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By Tony Paris, Retail Solutions Online

Seasonal retail employees may be the next victims of the slumping economy, according to a recent article on CNNMoney.com ("Holiday Job Picture Not So Jolly"). Citing a forecast from outplacement firm Challenger, the article suggests that retail hiring between October and December — the biggest shopping months of the year — could fall well below last year's 698,300 jobs, which itself was 6.5% lower than the same months in 2006.

It really should come as no surprise that retailers would slow their seasonal hiring. After all, holiday sales are projected to rise at their slowest rate in six years, with shoppers worried about their jobs, the housing and stock markets, and high gas and food prices, according to the NRF ("NRF Foresees Challenging Holiday Season"). Retailers have lowered margins, optimized floor plans, improved inventory management, and even adjusted their supply chains, all in an attempt to offset decreased sales. By also trimming their seasonal staff, retailers would shore up payroll some, but at what cost?

As it stands, consumers are already limiting their discretionary spending, a category that often includes gift buying. If retailers eliminate a significant number of seasonal jobs, will consumers tighten their budgets even further, leading to reduced holiday sales? With fewer seasonal employees in stores, will retailers be able to effectively move the required volume of product? Will their customer service suffer? Will already shrinking margins contract even further?

Regardless of the possible consequences, cutting seasonal staff is a risk some retailers appear willing to take. If they guess right, they could minimize spending during what is expected to be a weak holiday season. If they guess wrong, they could alienate their consumers, driving them to better-staffed, better-prepared competitors. Who will the winners and losers be? Only time will tell.