Fashion is gearing up for more layoffs as brands size up teams

In fashion, companies are now trying to rebuild real teams. “There was a lot of over-hiring during the pandemic because of so much online activity,” says Karen Harvey, founder of the eponymous consulting and advisory firm, which finds talent for clients such as Adidas, Calvin Klein and Coach. “Two things are happening right now: economically, there’s an imperative to reduce the workforce, but at the same time, there’s an imperative to innovate and focus on areas that weren’t focused on before [such as the physical retail experience].” As companies reach the end of the financial year and begin to evaluate the workforce, certain roles or teams may appear redundant, she adds, resulting in widespread layoffs since those teams may not “be the focus or emphasis of future strategy.”

“A lot of these companies benefited when people were working from home and more online, but now that the consumer is more global, we’re having a reawakening in terms of how people want to engage and shop in more physical environments,” he continues. she, adding that these companies are likely to invest more in the physical side of their business. Overall, he expects hiring to slow as companies become more cautious and review their hiring practices.

Luxury is proving more resilient, says Paul-Christian Bassett, founder and chief executive of Christian Bassett, an executive search consultancy that employs the likes of LVMH, Prada, Bottega Veneta and Burberry. “We haven’t seen anything like the level of layoffs in the luxury sector compared to the tech sector and some other areas,” he says.

Focusing on growth drivers

What’s unfolding is a correction of what was originally envisioned, says Kristy Hurt, founder of the fashion and luxury recruitment consultancy of the same name, as well as The Co-lab, a networked community for brand professionals. “Business was booming, and executives were predicting huge increases in hiring to accommodate the high growth,” she says. Now brands are proactively cutting costs to stay profitable. “This kind of cautious decision-making seems more strategic than necessary at this point,” she argues.

Following the pandemic e-commerce boom, fashion retailers are more aware than ever that online is not the “silver bullet” it was once thought to be, says analyst Hyman. “People imagined that if you trade online you have no rent to pay and it must be more profitable,” he says. “The reality is that returns are high and eat into your profits. It’s not that easy to make money [by] online retail.”

Hyman warns that corporate restructuring “shows that costs are too high and revenues are too weak … disinvestment is quite often a symptom of distress.” However, other analysts, such as Streeter, argue that in some cases it is recognized as a method to streamline operations, keep costs low and create efficient business models by focusing on areas that are drivers of company growth.

Growth in areas such as clientelization could also be a catalyst for job creation, points out Regrut Hurt. “When these companies are investing in new categories, it’s because they feel they can drive growth with these new areas of business, and in turn they’re hiring whole new teams to support the business.”

Comments, questions or feedback? Email us at [email protected].

More from this author:

Corteiz and Nike launch a collaboration

Burberry strengthens C-suite as it plans for growth

What the Pakistan Accord means for the fashion supply chain

Leave a Reply

Your email address will not be published. Required fields are marked *