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Explaining the Economy: Unemployment, the June 2019 Jobs Report, and the Retail Sector

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This is a syndicated post, view the original post here

By Tanios Boudames, Product Marketing Manager, Oracle HCM Cloud 
By Michael Forhez, Global Managing Director, Consumer Markets, Oracle Industry Solutions 
By Albert Qian, Content Marketing Manager, Oracle HCM Cloud 

Every month, the United States Bureau of Labor Statistics releases an employment report chronicling economic progress from hourly wages to the unemployment rate. In this series of blogs, we'll be defining key terms from the report and deep diving into a specific industry. This month, we take a closer look at the retail industry. 

The Bureau of Labor Statistics released the June 2019 jobs report last week, showing 224,000 jobs added and a 3.7% unemployment rate. With such a high jump in payroll, fears of a looming recession, for now, have been put on hold.

For those not so familiar, this report highlights unemployment rates as a key figure, measuring the number of active members in the labor force looking for a job while taking unemployment benefits. A lower rate indicates a smaller pool of benefit recipients and more individuals working. It does not, however, indicate the number of individuals seeking work whose benefits have since expired. According to the latest figures, under Alternative measures of labor underutilization, the total unemployed is closer to 7.2%.  

Nonetheless, a 3.7% unemployment rate represents good news for the United States labor force and is classified by economists as below full employment, which is described as unemployment falling to the lowest possible level that won’t cause inflation.

But to fully understand these numbers one must also analyze individual industries, as each performs differently during a unique economic cycle. In this month’s blog post, then, we dive into the retail sector, which has experienced significant upheaval in recent years with the emergence of the digital marketplace and other factors.

Let’s take a look.  

Opportunity is There – If You Know Where to Look

The retail unemployment rate is just a tick higher than the overall rate at 3.9%, generally suggesting a healthy industry. However, brick-and-mortar struggles have continued to dominate the news in 2019, with thousands of store closures already outpacing figures for the same period last year.

Of course, variations in employment and retail trends have routinely shifted, based on economic and other factors, but something looks to be very different this time. One can certainly point to e-Commerce, which is slated to grow 15% faster than brick-and-mortar in 2019, but we believe there’s more to see beyond this single figure, so we sat down with Michael Forhez, Oracle’s Global Managing Director for the Consumer Markets, to shed some insight on the matter.

Michael, while the above numbers are suggestive, can you tell us more about what they mean and might portend?

Forhez: To understand what’s taken, and is taking, place in modern retail we must first trace the roots of the industry back to a time when retailing, as we’ve known it, was driven and enabled by the forces of mass manufacturing, distribution, and marketing. In effect, this industry was built, and has been sustained, on a simple idea; make as much as can be made, sold to as many who can be convinced, for as much as can be charged, expecting they’ll come back for more.

For better than a century, then, we’ve been provided a combination of plentiful product assortments, offered by generally well trained personnel, serving what has been an essentially consumer-driven economy. In our current age –the age of the “connected” consumer– the need for physical stores, and clerks to staff them, is now being carefully re-examined. What practitioners have come to understand is that we are rapidly moving from a model mostly based on selling things ever more efficiently, to one that requires serving customers more effectively.

Some of this has been driven by e-commerce, some by overarching changes in consumer behavior. The net impact, though, has been an oscillation between what many call bricks & clicks, where physical storefronts make room for their on-line equivalents, and on-line “pure plays,” who have been experimenting with physical stores of their own.

Among the various challenges emerging from this transformation has been a recognition that many shoppers don’t think store associates have the necessary tools and training for the kind of customer experience they are coming both to expect and demand. And this is where Oracle can play a significant role.

retail is changing - will retailers change too?

So, connected consumers want more and retailers are working harder than ever to give it to them. Still, everyone keeps talking about the “retail apocalypse.” Truth or hype?

Forhez: It’s a bit of both, actually. On the one hand, and by example, Amazon Prime now has more than 100 million subscribers, which is a testament to the efficient service capability an on-line channel can provide. 

On the other hand, you also can’t argue against the number of physical store closings we’ve seen the last several years.

That said, at least two things –beyond the impact of on-line commerce– are pretty much well acknowledged. First, across several key categories, it now appears we were overstored, and this has been particularly true for malls. Second, many store outfits failed to sufficiently understand, prepare for and take advantage of, the impact and opportunities borne of on-line shopping. This all resulted from what I’d call the myopia of the masses, and where the success of our past was thought to guarantee our future.

But it’s not all bad news, because while innovation has invariably meant some jobs are being lost, many new ones are being created with others re-invented.

So, you’re saying retail is not dead yet?

Forhez: Quite the contrary! But we need to shift our perspectives with new minds sets, and skill sets to match. Retail is facing an epochal challenge. As well, a work force, that could count on a range of opportunities at all levels of customer facing sales, from high-end luxury to everyday items, and from full to part-time employment with flexible schedules, is now examining its options. Much, by necessity, will have to change.

For example, merchandising from the stock-room to the shop floor is giving way to distributing direct from the warehouse, with concierge services and “showrooming” now taking the place of large department stores.

And, frictionless commerce, where shoppers can use digital devices to complete their transactions, will mean that number of register operators will be reduced for cash only purchases. But, the redeployment of these personnel can mean better, and more personalized, customer service. These upgraded jobs will require higher degrees of social engagement and a comfort with modern technology, which will in turn mean better and more training, with pay to match.

Yes, the face of retail is changing, but for the bright, brave and bold there’s nothing but upside. A new, indeed, age has come.

Hail the consumer!

Adjust to the Market with Oracle HCM Cloud

The retail sector no doubt has a lot at stake as leaders and decision makers look to the second half of 2019. Though most revenue is made during the Thanksgiving to Christmas holiday time period, the effects of digital transformation are undoubtedly front and center.

If you’re a retailer looking to take advantage of industry change, discover what Oracle HCM Cloud can do with Strategic Workforce Modeling and Predictions. From planning ahead for your organization’s financial future to aligning your staff with business strategies, you can get the most out of your staff and create retail experiences that delight customers and drive retention. Learn more today and speak to one of our sales specialists for a demo.

About Michael Forhez

Michael Forhez is Global Managing Director for the Consumer Markets Industry Solutions Group at Oracle. He brings over 30 years of diversified sales, marketing and management consulting experience to his current role. Forhez is frequently called upon to write and speak on various subjects germane to the consumer products and retail sectors. He serves as an evangelist within the consumer markets and has committed his career to engaging with various stakeholders to better understand and reflect their collective requirements.

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