Fashion

How to Know When Layoffs Are Coming — And What to Do About It


This week, Walmart cut its profit outlook and in doing so, put millions of employees across the fashion industry on notice.

The retailer blamed inflation for leaving it with excess inventory in many categories, including apparel. Soon after, Shopify said it would lay off 10 percent of its staff, while Adidas also lowered its profit projections.

“Whether we are in or heading into an overall recession, it’s going to feel like a recession in apparel,” a Citi analysts said of Walmart’s results, in a note.

Fashion companies have been steadily adding jobs for the better part of two years, after firing or suspending millions of workers early in the pandemic. But that may be about to change. E-commerce sales are flat after surging in 2020 and 2021. And though retail foot traffic has bounced back from pandemic lows, it still lags pre-pandemic levels. Years-long trends, including the decline of department stores, show no signs of reversing.

So while consumer demand remains strong, many companies are likely planning for a recession, even if they haven’t announced cost-cutting measures yet.

“We see signs [of economic downturn] Throughout the industry, absolutely,” said Michael Brown, partner in the consumer practice at management consultancy Kearney. “You see the defensive position that many retailers are starting to take not knowing what’s ahead of us.”

All these factors have created a confusing scenario for fashion workers regarding their job security. Unlike the mass layoffs of 2020, predicting where or when cuts might be coming is difficult.

For retailers, many job losses will be an extension of the pre-pandemic transition from brick-and-mortar sales to a more-online focus. Many jobs eliminated in the coming months may in reality be shifted elsewhere, whether it’s store employee positions moving into e-commerce fulfilment roles, or corporate resources migrating to increasingly critical areas like sustainability, technology and logistics.

“The retail sector is a good example of how restructuring is occurring,” said Demetra Nightingale, a research fellow at the Urban Institute and former chief evaluation officer at the Labour Department. “It doesn’t mean that jobs will be lost permanently, it just means that they’re going to another part of the economy that is growing.”

Here, BoF breaks down the signs that layoffs are coming to your company and what you can do about it.

Signs Layoffs Are Coming

Brick-and-mortar stores and companies that have fallen behind on tech innovation or taken an outsized supply chain hit amid ongoing snarls will be among the most vulnerable to layoffs, experts say.

For store workers, the signs could be in plain sight, said Andrew Duffy, a behavioural economics and labour expert and co-founder and CEO of Sparkplug, a rewards platform for retail workers. Warehouses filled with last season’s merchandise, frequent clearance sales and ” disappearing help wanted ads,” are among the telltale signs, added Brown.

“You’ll start to notice things like, ‘we haven’t had a district manager for six months.’ and [wonder] if they’re ever going to replace them” he said.

Corporate workers could also look to the stores for hints — like sluggish sales and dwindling traffic — that layoffs are lurking. Earnings reports will also indicate if profits are consistently down, and detail key executive departures.

“If you see departures at the senior executive ranks — those are usually the people to know first but they get to announce their [exits] as if they’re just leaving to do something different,” said Brown.

Sometimes companies will excise entire departments or subsets of a business, and any department that’s not in close proximity to revenue generation could be at risk, said Duffy, particularly those that are newly formed and require significant investments.

Hiring freezes and layoff activity at competitors can also signal a ripple effect of slowing momentum in a particular market or product category. Companies that had been consistently underperforming will be more likely to enact job cuts alongside their peers during a recession when it appears “prudent to be laying people off rather than looking like evidence of a company’s executives not doing a good job,” Duffy said.

“If I work at Nordstrom and I see that Macy’s just did a big round of layoffs, either corporate or on the front line, then that’s a significant risk sign that my company is going to be doing layoffs as well,” he added.

How to Bounce Back From Layoffs

If the signs of impending layoffs are cropping up, employees should determine their company’s policies and procedures for layoffs. This may mean digging up your new-hire paperwork, logging into an HR portal or contacting someone in the department to ask what benefits — such as health and life insurance — you may be entitled to and for what length of time.

“There are different protections and policies that companies have to make available,” said Nightingale. “Just be aware of [things like] ‘are you going to be eligible for severance pay? Can you cash out unused annual leave?”

Keep in mind that layoffs aren’t always meant to be permanent and it’s important to find out whether your company has a “recall policy,” a mechanism to prioritise and contact certain employees for rehiring later, she said.

For many workers in fashion retail, where restructuring is likely to be a huge culprit driving layoffs, it’s possible to get ahead of cutbacks by picking up new skills and experience in growing retail categories such as e-commerce, supply chain and technology. For instance , many fashion companies are looking to operate in the metaverse or build more interactive e-commerce websites so it may be worthwhile to find an affordable coding boot camp to pick up some of those skills.

“Whatever you do today in retail and fashion, there is a high chance that you have to brush up on supply chain and technology [skills] — because the disruption we’re seeing is so enormous,” said Inna Kuznetsova, CEO of ToolsGroup, a supply chain planning and optimisation firm that works with major fashion retailers.

It may be helpful to move to a role in a department where the needs are greater, like assortment planning and supply chain logistics. In some cases, such a move could be lateral or may require a downshift. If the option to transfer internally isn’ t available, consider volunteering in high-growth departments to show value to your employer ahead of any job cuts — or to have the option to add that experience to your resumé down the line.

When applying for new roles, store workers and those in consumer-facing retail roles should also recognise the value and transferability of customer-service skills, said Duffy.

“If you can have that base of customer service and retail experience and add on an understanding of how technology integrates that environment, then I think you are probably the most valuable potential asset for some of these retailers,” he said.

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