With the waves of announced layoffs coming from what seems like every corner of the retail ecosystem these days, the latest consensus out of analysts that 2016 will be the worst year for retail segment layoffs sine 2010 probably comes as a shock to just about no one.
Layoffs are currently pegged to reach 37,000 by the end of 2016 — the biggest figure since 30,273 were shed during 2010. 24,000 of those jobs have already been cut, according to Credit Suisse, whose analysts also noted that total job losses in the sector could be even higher than currently forecast, given the wave of bankruptcies rolling through retail at present.
“Most of the layoffs announced year to date are at the store associate level, as a result of retailers closing unproductive stores to ‘right size’ their brick-and-mortar footprint, or as a result of retailers attempting to reduce the number of employees per store,” Credit Suisse wrote.
According to analysts, the current down trend in retail staffing is “typical during a cyclical downturn,” noting they represent “an attempt to deal with the decline in brick-and-mortar productivity, as brick-and-mortar sales are lost to eCommerce while store expenses grow due to increasing wages. With so much of these companies’ total expenses related to labor, there are few other levers for retailers to pull in order to reduce their cost base.”
However, labor is a touchy lever to pull since consumer experiences are often predicated on staff availability, know-how and expertise and at some point lacking sales people will start to negatively effect physical retail’s ability to make sales or impress investors. Nordstrom took a downgrade in its recommended share price from Evercore Partners who believe the retail brand has moved too far from its core distinguishers like superior customer service and upscale merchandise curation.
That rebuke came shortly after Nordstrom co-President Blake Nordstrom explicitly stressed coming layoffs would not impact the Nordstrom experience.
“We will never change our commitment to serving customers, but recognize how they want to be served has been changing at an increasingly rapid pace,” Nordstrom said. “Meeting our customers’ expectations means we must continually evolve with them. We see opportunities to create a more efficient and agile organization that ensures we’re best positioned to achieve our goals.”