Staff Cuts Hit California Retailers as Consumer Spending Tapers Off

Staff Cuts Hit California Retailers as Consumer Spending Tapers Off

MJP –

California shoppers are spending frugally and merchants pare their staffing accordingly.

That’s what my trusty spreadsheet found by reviewing two years of statewide retail sales data from the Census Bureau and shopkeeper hiring patterns tracked by the Employment Development Department.

Look, financial fears are growing as California consumer confidence is at a four-year low. Such skittishness is hitting your favorite shopping center’s cash registers.

It’s been wild times for shoppers and merchants. Exiting pandemic lockdowns sparked a shopping revival but also ended certain retailers’ boom times. Next, sky-high inflation and lofty interest rates made bargain-hunting a priority.

So, it’s no stunner that California retail spending in the year’s first five months – minus online shopping — rose only at a 1.2% average annual rate. That’s still a modest improvement above the 0.2% increase in the same period in 2023. Do not forget, though, that statewide sales jumped at a 9% rate to start 2022 as the economy’s coronavirus clamps were released.

In turn, California merchants got stingy with hiring over the past two years. The 1.6 million workers employed in retailing this year is down 4,600 jobs, or 0.3%, since the start of 2022.

By the slice

A deeper dive into spending and hiring patterns reveals wide variations in where Californians spent their money.

Staff Cuts Hit California Retailers as Consumer Spending Tapers Off

Look at 11 slices of California’s in-store shopping and you see clear winners and losers. Let’s ponder swings in sales and jobs by category in the past two years, ranked by the state’s hardest-hit merchants to those shops with the biggest sales gains.

Home Furnishings: Talk about dead. Everyone fixed up their homes during the 2020-21 lockdowns. High mortgage rates then cut homebuying, further hurting this niche. Sales are down 9.7% this year following the previous year’s 0.7% sales hike. And there’s 6,700 fewer jobs, or a drop of 13%, in two years.

SEE MORE –

Not Set Limit! New California Law Aims to Cut Homework and Ease Stress for Students

Sporting goods/hobby/music: Having fun seems to be on the outs. Well, at least spending money on the gear that might have been overly purchased during the pandemic. Sales are off 3.5% this year and a previous 3.5% hike. Jobs are down by 1,800 jobs or 4% in two years.

  • INFLATION TRENDS: What’s up? What’s cheaper? CLICK HERE!

Gas stations: The 3.1% drop in sales can be tied to falling pump prices. Same for 2023’s 16% sales dip. Yet jobs grew by 3,000 jobs or 5% in two years as owners beefed up their convenience store operations.

Car dealers: Shoppers are suffering from sticker shock and costly loans. So buying slowed and sales flattened this year after a 5.5% gain a year earlier. Staffing is up 1,100 jobs or 0.6% in two years as more shoppers come to showrooms just to close a purchase.

Building/garden supplies: A meek rebound as sales rose 0.7% this year after falling 4% in 2023. Like furniture sales, home remodeling is icy cold amid a sour housing market. Jobs fell by 5,700 jobs 4% in two years.

Electronics/Appliances: Business is stabilizing after large losses to online retailers and limited homebuying. Sales are up 1.7% this year after a 1.2% increase in 2023. But staffing is down 7,000 jobs or 13% in two years.

Food and beverage:  As grocery inflation slowed, shoppers went back to traditional grocers. Sales are up 2.7% this year following 2023’s 3.4% drop. Staffing is up 14,100 workers or 4% over two years as competition remains stiff with new players entering the market.

Clothing/jewelry: Dress for success is back. More workers returning to the office stemmed this niche’s pandemic-era slippage. Sales are up 3.2% this year vs. a previous 6% decline. Staffing is up 1,400 jobs or 0.9% in two years.

Miscellaneous retailers:  It’s a hot group. Sales are up 3.2% for a category that includes bargain lovers’ thrift stores and pet shops. Who skimps on Fido or Fifi? That jump follows a 12% surge in 2023. Staffing is up 1,000 jobs or 1% in two years.

General merchandise:  Sales at everything from department stores to discounters to club warehouses gained 3.5% this year after a previous 4.4% hike. These merchants thrive because of the low prices they offer. Jobs are up just 100 in two years.

Health/personal care:  Sales of some of life’s essentials rose 3.9% this year after a previous 5% gain. But jobs are pruned – off by 2,200 jobs or 2% in two years – as battles for lucrative prescription business rearrange the drug-store landscape.

Bottom line

Since May, when these sales stats ended, the Conference Board’s California Consumer Confidence Index plummeted to its lowest reading since May 2020 and the pandemic lockdowns.

Is that dive-in optimism just election-year nerves? Or did spending habits follow?

Please note these shopping gyrations are not unique to California. The state’s 1.2% retail sales growth in early 2024 is smack in the middle of the national rankings.

The biggest shopping gains were in the Northeast – Delaware (up 5.5% in a year), New York (up 4.7%), District of Columbia (up 3%), Connecticut (up 2.8%), and New Jersey (up 2.8%). But four states had sales dips, with a Middle American theme: Tennessee and Iowa (down 0.02%), Missouri (down 0.1%) and Nebraska (down 1.8%).

Then there’s California’s economic arch-rivals: Florida shopping rose 2.3% while Texas gained 1%.

Leave a Reply

Your email address will not be published. Required fields are marked *