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One big economic story that’s come out of the pandemic is the resilience of the American consumer. Despite historic inflation and high interest rates, we’ve just kept buying stuff.
During the pandemic, retailers have had to adjust to a few sharp turns in consumer spending. Wendy Liebmann, CEO of WSL Strategic Retail, said these layoffs reflect yet another shift.
“It’s what we call the just-in-case stage of things,” she said. Where even though the labor market is holding strong and inflation is trending downward, “people are just uncertain,” Liebmann said. “And then consumers are uncertain. They just hold back and stick to what they must have and not what they might have.”
With consumers apparently reducing discretionary spending, Liebmann said retailers are being cautious in turn. Many of the stores announcing staff cuts — like Walmart and Best Buy — have something in common, according to Shannon Seery, an economist with Wells Fargo.
“Those are definitely retailers that benefited from the work-from-home economy and the stay-at-home economy,” she said. “I think we’ve seen a transition away from that.”
She said people loaded up on furniture, electronics and clothing and they just don’t need as much now. Plus, retailers are adjusting to another pandemic sharp turn: the rise in online shopping.
“We’ve seen the consumer migrate or accelerate their migration to digital,” said Sonia Lapinsky, managing director of retail at AlixPartners. With e-commerce booming, she said, some retailers are laying off in-store staff they simply don’t need anymore.
Others are taking a different approach to staffing.
“We’re in this world of ‘the consumer is hard to predict.’ They’re changing every day,” Lapinsky added. She said some retailers are holding on to workers in this still-tight labor market in case spending and in-store traffic tick back up and they need to pivot yet again.
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