Report: Retail cuts lead US job losses for the year
Workforce cuts announced by U.S. employers rose sharply in May, with planned job cuts totaling 33,092 for the month*. Retailers continue to announce the most job cuts for the year so far with 55,910, of which 5,777 occurred in May, according to a report released Thursday from global outplacement consultancy Challenger, Gray & Christmas, Inc.
Macy’s led the retail carnage with 10,000 job cuts for the year amid 68 store closures (part of its plan to shutter at least 100 stores by the end of this year).
May job cuts were 9% percent lower than the 36,602 job cuts announced in April, and 9% percent higher than the same month last year, when employers shed 30,157 jobs. Employers have announced a total of 195,895 job cuts so far this year, down 29% percent from the 275,218 in the same period last year, according to the report.*
The shift to e-commerce, which is now also hitting the grocery sector, is leading to a downshift in retail employment, according to John Challenger, CEO of Challenger, Gray & Christmas. “The retail industry is still shedding jobs,” he said in a statement on Thursday.
In addition to Macy’s massive retreat from the retail landscape, bankruptcies are adding to the job loss totals, according to the report. The Limited, (which closed 250 stores and cut 4,000 jobs), American Apparel (which closed 110 U.S. stores and cut 3,457 retail jobs), and Wet Seal Inc. (which closed 171 stores and cut 3,000 jobs), all shuttered their physical retail operations upon exiting bankruptcy this year.
American Apparel also cut thousands of manufacturing jobs in the U.S., as new owner Gildan began moving most of its American Apparel production overseas. Wet Seal, which was picked up by Boston-based global restructuring, investment, advisory and branding firm Gordon Brothers for $3 million in March, may pursue a licensing deal and/or restructure the brand as an e-commerce venture.
E-commerce may make up for some of the job losses, as warehouse, delivery and fulfillment positions replace retail store staff. Ratings agency Fitch this week noted that e-commerce operations and retail locations are converging, with locations for each subject to many of the same demographic considerations that traditional mall landlords and investors have long taken into account. The Fitch report noted that zoning officials should consider these shifting trends if municipalities want to protect tax receipts and jobs.
But technology is also reducing the need for human beings, as robots and other tech advancements increasingly do the jobs workers once did. Some forecasters see the potential for extreme job losses, including a recent report conducted by Cornerstone Capital Group for the Investor Responsibility Research Center Institute (IRRCi) that estimated between 6 million and 7.5 million retail jobs could be eliminated by automation in the coming years.
“The retail landscape is changing rapidly and investors need to understand the social and governance issues impacting valuations for public companies in this sector," Erika Karp, Cornerstone founder and chief executive officer, said in a statement earlier this month. “Retailers are facing a perfect storm: they need to balance demand for wage increases with the negative optics of future job losses. The winners in retail will be companies that provide recruitment, retention and training for workers and innovate with forward-thinking future store strategies.”
*The numbers in this report reflect an adjustment from Challenger, Gray & Christmas, Inc. emailed to Retail Dive late on Thursday, which included a downward accounting of job cuts from Ford Motor Co.
- Challenger, Gray & Christmas, Inc. 2017 May Job Cut Report; Cuts Rise Sharply to 51,692
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