Growing eCommerce Hits Physical Store Payrolls

April 12, 2017         By: Steven Anderson

While it’s been known, at least anecdotally, for some time that online retailing and mobile payments use has a relationship with physical store sales, recent news drove this point home quite thoroughly.

The number of jobs lost at general merchandise stores added up to 34,700 in March, based on reports from the New York Times, representing one of the worst turnarounds in recent memory.

Basically, the reports note, ecommerce and technology were delivering ever-increasing power to the consumer, which in turn meant that the consumer was solving many of his or her own problems, sending the need for—as Nomura retail analyst Simeon Siegel reported—the need for not “…as many people walking around trying to convince you to buy a sweater.”

This is the second month in a row retail payrolls have taken losses, reports note, and it’s representing not so much a change in overall consumer spending, but where those consumers are doing the spending in question.

A majority of shopping is still done in physical stores, reports note, but with more customers moving to online sources, it limits the need for hiring in those physical stores, only to replace those who leave or to accommodate certain seasonal fluxes.

It’s not exactly good news; ecommerce options never really needed so many people, and the more people lost from the workforce altogether the less capability there is to shop, and thus the lower the overall market is for all those goods and services.

It’s good news, however, in that the losses seen in brick and mortar aren’t absolute losses, but rather losses ameliorated by other options in the field. So while there were 34,700 jobs lost in general merchandise stores, perhaps online retailers added 10,000, which reduces the overall loss.

It’s not likely that the move from physical to online is one-for-one—it’s a safe bet, after all, that there’s been reduction in shopping overall—but the losses in physical are pronounced and only partially limited by online gains.

The market is changing, overall, and with these changes brings others in turn, radiating out from the center like ripples in a pond. We’re seeing some of these right now, for good or ill, and we’ll likely see more before it’s all said and done.