- Nearly 1,800 retail employees were laid off at four major companies this week, signaling ongoing strife for the industry even as the US unemployment rate reached a 50-year low in 2019.
- While layoffs at Barneys and Kohl’s reflect ongoing challenges for the traditional retail market, woes at Wayfair and Jet Black point to the dangers of e-commerce brands that grow too much, too fast.
- We took a closer look at this week’s rash of layoffs as the retail apocalypse continues.
- Visit Business Insider’s homepage for more stories.
Since Monday, nearly 1,800 total positions were eliminated across four major companies – Jetblack, Wayfair, Kohl’s, and Barneys – in retail. These workers join a growing legion of retail employees who continue to be axed en masse from major companies, despite the US unemployment rate reaching a 50-year low in 2019.
While the challenges plaguing these companies are nuanced, the cuts represent a wide cross section of the issues affecting both traditional retailers and e-commerce companies alike, as they struggle to keep up with the fickle whims of consumers.
“The struggles of Kohl’s, Walmart, and Barneys are exemplary of what many retailers are facing today,” Katrin Zimmermann, managing director of TLGG Consulting, told Business Insider. “There’s a tendency to point towards rising rents and competition from e-commerce players as the source of these struggles, yet there are things all retailers can do to remain competitive in the new decade.”
Though Barneys and Kohl’s represent opposite sides of the traditional retail spectrum – Barneys an iconic luxury department store beloved among celebrities, and Kohl’s the big-box store that became emblematic of the suburban US shopping center – both have failed to adapt to a quickly changing retail landscape.
“Department stores have been struggling for a long time, but they still generate billions of dollars,” Sucharita Kodali, vice president and principal analyst at Forrester, told Business Insider last year. “That’s not going to evaporate overnight, but we’re still seeing this slow chipping away. Sometimes a well-executed program can help stave off the decline. Every quarter they have to pull a rabbit out of a hat.”
Meanwhile, on the e-commerce side, Jet Black and Wayfair represent the dangers of the plucky digital startup that grew too much, too fast. In both cases, these companies made lofty promises that left them incapable of handling high operating costs.
Zimmermann said that for Kohl’s and Wayfair – the two companies in the group still standing – survival will be dependent on refocusing on new target audiences and being smarter about how to integrate tech.
“Technology has been a buzzword in retail for almost a decade now, yet there are still few companies that get it right,” she told Business Insider. “It’s not enough to simply hand out iPads to your employees. Technology is always a means to an end, never an end in itself. The end should always be a more seamless customer experience.”
Here’s a recap of layoffs from this week to bring you up to speed.
Kohl’s: 250 employees
- Business Insider/Jessica Tyler
After several quarters of underperforming sales, Kohl’s announced on Wednesday it would slash 250 jobs, including several regional managers, as part of a larger companywide restructuring plan. Though Kohl’s will not close any stores at the time being, the Midwest retailer has significant work to do in order to improve efficiencies and bolster sales, even after testing innovative partnerships like its return program with Amazon.
“I was convinced that [the Amazon] partnership would have brought new potential customers through their doors to return Amazon products, with some portion of those customers spending money in the store on their way out,” Jonathan Treiber, CEO of offer-management platform RevTrax, told Business Insider last year. “However, even if this were true, the rest of the Kohl’s value proposition and store experience needs a face lift.”
Wayfair: 550 employees
- Business Insider
Wayfair employees on Thursday received an email from CEO Niraj Shah detailing mass layoffs, part of what staffers have dubbed the “Valentine’s Day massacre.” The cuts will affect 550 employees as part of the company’s focus on “organizational changes” intended to “increase efficiencies,” a Wayfair spokesperson told Business Insider’s Mary Hanbury earlier this week.
In recent years, the company has hemorrhaged money into advertising and improving its inventory selection, investments that have failed to improve the company’s “already wafer-thin margins,” Neil Saunders, the managing director of GlobalData Retail, said previously.
Adding to its woes, in June Wayfair found itself at the center of controversy when customers and employees alike protested the brand for its role in furnishing migrant detention centers.
Jet Black: 293 employees
On Thursday, Walmart announced that it would shutter its exclusive, members-only concierge service Jetblack, coming off a 2019 Wall Street Journal report that found the company was losing a staggering $15,000 per member. The brand was ambitious from the onset, but it garnered significant buzz as the brainchild of former CEO Jenny Fleiss, who also cofounded Rent the Runway.
However, the departure of Fleiss in 2019 signaled that strife was afoot, and it didn’t take long for the company to be crushed by its own zeal. Jet Black will close for good on February 21, at which point Walmart will “focus on how to leverage [its] infrastructure to make conversational commerce scalable,” a spokesperson told Business Insider’s Áine Cain.
Barneys: 719 employees
- Bethany Biron/Business Insider
After months of hanging by a thread, Barneys announced it would officially close its doors on February 23, marking the end of an era for the iconic luxury department store. The shuttering will effectively entail laying off more than 700 employees, many of whom had already experienced a barrage of difficulties during the liquidation period, including rampant theft and paycheck delays.
Since Barneys first filed for bankruptcy in August 2019, its most loyal fans held on hope for a possible restructuring deal that would save the company. However, its acquisition by Authentic Brands Group in November marked the beginning of the end for Barneys. ABG subsequently called for the closure of all remaining Barneys stores and moved licensing of the Barneys name under Saks Fifth Avenue.