Retail sector hit hard by job cuts
April 15, 2002-- Home Textiles Today,
American retailing was among the hardest hit sectors of the broad economy slowdown following terrorist attacks last Sept. 11, and underlining that point, more than three-fourths of all the 109,516 retail layoffs that took place last year came in the weeks and months after the attacks.
A new analysis of retail layoffs shows that 83,237 layoffs were announced after Sept. 11, abut 76 percent of the total for all of 2001, reported Challenger, Gray & Christmas, an international outplacement firm that tracks job cuts nationwide. But retail wasn't alone in taking a punishing hit from the one-two punch of a soft economy and terrorist attacks. A total of 1.2 million job cut announcements, covering all industries, were made after Sept. 11.
Remarkably, Challenger pointed out, more retail jobs were lost after Sept. 11 last year than during "every year since 1993, except 2000 and 2001, the two highest years on record, with 94,482 and 96,741 job cuts, respectively."
And the toll at retail continues, said Challenger. "The pace of retail job cuts, which increased dramatically in the 2001 fourth quarter, following the terrorist attacks, has continued to rise in 2002." The company's latest analysis shows that "after just one quarter, announced retail cuts of 51,078 are halfway to matching last year's record 96,741 cuts."
John Challenger, ceo, commented, "The fact that 2001 was a record year for retail job cuts may have gone unnoticed because it was overshadowed by the extraordinary job cuts in telecommunications, which saw over 300,000 job cuts announced, as well as computer, industrial goods and electronics, each of which experienced more than 150,000 job cuts. However, there has definitely been an upward trend in retail job cuts in the last couple of years, a trend which is apparently continuing in 2002. Granted, it is early in the year, but retail is on a track to have one of these 100,000-plus job-cut years."
On a sobering note, Challenger pointed out that through the first three months of the year, "retail is cutting an average of 17,026 jobs per month. If this pace continues until the end of the year, the total would, in fact, exceed 200,000." And at this point, he added, "there is no reason to believe that retail cuts will not continue to reach 17,000 jobs a month." And it's not just terrorism to blame, he added. "Despite news of recent gains, some experts see a sector that has been severely weakened by price slashing, a more informed and value-seeking consumer and a glut of stores offering the same products at similar prices."
Indeed, it would not be surprising, said Challenger, "to see a reprise of some of the large-scale job cutting which put mega-retailers Sears, Montgomery Ward and Caldor Corp. among the top job-cutters for all industries in the 1990s."
And sounding a loud tocsin, Challenger cautioned, "Some believe that a much-needed consolidation is approaching," with the greatest changes likely to take place among the nation's badly battered department store segment. "There have already been hints that May Department Stores and Federated Department Stores are discussing a possible combination," Challenger observed. "The number of shoppers going to discounters like Wal-Mart and Target continues to grow. For major department stores, the numbers keep going down and down and down."
Challenger cited Britt Beemer, chairman and founder of America's Research Group of Charleston, SC, who told the outplacement company that retailing has ceased to be a high-priority career opportunity. "Starting in the late 1980s, employees and prospective employees in the retail sector stopped looking at retailing as a career opportunity. They look at it as a temporary stopover until something better comes along. When this happens, everybody loses — employees, customers, stores, etc.," Beemer told Challenger.