Layoffs have been a common sight in retail for the past few years, starting with the host of retailers that laid off employees during the first stages of the pandemic and continuing last year as layoffs hit a wide swath of retail disruptors, as well as stalwarts like Walmart.
2023 kicked off with a grim start: Retail layoffs spiked 3,225% year over year, according to Challenger, Gray & Christmas data. Well over halfway into the year, layoffs remain elevated. Retailers announced nearly 56,000 job cuts through the end of August, a shocking 524% increase compared to last year.
“Job openings are falling, and American workers are more reluctant to leave their positions right now. The job market is resetting after the pandemic and post-pandemic hiring frenzy,” Andrew Challenger, senior vice president of Challenger, Gray & Christmas, said in a statement in August. “The increase in job cuts is not surprising as technological disruption and companies taking a cost- savings approach on the economy claim positions.”
Indeed, in Retail Dive’s coverage alone, nearly 50 businesses have laid off employees in 2023 — and not just those in dire financial straits. Among the long list are dozens of big-name retailers, including Kohl’s, Gap, Amazon, Walmart, REI, Under Armour, Neiman Marcus and CVS. There are also a slew of digitally native companies, including Allbirds, Ruggable, Everlane and Stitch Fix.
In Retail Dive's coverage, close to 50 retailers laid off employees in 2023
“Retail layoffs are likely to continue for a variety of reasons. In a down economy, they’re often thought of as a cost-cutting measure, and we’ve seen retailers using layoffs to preserve capital. We’re also seeing layoffs stemming from the closures of brick and mortar that are struggling either financially or with other issues such as theft,” Catherine Lepard, global managing partner of retail and direct to consumer at Heidrick & Struggles, said via email. “Outside of the fiscal drivers, layoffs have recently been the result of retailers rethinking their larger business strategy — right-sizing their footprints to align with consumer behaviors shifting from physical to online shopping.”
Here’s a breakdown of a few of the retailers that have laid off employees this year, what reasons they gave and what else is happening in their business currently.
The size of layoffs this year varied dramatically from company to company, with Under Armour and Dollar Tree cutting fewer than 100 jobs. On the other end of the spectrum were players like Gap and CVS, which laid off 1,800 and 5,000 employees respectively. The size of the business and the reason for the job cuts can impact the amount of employees hurt by downsizing, but some of the largest layoffs announcements his year in terms of the sheer number of employees impacted lie with Amazon and David’s Bridal.
Amazon’s job cuts started in November last year, when the e-commerce giant confirmed it was consolidating some teams and programs. Then in January, the company said it would eliminate even more staff, with plans to cut 18,000 jobs between the two firing events, primarily in its Amazon Stores, and People, Experience and Technology divisions.
In a blog post at the beginning of the year, CEO Andy Jassy defended the layoffs, and said Amazon wouldn’t stop innovating despite them.
“These changes will help us pursue our long-term opportunities with a stronger cost structure; however, I’m also optimistic that we’ll be inventive, resourceful, and scrappy in this time when we’re not hiring expansively and eliminating some roles,” Jassy said. “Companies that last a long time go through different phases.”
Two months later, Amazon said it would lay off another 9,000 employees, this time mostly impacting its AWS cloud division, as well as its Twitch gaming, advertising, and People, Experience and Technology teams. Simultaneously, Jassy said the company would conduct “limited hiring” in areas of the business that are strategic priorities.
The retailer has been paring back its retail operations over the past few years, including streamlining the number of private labels it offers and shutting down its bookstores and 4-Star locations. In September, Amazon was sued by the Federal Trade Commission and a group of state attorneys general over anticompetitive practices.
Just days before filing for bankruptcy, David’s Bridal filed a WARN notice saying it would lay off 9,236 workers. That initial announcement ended up being far larger than the amount it actually laid off, which came in closer to 2,000.
The drastic change was thanks to David’s Bridal’s sale to Cion Investment Corp., which kept nearly 200 stores from closing and saved 7,000 jobs. The wedding retailer’s Chapter 11 filing this year was its second bankruptcy. Previously, David’s Bridal filed for bankruptcy in 2018 and exited with roughly $450 million less in debt.
“Our new shape is a sign of promise and progress as we continue to make dreams happen for our customers with a company ready for the future,” the company said in a statement to Retail Dive. “We have a lot of exciting news to share as our evolution and transformation progresses in the weeks ahead so stay tuned.”
Last year was already difficult for some of retail’s newest entrants, but with a tough funding landscape and an unforgiving stock market, 2023 is increasing the pressure on young companies. Activewear brand Sweaty Betty, which was bought by Wolverine Worldwide in 2021, enacted layoffs in March this year, alongside an announcement that its CEO would step down. Other e-commerce businesses have made similar moves as they focus on profitability, including Stitch Fix, which eliminated 20% of its salaried workforce in January at the same time that it made a CEO change.
Amid a host of challenges over the past few years, Allbirds announced layoffs in May this year, at the same time that co-founder Tim Brown said he would move from a co-CEO role to a position as chief innovation officer. According to a company filing, 21 employees globally were impacted by the layoffs.
The reduction came just a couple of months after the shoe brand released a strategic transformation plan aimed at reaching profitability. As part of the plan, the retailer is paring down its store openings and looking into wholesale partnerships to help it grow in a more cost-efficient manner.
“Our teams are executing well against our strategic transformation plan designed to reignite growth, improve capital efficiency and drive profitability,” CEO Joey Zwillinger said in a statement at the time of the layoffs.
Buzzy travel brand Away, which Bloomberg reported was considering a sale earlier this year, laid off 22 employees this spring. Among that number was the company’s chief commercial officer, who had joined the retailer two years prior. At the same time, Away said it was hiring for strategic positions over the coming months to support its growth.
“With this reorganization, we combined some functions to strengthen core competencies, and, as a result, made the difficult decision to part ways with some employees,” the brand said in a statement. The company added that the moves “have and will allow us to continue to drive sizable growth for the business while prioritizing our brand and customer experience.”
Away suffered from the worldwide shutdown caused by the COVID-19 pandemic in 2020, but has since returned to store expansion plans. The retailer brought on a new chief marketing officer in January, and tapped a vice president of retail and a vice president of brand around the same time as its layoffs.
As a well-worn method of cutting costs, layoffs are often one way for financially distressed businesses to course correct. Among the 11 notable companies at an elevated risk of bankruptcy as of early October, several underwent layoffs at some point this year. That includes Qurate Retail Group, which laid off 12% of its workforce in March, mostly tied to its QVC and HSN banners, and then laid off additional positions at its Zulily e-commerce business a matter of days later.
The Container Store
Home organization company The Container Store announced layoffs in May, saying it eliminated some open roles and reduced around 15% of workers at its support center and less than 3% at the company’s store and distribution center operations. As of Oct. 2, the retailer had a FRISK Score of 2 with CreditRiskMonitor, which represents a 4% to 10% chance of bankruptcy in the next 12 months.
The company saw a sales boost for a time from consumers stuck at home during the pandemic, but net sales in the first quarter this year fell 21% year over year. For the full year in 2022, net sales decreased about 4%, and CEO Satish Malhotra said the company expected “macroeconomic headwinds to intensify.”
Several months after the layoffs, Malhotra agreed to take a temporary pay cut of 10% on his base salary to help pay for employee raises.
Craft retailer Joann eliminated some positions “from various departments” this year alongside a restructuring of its field and corporate operations “to more closely align our expense and corporate structure to the needs of the business.” Among those leaving the company was its vice president and controller, who also previously held a position as interim CFO.
As of Oct. 2, Joann had a FRISK Score of 1 with CreditRiskMonitor, which represents a 10% to 50% chance of bankruptcy in the next 12 months. The craft retailer entered into a $100 million first-in, last-out facility in March to shore up liquidity, part of which will be used to repay a portion of its existing $500 million asset based revolving loan facility. At the end of July, Joann had long-term debt of $1.1 billion.
Outside of layoffs, the retailer has looked to cut costs in other ways, including through its supply chain. The company has also turned to private labels to reduce merchandise costs. Joann’s last CEO, Wade Miquelon, retired in May, with no permanent replacement named yet.
While financially distressed companies laying off employees is expected to some degree, even retailers on solid financial footing have been turning to job cuts this year. Businesses that are usually stable, like Nordstrom and Lululemon, announced layoffs in 2023, with the latter enacting two rounds of cuts to its Lululemon Studio arm as it pivoted away from fitness hardware device Mirror. The variety of names cutting employees in retail this year is proof that the pressure is widespread.
Over the course of the spring, Walmart laid off more than 3,000 workers at e-commerce facilities, including at fulfillment and distribution centers in California, New Jersey, Texas, Pennsylvania and Florida.
“Customer expectations are changing, and we are moving quickly to meet and exceed their needs,” Walmart said in a statement at the time. “As demand grows, we are maximizing our network of stores and fulfillment centers, to deliver items for online customers, when and how they want them.”
While the pandemic boosted e-commerce sales across the industry, and with it, the need for broad fulfillment networks, those trends have since moderated. Retailers with large networks, including Amazon, are pulling back as they now look to rightsize.
Dick’s Sporting Goods
As part of a “business optimization” plan, Dick’s said in August that it would lay off an unspecified number of employees, mostly in its customer support center. While the retailer noted the layoffs would result in some cost savings, those funds are expected to be reinvested in hiring elsewhere.
The job cuts came amid continued sales growth at Dick’s: The retailer in August reported Q2 net sales were up 3.6% year over year. That was on top of 5% growth earlier in the year. Despite Dick’s strong performance, net and operating income were both down double digits in the second quarter, which CEO Lauren Hobart attributed to the retailer’s “decisive action” on excess inventory and theft.
The retailer remains in investment mode, with seven new House of Sport locations opening in Q2, and the expansion of a new core Dick’s Sporting Goods model, both of which are “yielding powerful results,” according to Executive Chairman Ed Stack. Dick’s bought Moosejaw from Walmart earlier this year to bolster its outdoor business, though it announced in September that 11 of Moosejaw’s 14 stores would close.