When Layoffs Can Be A Sign Of Success

Retail businesses are especially vulnerable to economic tides, so it is easy to assume that fears around inflation and recession drive the layoffs and losses we currently see from traditionally stable companies. However, studying what is under the surface is clear that today's challenges are based on much more than reactionary fear and, in many cases, are simply the inevitable result of years of poor strategies.

Reasons for the widespread layoffs and earnings contractions we see across all retail industry sectors can be grouped into three basic categories: Past Decisions, Present Conditions, and Future Enablement. What is unusual is that these categories are currently happening simultaneously in a rare time of convergence.

Past Decisions

This is where layoffs are most frequent, caused by miscalculations, mistakes, and excessive debt. Over time these issues come to a head, with layoffs used as an attempt to right the financial boat. Shopify miscalculated e-commerce growth, GoPuff's rapid delivery business model was never going to generate sustainable profits, Glossier underestimated the importance of brick and mortar, and Office Depot failed to respond to decades of consumer and market realities. Companies in this category need to be able to reset their north star and build around…