Oregon General Merchandise Stores – Surviving the “Retail Apocalypse”

by Ainoura Oussenbec

April 17, 2018

Retail market analysts love talking about the retail apocalypse, i.e. the imminent death of brick and mortar stores thanks to the Internet and Amazon. However, retail trade is a large and diverse sector, and oversimplified predictions may not accurately portray some of its segments.

In 2017, retail trade employment reached 210,227 or about one out of 10 jobs in Oregon. After food and beverage stores, general merchandise stores (GMS) were the second largest employer in retail trade with 41,458 jobs.

General merchandise stores include department stores, warehouse clubs, superstores and other general merchandise stores. Establishments in this subsector are unique in that they have the equipment and staff capable of retailing a large variety of goods from a single location. This includes a variety of display equipment and staff trained to provide information on many lines of products. Fred Meyer stores are a good example of GMS in Oregon because of their distinctive concept as a “one stop shopping center.” Fred Meyer stores provide customers with groceries, clothing, household goods, gardening supplies, electronics, and even furniture and gas (in some locations).

Employment in General Merchandise Stores Remained Solid in Recession

During the infamous recession of 2007-2010, total employment in Oregon declined by about 8 percent, with some industries like construction suffering severe job losses. Remarkably, employment in GMS declined by less than 1 percent between 2007 and 2010. In fact, employment in GMS continued to grow until late 2008, dropped by 2010, and rebounded to exceed the pre-recession peak in 2011.

Among the three top retail employers in Oregon, general merchandise stores and food and beverage stores weathered the recession well. In contrast, employment levels in motor vehicle and parts dealers, the third largest retail employer, dropped by nearly 20 percent during the recession, recovered slowly, and remains at about 2001 levels to this day.

Employment in general merchandise stores increased steadily from 36,674 in 2001 to 41,458 jobs in 2017. The rate of growth in GMS was 13 percent compared with 15.3 percent in all industries.

While the job increases in GMS somewhat kept up with the rest of Oregon’s economy, the sector’s wages did not. In 2017, payroll per job was $26,885 annually, lower than the average of $30,504 in retail trade overall, and significantly lower than the $51,132 for all industries. Since 2001, the GMS average wages increased by 41 percent, faster than in retail trade overall. However, in all industries the average annual wages grew by 54 percent during the same period.
More Workers Per Establishment, Key Jobs Starting at Minimum Wage Levels

The number of business establishments in GMS increased by a mere 3 percent in the past 16 years. This means the GMS establishments now employ more workers per unit, on average, with about 80 jobs per establishment. This is contrary to the analysts’ expectations of massive retail job losses due to automation, technology, and the Internet.

The key occupations in GMS are the same as in retail trade in general and include retail salespersons, cashiers, stock clerks, and supervisors of retail trade workers. Workers with experience from other types of retail establishments can easily find employment in GMS and visa versa. The average wages for retail salespersons and stock clerks are about $13 to $14 per hour, and they do not vary that much around the state. Supervisors of retail workers can start at $12 to $13 per hour and go up to $20, depending on the store and region. There is greater variation in retail supervisors’ average wages in different parts of the state, ranging between $16 and $21 per hour.

Employment in General Merchandise Stores Depends on Population Growth

While Amazon is trying to enter into the groceries side of retail, most consumers still require convenient access to food and every day household items where they live and work. Regardless of economic ups and downs, people must spend a certain portion of their income on food and household supplies. Consumers need fresh and perishable items frequently, and most of them will not travel long distances nor wait for Internet companies to deliver their loaf of bread or the right garbage bags. In addition, an increasing number of consumers prefer locally produced food and other everyday items.

Consequently, parts of retail trade generally follow demographic trends and that tends to make their employment base less volatile compared with other industries with different business cycles. In the past decade and a half, Oregon’s population increased by about 1 percent per year, and, no surprise, the jobs in general merchandise stores trailed that steady rate of growth.

However, in the markets defined and even confined by demographics, the main challenge for industries such as GMS is still competition. Only those general stores able to interpret and follow the ever-changing consumer preferences can ensure their own staying power in this highly competitive environment.

Retail Is all about Selection, Customer Service and Now… Technology

Retail analysts agree on several important trends in consumer preferences for most retail stores, and they are, in essence, about more choices and better service. This, in turn, may require not less but more staff and/or training. For instance, successful GMS today tend to feature extensive wine and craft beer collections where knowledgeable staff are available to advise customers, not just to restock the isles. Other popular additions are deli departments with foods that can rival restaurants, convenient meal kits and semi-prepped meals to go, as well as health foods and supplements, real coffee shops, and other related or not-so-related products and services.

Retail stores, especially large entities, are embracing technology. The best GMS are already allowing customers to view and order items from their smart phones and to pick up the bagged products when convenient. Fast self-checkout areas are becoming available in more GMS, saving time and money for customers as well as stores.

Fred Meyer in South Medford Stays on Top of Retail Trends

South Medford Fred Meyer is one example of a local GMS already well equipped with new and “must-have” retail features. The most recent development to this Fred Meyer location is a wine bar located in the impressive wine and beer department, next to high-end cheeses and artisan breads. The produce department has expanded and is now located prominently at the main entrance into the groceries department, no longer hiding in the back of the store. Employees are offered cross-training, and can move around from department to department, developing new product knowledge and skills.

Another hot new feature is a ClickLine program, where customers review and order goods via smart phones. Then at the appointed times, staff will bring their packed bags (re-usable or otherwise) right out to the ClickLine reserved parking spots. The idea is that those busy customers do not even have to enter the store anymore.

In addition, having a gas station with highly competitive prices, a bank, Western Union, and a coffee shop with a large sit-down area on the premises, makes this store even more attractive to customers.

Even the presence of a Walmart Supercenter just a stone’s throw away has not slowed down this particular Fred Meyer. The store’s parking lots always look busy and there are plenty of customers inside, at all hours. This general merchandise store is not competing on low prices alone, but on the overall combination of service, quality, selection, and price.

Competition May Intensify but General Merchandise Stores Are Likely to Remain in Our Neighborhoods

According to OED’s employment projections for 2014 to 2024, employment in general merchandise stores will increase by 9 percent. The rate of growth is slower than 11 percent for retail trade overall and 14 percent for all industries. However, GMS certainly do not seem to be facing the “retail demise” just yet.

National retail trade forecasts predict that pricing wars for general merchandise stores and all retail businesses will intensify in the near future. Amazon and other Internet-based giants will prove a big challenge for GMS because already 30 percent of U.S. shoppers have tried purchasing some groceries and everyday items online.

So far, Oregon’s GMS have remained relevant as steadily increasing employment levels indicate. Some brick and mortar stores may have struggled but others have strengthened their market positions. Located where people live and work, the best of GMS have been evolving and adjusting to the constantly changing world of retail trade.

Even if Internet companies succeed in selling many kinds of standard groceries online, the brick and mortar stores can still offer a complete shopping experience, focused on fresh, local, or more specialized products right in our neighborhoods. As long as enough customers continue to enjoy live shopping with real sales people available to assist and advise, general merchandise stores will remain a vital part of our communities.

 


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