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WCC's Work Comp World

Wednesday, December 11, 2019

Tis the Season for Injuries - Part 1

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By Kristen Chavez, President and CEO of www.workcompcentral.com

In this two-part series, "Tis the Season for Injuries", we will provide an overview of an industry that is shrinking while experiencing an increase in the frequency of work-related injuries and lost time.

I will summarize an analysis of how the retail industry is evolving, what is perpetuating the most recent trends, how this is impacting hiring practices, how the Holidays impact these practices and what this means to employees that sustain an injury. 

The Evolution of Retail 

It is obvious, the retail model is evolving very quickly. More and more people are shopping online. We are all time starved. The convenience of shopping on your phone, tablet or desktop is sometimes too good to pass up. 

When I think of big box retailers, Sears always comes to mind. It is ironic that Sears started in the late 19th century as a mail order retailer selling watches and jewelry. It was only after the proliferation of automobiles that Sears opened its first store in Chicago attracting consumers that could now drive to the brick and mortar from outlying suburbs and rural towns. 

Sears enjoyed unprecedented prosperity for decades until they were challenged by Kmart. Later both retailers were surpassed in sales by Walmart. Sears filed for Chapter 11 bankruptcy protection in 2018, restructured and moved ownership to the former Sears CEO's hedge fund. There are several plans currently being circulated on owner's plan to keep Sears afloat. 

In 2019, large U.S. retail chains announced 7,062 store closures. This compares to 5,864 store closures in 2018. By the end of 2019, major retailers could shed as many as 12,000 stores. To provide some perspective, this is twice the number of stores that closed in 2008 during the Great Recession. 

Forever 21 filed for bankruptcy to allow for restructuring on September 29, 2019. Their strategy includes closing most of their international stores in Asia and Europe. 

So, what is causing so many big box retailers to close their stores?

Shopping Online

Many have coined the growing trend of online shopping as the "retail apocalypse." Travel agents have had the ability of making online transactions for decades. American Airlines developed SABRE or Semi-Automatic Business Research Environment that linked computer terminals from various agencies to a large IBM mainframe computer. Consumer online shopping officially began with Amazon and eBay launching their sites in 1995. According to the Federal Reserve Bank of St. Louis, purchases via e-commerce accounted for 10.2 percent of all retail sales in the first quarter of 2019. During the same quarter, Amazon reported having roughly 103 million Prime subscribers. This number represents 80% of American households. 

The Popularity of Shopping Malls Are Declining

Every good thing must come to an end. From 1970 to 2015, the number of American Shopping Malls grew from 37,000 to 116,000. In marketing, the "anchor" or "magnet" store at a mall are those that usually draw the crowd that eventually visit the food court and other retail stores. These anchor stores, like Sears and Macy's are struggling which means less traffic for the remainder of the retailers resulting in reduced revenue. This trend is exacerbated by the desire of Digital Natives and their Millennial predecessors to have an "experience" when being wooed by retailers. That is why malls the offer alternative experiences, i.e. aquariums and roller coasters are doing better than their competitors.  

As Store Disappear So Do Jobs

According the U.S. Bureau of Labor Statistics (BLS) the number of retail jobs will decline by 2% over the next ten years totaling 105,200. It is important to note, this bureau does not include online shopping in this figure. They bifurcate and place online commerce under the category, "transportation and warehouse."  

BLS also reports that conversely the number of e-commerce jobs are growing. From December of 1997 to 2016, jobs involving electronic shopping and mail-order increased nearly 80 percent. By 2026 this vertical will create another 450,000 jobs. 

Next Installment

In our next part of this two-part series we will examine the interesting trend of injury frequency increasing in retail. How the Holiday season impacts hiring by retailers. And what this means for employers, employees and injury frequency. 

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