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Layoffs Hit the Retail Industry

2 minute read

Will Santa bring layoffs this year?

Female seller helping shopper choose the clothes in the store.jpeg

The holiday shopping season is still several months away but employment trends are indicating that 2016 just might be the year we’ll notice shorter cash register lines and less traffic around malls.  In fact, 2016 just might be the year when on-line commerce outstrips in-person transactions.

For the nation’s economy at large and retail workers specifically, this news is not being greeted with cheers.

According to economist Robert Reich in his current book Saving Capitalism, “Amazon has become the first stop for almost a third of all American consumers looking to buy anything.”  Not shocking news.  Big box chain store Sports Authority has filed for bankruptcy and may close as many as 450 stores while Macy’s, Wal-Mart and Nordstrom’s have all announced layoffs this year.

Credit Suisse analysts report that retail layoffs are on track to reach or exceed 2010 levels: “These layoffs are clearly an attempt to deal with the decline in brick-and-mortar productivity as such sales are lost to e-commerce while store expenses grow due to increasing wages.”

None of this is all that surprising.  But why now?  Why is this transition hitting so hard in 2016?  One theory: maturation.  On-line shopping has been developing for at least the last ten years so that by now, we have the first generation of adult consumers who grew up buying on-line and watching for the UPS guy or girl rather than strolling through shopping malls and retail stores.

Second theory: the growth of Amazon.  Remember when Amazon was blamed for the demise of independent bookstores?  And then the failure of Borders?  Well, you can buy more than books via Amazon.  In fact, you can buy anything you want on-line now if not through Amazon, then on any number of sights including Overstock.com and retailer websites that increasingly are generating more sales than all their retail stores combined.

Third theory: price competition.  Surely you have noticed that prices tend to be cheaper on-line.  Of course that’s due in part to the fact that no or few human beings are actually involved in your transaction so nobody’s getting paid.  No rent is due either because there’s no physical store.

And another factor increasingly present through on-line shopping but nowhere to be found in a retail store: testimonials.  If you’re looking at a pair of shoes on-line, chances are that right next to those shoes there’s a button for comments from others who have bought them already.  That goes a long way in influencing a purchasing decision.  Where’s that button in Macy’s, Nordstrom’s or Sports Authority?  No where to be found.

Some portion of these eliminated retail jobs may go unfelt if retailers just hire fewer seasonal staff this November and December. Ultimately they will need to be resourceful and creative in identifying new opportunities in an economic climate that continues to challenge.

Whatever the reason, make sure that your organization has a layoff plan template to assist in the event.

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