Rundown: Seasonal retail hiring commences, Instacart finally goes public & H&M charges for returns

0:06Hello and welcome to the Modern Retail Rundown. I'm your host, senior reporter Gabby Barco, and I'm here with Editor-in-Chief Kale Guthrie-Weissman. Hello, Kale. Hey, how are you doing, Gabby? I'm doing well. How are you? I'm doing good. It is evening here in Finland. Yeah, so then let's just get into it to get you into your evening. Seasonal hiring has kicked off, so we're going to be covering some of that happening over at Amazon and Target, among other. companies. Then we will be taking a look at Instacart's IPO, which finally occurred. And finally, we will discuss the potential end of free returns.

0:53It feels like a thing of the past. Yes. Yeah. So first up, let's talk about the seasonal hiring bonanza that's going on. It's being, seems like, spearheaded by Amazon, where they announced they're planning to hire 250 ,000 employees for the holidays. That's like an entire city. That's kind of crazy to think about. But it's, believe it or not, it's 100 ,000 people more than last year. So it doesn't seem like they're pulling back on hiring, even though, I know it's a different type of hiring, but they did just have a lot of layoffs corporate wise. Yeah, absolutely. It's everyone sort of looks to holiday hiring as a bellwether for what the holidays are going to be like.

1:41And I don't know if Amazon is the correct barometer of this, but it's good news, at least for Amazon, because they're hiring more than they did last year. And so 100 ,000 people more, I believe in 2022, to it was 150 ,000 people. They say it's seasonal, part-time, full-time, fulfillment center and transportation roles. So none of this is surprising. We expect these types of announcements just about now, but at least I'm sure economists are looking at these major players and seeing what roles they're needing, how they're forecasting, what kind of growth it will be. And this probably makes things look good, at least on the e-commerce front.

2:22Right. Yeah. And, you know, there are other companies that are also doing some doing a pretty decent amount of seasonal hiring, including Target, Walmart, even Macy's announced they'll be bringing on thousands of employees or just, yeah, temp workers this season. Yeah. And so like the ones that we've heard from thus far, we've heard from Target, We've heard from Macy's. Macy's is an interesting one. We'll get into that in a few minutes. But Target, it's interesting because it's hiring 100 ,000 seasonal employees this year. It's about the same as last year. So not more, not less. And especially since Target's had a rough quarter or so, I imagine this forecasting is good.

3:09you know, it's giving analysts good news that it's not going to be a completely dismal holiday season for them. We haven't heard from Walmart yet. So we're waiting with bated breath to know how many people Walmart will hire for their seasonal workers. But last year was really interesting because Walmart only hired 40 ,000 new workers, which isn't that many. I mean, that in itself, as you said, is a city, a small city. But it's still not as many as the 250 ,000 that Amazon is hiring this year. But one thing that Walmart did say it was working on last year was they were hiring full-time truck drivers to build out its delivery arm even more.

3:48And so we don't know what Walmart's going to say. It might hit in the next few days, few weeks, who knows. But it'll be interesting to see, A, what the number is, if it's more than it was in 2022, and B, what roles they're hiring for. Right, yeah. Why don't we look at that now? Because I think it's interesting, especially in the case of for Amazon, it's a mix of retail and warehouse workers, whereas Target, they've kind of become known for this, but they are hiring for fulfillment specialists. So those are the people that walk around the store, pick up orders, and take them out to either curbside or pickup.

4:28So yeah, that'll be interesting. Maybe it's pointing to them expecting more of that, even though I know it's slowed down in the last couple of years. Yeah, absolutely. I mean, with the Target, they did say that most of the roles will be in store and they will include store associates. They'll include stylists. Like there will be the traditional holiday roles that are expected. But Target also did say that it's hiring this fulfillment expert. It also did say it was going to be hiring for some warehouses. So e-commerce fulfillment is definitely playing a big part in this. With Amazon, it's much more cut and dry.

5:02They need people to be delivering, picking and packing those items. And so that's specifically what they're hiring for. And so I don't know, I'll be interested to see specifically with a company like Target, A, what the e-commerce numbers turn out to be. I'll also really want to know how much of Target's holiday sales were in-store versus online, because Target has been a leader in this omni-channel fulfillment, in-store fulfillment, buy online, pick up in-store. And so with the last few years sort of bumpy numbers where they saw huge e-commerce gains and then it sort of flattened out and now it's sort of a toss-up, it'll be interesting to see how that plays out this year, specifically with holiday orders.

5:47Right. And then do you think it's any indication to just the overall retail sales in the U.S.? Because they have been sort of a mixed bag across the board, but they are not growing as fast as they were, of course, maybe in 2021 and even last year. Yeah, absolutely. And I think that this is one of the big indicators that economists look for is just what are the retailers saying the demand will be and how many people on the ground do they need working? And so the fact that it already seems to be, you know, with Amazon, it's more with Target, it's flat, shows that it might be a mixed bag. There's actually a report that Reuters in its article about about these hiring cited that I thought was interesting, where it was a MasterCard report, which said that retail sales between November and the end of December were only going to rise 3.7 percent compared to last year during that period, they rose 7.6 percent.

6:46So the sales growth this year is half what it was last year. And so that's not very good. And so it all points to exactly what you were saying before, where it's been really bumpy, some bright spots, some not so bright spots. And that's what it seems like at least people are thinking, retailers are thinking the holidays are going to look like. Yeah. Yeah. And then, like you said, it'll be interesting to see. I think Walmart will probably announce that any day now because they are usually the biggest bellwether since it's literally the biggest private employer in the country. Right. Is that still the stat?

7:25It might be. Although maybe it's Amazon now, actually. We should we should fact check. Oh, yeah. I know it's it's really toe to toe. Yeah. But I think it'll be I mean, I know we talk about this a lot. We've already started talking about this a lot, you know, fulfillment and the holidays. And I feel like it's a little bit of a whiplash. Every year we have a different issue. Like first it was, you know, delays and then it was excess inventory, supply chain, all of that. So I think this year maybe it's a mix of all of them. Yeah. And I think it's a mix of forecasting where, you know, there's been so much coverage about what the economy is.

8:03And there's been so much debate like, were we in a recession? Were we not? Did we have a soft landing? Did we not? Are people buying things? Are they not? And every month, the numbers seem to tell a slightly different story depending on the way you look at them. And I think that the trend with these holidays, with these hiring, is specifically that it's a mixed bag. And depending on which company you look at, there will be a different story to tell in their forecasting in a different way. And I think that like there's another retailer that I talked about the front that I want to just give some numbers to that sort of adds credence to this, which we have Macy's.

8:39You know, Macy's always hires holiday workers back, you know, in the olden days. That was it was always the department store seasonal hires that were the bellwether for how the holidays were going to be. But Macy's is only hiring 38 ,000 seasonal employees this year. It hired 41 ,000 last year. and two years ago it hired 71 ,000. So it's nearly half as many seasonal employees this year at Macy's than two years ago. And I don't know, I don't think that this is necessarily a bellwether for what the holiday sales, you know, writ large are going to look like, but it is a bellwether for what the holiday sales at department stores are going to look like.

9:17And I think that that tells kind of the story of where retail is at, where it's, you know, the winners are going to continue to win and the ones that haven't been doing as well are going to continue struggling, even though they're trying to figure out ways to right side their business. Anna, I guess more of a positive note in the industry is that Instacart finally went public. I feel like we spend half our lifetime waiting for this. But I mean, yeah, if you've been covering the company for a while now, it's like this. Yeah, you've been waiting for this day. But it seems like they're doing pretty well.

9:51And I saw some tweets saying that I think between this and Klaviyo, like, IPOs are back, maybe. I don't know. Yeah, no, this is, we're in an interesting time, especially since, you know, we've had such a cooled period the last year and a half, two years. So if we've had two pretty good retail consumer-facing, I guess Klaviyo is not consumer-facing, but, you know, retail IPOs, that's a good sign for what's to come over the next few months. Yeah. So yeah, they officially started trading on Tuesday with an offering price of$30, but they did pop open at$42, so it's a little higher than expected, and then closed at the end of the day at $33.70.

10:38The valuation, I think, is, yeah, about$11 billion. Of course, it's a lot less than some of the lofty valuation from a few years ago. I think it hit$39 in 2021. So it's about, yeah, a third of that. But still, I mean,$11 billion is not nothing. Yeah, no. I mean, the fact that it closed 12 % beyond its initial price, I think, is good. You know, this is going to be one of those long game things where I'm sure there will be times when the stock does well. There will be times when it doesn't do well. And so it'll be about how it trends in the long term. And also just we'll be looking at its balance sheet and financials over the next few years.

11:19it's uh it's maybe been profitable a few times but it's never been consistently profitable and you know it's in a very competitive and you know tight margined industry and so the fact that it's doing well now is good but uh it'll be interesting to see how it plays out over the next few years yeah and then uh yeah we should note that uh some of the you know public info that came out along or just as a, yeah, from the IPO is that the, I guess, who came out a winner from this? And we should talk about the retailers, of course, because Instacart, the whole thing is that it's, it powers grocery stores.

12:01So yeah, you want to tell us a little more about that? Yeah, no, there was, this was a story that came out in the information earlier this week that I thought was super fascinating and really just indicative of some of the back-end maneuvers Instacart has been wielding for the last few years, which is there were some major beneficiaries that people were unaware of with this IPO, one of which is Albertsons. And so according to the information, the way part of the deal that Instacart struck with some major retailers like Albertsons and supposedly Kroger was allegedly that they got stock options.

12:35And so according to the information, with this IPO, Albertsons stood to make as much as$80 million because of the stake that Instacart gave to it. Kroger supposedly also had a stake, but it's not sure how much Kroger made because it might have sold some of its shares beforehand. But I think that it's a really interesting thing because part of the way that Instacart has touted itself is that it's inked these really, really big, these big partnerships with some of the major retailers. And these are retailers who one would think could and might should build their own tech stacks, that they could do their own delivery rather than using a third-party service.

13:16And the way that Instacart got those companies to sign on and to stay on was with stock options, according to the information. And, you know, there was a quote in the story, which is pretty much like major retailers and Instacart have a kind of frenemy relationship in the sense that, yeah, like Instacart does power these grocers business, but also when you get to a certain scale, you kind of don't want to be relying on a third party. And so you should be building that in-house in some way. And so one of the things that Instacart is trying to do is prove out that it's there for the long run and will be able to power these huge businesses for a very long time.

13:52And so just learning about this kind of deal that went through, I thought was super fascinating. Yeah, it'll be interesting to, yeah, be able to check in every quarter on this. That's, you know, for us, that's the fun part, I guess. I don't know about fun, if fun is the right word, but. Yeah, no, it'll be good. And we know if we ever, you know, it's always interesting to see the rise and falls of these, these platforms like Uber and Lyft were always the really interesting ones where, you know, they were the darlings until they weren't, they had dismal stock performance, but now Uber is doing better than, than I think many people thought it would.

14:28And so I can imagine a similar story with Instacart over the years. It's one of those just long tail businesses will have to watch that, you know, especially as Instacart builds out its other businesses beyond, you know, its grocery delivery, its retail tech, its advertising, that will be what will prove whether it's able to thrive in the public markets or not. And then next up, we are discussing just another retailer that is taking away free returns, at least for online orders. Those are the most expensive to fulfill. This week, H &M began charging, and this is in the UK, but I'm sure it'll come to the US at one point, but they are charging a pound 99 for anybody who's purchasing online and returning either in store or online.

15:20But I think this is always interesting that the H &M Rewards members get that fee waived. This has kind of become a little bit of a trend. Sephora does this too, where if you're a member, Lululemon, and it's interesting because these are free rewards programs. So I don't know if it's just a tactic. It's a little bit of a side tangent, but I always think it's interesting how they promote these programs. But anyway, yeah, there it's just the latest company that is doing this uh you know last year zara started charging customers by you know just deducting that fee from the original order it's 399 395 i believe right now so yeah it just seems like the default thought of just oh i'll be able to just return this if i hate it is maybe no longer the case like we're we're really moving away from that because they're just too expensive for these companies to do.

16:18Yeah, online returns are expensive and Amazon really, I mean, it did kind of a disservice to other retailers when it made every consumer think that they can buy a lot of things online and return a lot of them for free. And, you know, like I think it's interesting and telling that this is happening now because, one of the big stories of the last year has been companies trying to right side their financials. They saw major e-commerce growth.

16:51Married things happened over the last few years, but in late 2022 and into 2023, a lot of them have seen sales sort of flatten or not do well. And as a result, they've had to cut costs wherever they can. And online returns is a huge one of them. That's one of the biggest things that eats into retailers. And also, like, people return a lot of clothes. I think there was a 2020 study I was reading earlier that, like, as many as half of the, I think it was apparel, is returned that is bought online. So all this to say is that, like, this is a major, like, issue that retailers have been dealing with.

17:29And it was only a matter of time before they started to try to find ways to mitigate it. you know, charging is one way. There are other strategies that other retailers are trying to take up. But yeah, it's interesting that now a lot of the fast fashion companies like H &M, Zara, Uniqlo are all doing this because I think they've become known for people to buy up a lot of clothes, see what fits and then return them pretty easily. That was sort of the consumption manner of their clothing, you know? Yeah. And I think, and this has just been on my mind because I have been doing a story about this this week, but the idea that just delivery in general for customers and online shoppers is no longer guaranteed free.

18:15So now if you go on any website, you notice that, you know, some of the minimums are, I don't know, like even$100 minimum purchase. So you do have to kind of commit if you do want the free delivery, of course, you could pay for it. But I don't know about you, I don't like paying for delivery. So, yeah, so it's all in just part of that trend, like you mentioned, where the retailers are really looking at the numbers and realizing, OK, this is where we can maybe trim some of that. And in some ways, I think this is a good thing for, you know, society. I mean, like. I mean, the climate change. I did see some analysts talk about this is going to be good for waste reduction.

18:57No, yeah, exactly. And the thing is, is that most consumers, especially U.S. consumers, have sort of been trained to think that they can buy anything online. It'll be delivered to their house for free in less than two days. If they don't like it, then they can return it for free by walking to a drop-off store. And that's that. And I think that, you know, that was sort of the ease of the last, you know, five to whatever, seven years. And that costs a lot of money, but it has a lot of other bad impacts. And so the fact that we're seeing major retailers try to cut down on that, and we're even seeing Amazon, for that matter, try to cut down on free and fast delivery in certain ways, like having a rising threshold, also giving people perks if they allow their deliveries to take longer.

19:50I think it's overall a good thing. And ideally, it'll probably be helpful for smaller brands when you think about it because it means that they won't be forced to have to deliver the ease that Amazon once did, which is any product delivered for free in a really short amount of time. now consumers are being retrained again to be like, oh, I might have to pay a little bit more for that fast delivery or, oh, I might have to think a little bit more, you know, critically about whether I want to buy this thing if I might return it because then I might be hit with a$5 fee. So I think it's an interesting retraining that has been a long time coming.

20:27I honestly didn't expect it to happen sort of this quick with so many different players following suit. But But overall, I actually think it's somewhat of good news for the retail industry, if you think about it. Yeah. And then, yeah, I think the only other solution would be, you know, to use these reverse logistics companies like Happy Returns and some of the others to do it. But again, that's another investment for the retailer to make. Yeah, exactly. And like those, you know, they themselves cost money. And a lot of those companies were built during the height of free returns and during the height of free delivery.

21:04And so I think a lot of the offerings of those vendors are probably going to shift as more people become OK with paying a fee for a return or rethinking what the shipping window is or realizing they have to buy more to get free delivery. And so I think that probably there will be a shift in exactly how those vendors work as well as people become more trained to be OK with these types of fees. that's our show for this week please rate and review us on Apple Podcasts Spotify or anywhere else you're listening and then don't forget to subscribe to the Modern Retail Podcast to hear interviews with industry leaders every Thursday and of course come back on Saturdays for the Modern Retail Rundown as always thank you for listening

21:55Thank you.