America's latest shopping habit is great news for retail workers

Shoppers are buying online more than ever, and that could be great news for workers.

Walmart, Target, and Best Buy have reported unprecedented online demand this holiday season, the companies are hiring thousands of staffers to work in new fulfillment centres — where online orders are packed and shipped — across the country.

These positions typically pay more than the average retail job. Target’s warehouse workers make $18.23 an hour — one of the highest starting hourly wages in the retail industry and more than twice what the average retail associate makes, according to data compiled by Glassdoor.

A job advertised for an Amazon fulfillment center in Lexington, Kentucky is promising as much as $17 an hour. Workers on a retailer’s sales floor, by comparison make $9 to $10 an hour, according to Glassdoor, which tracks wages using data provided by employees.

Seasonal jobs

Warehouse workers can start at a higher salary than store associates because of the “specialised nature of the job,” Walmart representative Ravi Jariwala told Business Insider. Working in a fulfillment center requires more technical skills, such as handling equipment and learning to use technology for processing orders, Jariwala said.

Walmart’s average warehouse associate makes $14.22 an hour, compared with $9.31 for a retail worker, according to Glassdoor. Jariwala says the retailer’s warehouse jobs often come with perks like healthcare and retirement plans.

To be sure, this isn’t a shift with broad economic consequences. The jobs are typically seasonal (Amazon’s posting says the $17 per hour wage will apply to workers who stay through Dec. 26), and the fulfillment centres typically aren’t in big urban markets.

But both wage and job growth for warehouse works is outpacing traditional store associate jobs, according to data from the Bureau of Labour statistics.

There are several reasons retailers typically pay warehouse workers more than retail associates, according to Sucharita Mulpuru, an e-commerce analyst for Forrester Research.

“Many times with these workers we see a more specialised skill set,” Mulpuru told Business Insider in an interview. “Sometimes they need to operate mechanical equipment that may require licenses, similar to driving a semi-truck.”

The warehouse operation is a leaner one, leading to more financial wiggle room for retailers.

There is one warehouse worker for every $2 to $5 million in sales for major retailers, compared with one store associate for every $400,000 to $500,000 in sales, according to Forrester.

“These workers make more because you can get more efficiency out of them and they might be more highly skilled,” Mulpuru said. “That accounts for the difference.”

Target opened two new distribution centres this year, resulting in more than 650 new jobs. The retailer is also transforming about 25% of its stores into mini distribution centres that ship merchandise ordered from the website, representative Eddie Baeb told Business Insider.

Target’s online sales during Thanksgiving and Cyber Monday shattered records. More broadly, the rise in online sales came as in store sales at major American retailers declined, according to data by ShopperTrak.
Walmart expects to invest $1 billion in e-commerce by 2017, and recently announced a 1.2 million square foot fulfillment center outside Atlanta that will staff 400. Online sales growth at America’s largest retailer is expected to hit $45 to $60 billion in the next three years.

Retailers are staffing fulfillment centres at a time when store associates and fast-food workers are demanding higher wages. Walmart, Target, and TJMaxx all raised their minimum wages this year in an attempt to retain talent.

Disclosure: Jeff Bezos is an investor in Business Insider through hispersonal investment company Bezos Expeditions.

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