Amazon’s decision to choose Long Island City in New York as one of its second headquarters was welcomed with open arms by politicians and business organizations, with New York City Mayor Bill de Blasio stating, “New Yorkers will get tens of thousands of new, good-paying jobs, and Amazon will get the best talent anywhere in the world.”
Not everyone, however, might be happy about the giant descending on the city. As well as those set to be priced out of Long Island City’s housing market, another group that may be irked by it creating a 25,000-strong workforce in New York is the retailers headquartered there, who after years of falling behind in the battle for customers as Amazon grew into a global behemoth are trying to catch up by plowing a lot of money into their digital businesses.
That has meant looking outside of their usual hiring pool of sales executives and dipping their toes in the tech world, with LinkedIn data finding that software developer is now the fastest growing job in retail and the third most popular job across the industry.
Amazon’s move could therefore cause them somewhat of a recruitment headache as while it hasn’t specified the jobs it will advertise, it’s widely believed that many will be quality assurance engineers, software development engineers and senior user experience designers — the type of positions retailers need to fill if they are going to build competitive digital offerings.
“It’s going to cause a recruitment headache for everybody,” Craig Rowley, a senior client partner at headhunter Korn Ferry, said of Amazon’s plans, although he stressed that it’s not going to be 25,000 jobs at once so competitors will have time to prepare.
But it’s not just Amazon, which is expecting to add those positions by 2029 and up to 40,000 jobs by 2034 with an average salary of more than $150,000, that is putting a wrench in the works as far as its hiring plans are concerned.
This comes at a time when Google is rumored to be gearing up to double its New York workforce to around 20,000 and when the U.S. has an extremely tight labor market, with unemployment at a 49-year low of 3.9 percent and vacancies topping 7 million.
“There are a number of companies out there that are looking to ramp up their technology capability,” added Rowley. “There’s a lot of recruiting going on already. Companies are significantly increasing the size of their tech force. It’s going to be an ongoing problem for the next couple of years.”
However, Simeon Siegel, a retail analyst at Nomura Instinet, said that if you look at the example of Seattle where Amazon is headquartered, retailers can still attract tech talent if they have something interesting to offer tech types.
“Seattle has a very strong retail contingent, some of which, mainly Nordstrom, are particularly tech-savvy. Being next to Amazon has not precluded retailers from hiring tech talent,” according to Siegel.
“At the end of the day as great as Amazon is, they are certainly not the be all and end all and even when companies create monopolies, other companies still manage to find talent.”
Amid a tight labor market, though, he stressed that companies need to be competitive and make sure what they are offering is enticing enough to be there and that traditional retailers need to play up that fact that this is an opportunity to revolutionize an icon.
“It’s allowing tech-savvy and creative people to come in and leave their imprint and bring a historic icon into the new future,” he said.
A report by Moody’s found that despite being among the worst performers in retail for two years, department stores have been among the more aggressive in harnessing e-commerce and digital innovations as a powerful part of their recovery. Around 22 percent of total sales are now online, well above the estimated 13 percent average penetration for the broader retail industry for fiscal 2018.
Apparel retail, meanwhile, is racing to get digital capabilities up to speed and Moody’s expects online penetration for the rated apparel retail sector to hit 20 percent in 2019, among the top four in retail.
Still, the sector has a long way to go. In a recent digital capability survey by Korn Ferry, retail came in 19th place.