Holiday sales at Macy's Inc., Sears Holdings Corp., and J.C. Penney Co. were anemic and U.S. government data just confirmed it. The nation's traditional department stores are steadily losing ground to their online rivals — a shift in the retail landscape that shows both the change in Americans' shopping patterns and where the job growth is taking place.
Sales at all U.S. retailers increased 4.4 percent in December on an unadjusted basis from a year earlier, according to Commerce Department figures released Friday. The breakdown showed purchases at department stores fell 7.2 percent, marking the 23rd consecutive month of year-over-year declines in the beleaguered sector.
Standing in contrast are non-store retailers' sales, which include Internet and catalog purchases. They helped pace the overall advance, with a 10.4 percent gain that represents the sixth month of double-digit gains last year. E-commerce sales in the third quarter accounted for 8.4 percent of all retail sales — which include spending on cars to clothing to restaurant meals — according to a separate Commerce Department report released in November. That's the largest share in records back to 1999, when they made up just 0.6 percent.
The government data follow sluggish sales reports from a slew of U.S.-based retailers, including Macy's, which also announced plans to close 68 stores and cut 10,000 jobs. Meanwhile upscale retailer Neiman Marcus Group last week withdrew its plan to go public amid declining sales.
Dwindling mall traffic as consumers embrace the ease of shopping online is primarily to blame for weak industrywide performance, according to Poonam Goyal, a senior U.S. retail analyst at Bloomberg Intelligence, who says the change in purchasing behavior can have ripple effects on consumer spending. "When you're in a store, you're more likely to pick up five things than when you're shopping online and know exactly what you want," she said, explaining how less time at the mall means potentially less time at the food court or popping in and out of different shops.
The shift toward electronic purchases is also evident in the labor market.
As the chart above shows, while employment at non-discount department stores is down 45 percent from 2000, the number of e-commerce jobs has more than tripled.
The Labor Department doesn't break out differences in average hourly earnings between traditional department store and Internet-retail employees. And e-commerce jobs still comprise just a sliver of the millions of positions across all different kinds of merchants.
"The underlying base of e-commerce is much smaller than the underlying base of brick-and-mortar stores," Goyal said, referencing the existing distribution of jobs across retail. She noted that payroll gains in one sector do not compensate for job losses in the other in an even swap.
Amazon.com Inc. announced plans Thursday to create more than 100,000 full-time positions in the U.S. in the next 18 months as the world's largest online retailer further expands into new categories from groceries to fashion.