Should I Hire Staff For Peak Season? You Are Deflating Your Sales By The Wrong Number
Blake Manchester4 min read
Probably yes, and more confidently than the inflation headline implies. Whether you should hire staff for peak season turns on unit growth, and most retailers work theirs out by knocking headline inflation off the revenue line. Headline inflation is not the price of what you sell. Retail turnover grew 4.9 per cent in the year to September against a 4.3 per cent Consumer Price Index, which reads as nothing. In clothing and household goods, almost all of it was units.
Outstaffer sells employment and publishes what it charges, so read the argument below as an interested one.
Retail turnover growth was 4.9 per cent, and slowing
The Australian Bureau of Statistics published retail turnover to September on 4 November, in Table 19 of its household spending release. Seasonally adjusted turnover reached $39.91 billion for the month, 4.9 per cent above September last year, down from 5.6 per cent in August.
The ABS Consumer Price Index for the 12 months to September rose 4.3 per cent. Side by side, retail looks flat in real terms.
That comparison is wrong, and the CPI release says so in its own group table.
Which prices actually rose?
Not the ones retailers charge. Housing rose 5.2 per cent and transport 8.7. Clothing and footwear rose 0.4 per cent. Furnishings, household equipment and services rose 0.8. Food and non-alcoholic beverages rose 3.2.
So clothing and footwear retailing, up 4.9 per cent in dollars, sold considerably more than a year ago. Household goods, up 4.1 against 0.8 per cent price growth, did too. Food retailing, up 3.3 against 3.2, is about flat. The headline is carried by rent and fuel, which no shop sells.
The arithmetic nobody runs before approving the roster
Take a clothing retailer turning over $4 million a year that grew with its category.
That is 4.9 per cent, or $196,000 more revenue than last year. Its prices rose 0.4 per cent, which accounts for about $16,000. The other $180,000 is extra units: more orders, more transactions, more enquiries, more returns.
What happens if you use the headline instead?
Deflate the same $196,000 by 4.3 per cent and flat volumes would have produced $172,000, leaving $24,000 of apparent real growth. Same business, same year, same data. One method says $180,000 of new work walked in and the other says $24,000 did.
The honest counter is that a group index is not your price list
A fair objection. If you discounted harder than your category did, your own volume number is smaller than the group figure implies, and nobody at the ABS has seen your margin.
The category mapping is loose too. Department stores and large online retailers, up 1.7 per cent, sell a mixed basket with no single matching index, and other retailing covers pharmaceutical and cosmetic lines. Table 19 is an experimental series and gets revised.
What survives is the direction. Deflating retail revenue by all-items CPI understates volume growth in the goods groups the ABS prices separately, and that is the calculation most founders run in their heads.
Peak season staffing is a volume question, so staff the transactions
Work out your unit growth using your own category’s price movement, not the number on the news. If units grew, the work grew, and the roster argument is real rather than inflationary.
Then split those hours by where they have to sit. Serving somebody in a shop happens in the shop. Processing the order behind it, answering the enquiry, chasing the return, reconciling the shipment: that work tracks transaction count, runs all twelve months, and is indifferent to which building holds it. Those hours are worth making permanent rather than rehiring every November, and they are where to start on which roles to move first. Before pricing any of it, know what an hour of that admin already costs you.
Related reading
What the decision turns on
Whether you should hire staff for peak season is a volume question, and the volume is better than the headline told you. Run one role through it to see what the permanent version of those hours costs, or keep buying the burst each November and training it twice.
So which number are you deflating your sales by: your category’s, or the one on the news?
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