
She said there are still trickledown effects from the pandemic that are impacting her small workforce — parents forced to stay home with quarantined kids, kids still doing school work at home. In some cases, those employees are coming in to work through the night.
“I literally have people working for Timbuk Toys around the clock, 24 hours,” she said.
Kashiwa said she’s seen a spike in crime this year, and she needs older, more mature workers to handle those stressful situations. But those workers have been hard to find.
“I don’t want a high schooler to have to handle somebody who is working in concert with a ring of shoplifters, or a ring of counterfeiters,” Kashiwa said.
Kashiwa said that as the owner of a small, specialty toy store company, she can’t compete with large retailers offering large signing bonuses. She said that in recent years her payroll costs have increased far more rapidly than her sales. The minimum wage increase in Denver, which is just shy of $15 an hour, has made her less inclined to hire very young workers.
“Ten years ago, I used to be able to hire some kids who were just old enough to have a job. And I might hire two or three of them to work on a Saturday, and they would be at a table out in front of the toy store, and they would be doing demonstrations of science kits and things like that,” she said. “I can’t afford to be paying three people that much money just to be out front of the store to do demos anymore.”
Kashiwa said her biggest issue this year has been the supply chain. In some cases, her orders for popular products have not been filled, or have only been partially filled. Some products that she’s featured prominently in her catalogs have been hard to come by.
“It’s generally not good business to put a product on the cover of a catalog and then have customers coming in looking for it, and saying, ‘Gosh, you know, it’s really too bad, but we didn’t get that one,’” Kashiwa said.
Customers have been understanding, Kashiwa said, but the supply chain is “absolutely absurd.”
“We have never, ever, ever faced such challenges,” she said. “We pride ourselves in absolutely excellent customer service, and when a customer says, ‘Do you have such and such?’ we’ve always been able to give them a definitive answer. It’s a yes, it’s a no, or it will be here, say, next week. And not it’s like, well, it’s been on order since last May. We’re hoping to see it.”