The New Challenger Report Shows Retail Jobs Are Still Vulnerable
U.S. companies announced a total of 31,105 job cuts in June, an improvement compared to May. Retail, however, remains an area of concern as employment continues to plummet.
The report from consultancy firm Challenger, Gray & Christmas, Inc. marked some good news for American employment but again painted a dark picture for the state of the retail business.
Announced layoffs in the first half of 2017 are the highest since the recession as big-box retailers are feeling the brunt of e-commerce and the loss of revenue at malls. Companies like Macy’s Inc (NYSE:M) have closed stores, leaving dozens without jobs as companies facing these financial dilemmas seek out ways to cut costs.
The sector showed 60,127 job cuts through June, a considerable increase from the 42,095 job cuts reported through the first half of 2016. This marks a 42% increase in terms of jobs shed this year so far in the retail sector compared to 2016. In fact, this would be the highest rate of job loss in the sector since the first half of 2009, right at the start of the financial crisis.
So far, the retail sector has reported over 5,000 store closings this year, representing a grim year for retail companies and their hundreds of thousands of employees.
Retail has come under fire recently due to two main factors: e-commerce and the death of the American mall.
As Amazon.com, Inc. (NASDAQ:AMZN) and other online operators continue to offer alternatives to shopping at malls and big-box retailers, many companies have found it difficult to adapt to the new online realities. Online sellers have begun eating a larger market share of retailer revenue, leaving many companies in a dismal financial situation where the only way out is often through store closures and the mass culling of jobs in order to settle the financial deficit.
At the moment, there is little in the way of good news for the retail business, as e-commerce continues to dominate and the chances of retail making a comeback become smaller as Amazon and other online providers only continue to grow.
“U.S. planned layoffs slow in June: Challenger,” Reuters, July 6, 2017.