With the disappointing Holiday season behind us, the layoffs and retail store closings are continuing to mount:
Today, Home Depot has announced that they are closing their line of Expo home design centers and trimming support staff, resulting in 7,000 reduction in staff. With both home sales and the economy down, shoppers aren’t looking for high end home design solutions right now. The retailer is quick to note that the layoffs will not impact any customer service positions at the Home Depot proper chain.
It appears that their Expo stores weren’t performing well during the housing boom, so it’s no surprise that they would be doing even worse during the current economic conditions.
Another victim of the housing slump is Williams-Sonoma. On Friday, the retailer announced an 18% reduction in their workforce. In addition to stores being effected by the layoffs, the retailer will also close a call center in Pennsylvania and a distribution center in Memphis. I think the high end housewares stores have been hurt badly by both the economic downturn and mid-market retailers like JCPenney and Kohl’s.
Starbucks, who closed 600 stores in 2008, is expected to eliminate 1,000 jobs at their corporate headquarters and reducing district managers and field employees. The published report, prepared by investment firm McAdams Wright Ragen, speculates that these layoffs will happen in early February and won’t effect store-level barista positions.
And don’t forget that last week Circuit City announced that they are closing all US operations with job losses effecting up to 35,000 people.
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It is now reported the Circuit City has failed to find a buyer willing to take over their store operations and instead has reached a deal with a liquidator. The electronics retailer filed for Chapter 11 bankruptcy protection in November and closed 155 stores in Q4 of 2008. They will now close the remaining 567 stores in the United States. Adding to the growing US job loss numbers, up to 35,000 people will be affected by these store closings.
Circuit City has announced that they are cutting an additional 850 jobs, on top of the previously announced 3,400 jobs that they cut earlier this year. Now they are targetting store executives, cutting some stores down to 3 managers from the 5 that all stores had. They are also cutting 200 jobs at Circuit City corporate.
It is a shame to see any company cut jobs like this. I wonder if Circuit City has taken a look at the root of the problem – what caused the company to get to the point where they need to make this decision? Have they thought about their customer service policies? Their training? Their merchandise assortment?
When I talk to my tech-inclined friends about Circuit City, they all say the same thing: they don’t enjoy shopping there. Prices aren’t good and sales people are undertrained and unknowledgable. This isn’t a problem at one location; this is a problem across the chain. People don’t enjoy shopping there.
The retailer has also announced plans to open 165 new stores, after closing 60 earlier this year. The new stores will be a smaller, redesigned layout that is more customer-focused. Good, but is that too little too late?
No doubt that Circuit City can prove the layoffs as being a financial necessity right now. However, with some better forethough, some revamping, and some twaking of policies over the past few years, Circuit City could have remained competitive in the marketplace. Their underperfomance is nothing new. By constantly evaluating what is working and what isn’t over time, 4,000 people wouldn’t be out of a job today.
Monday
September 25, 2006
Yes, it’s been a few weeks since I have had the opportunity to update the retail notes column, but it’s back! Only change is that due to a different schedule that I’m not on, it will be coming out Monday’s instead of Sundays, as I had been publishing it.
A couple of things for this week that have caught my eye:
At least one analyst is happy with Gap’s winter offerings for all three of it’s brands. As we enter into the final week of September and anticipate same store sales being released next week, I’m not sure what to expect from Gap. I’ve been in a lot of malls lately and foot traffic seems to be up to the adult Gap store, but are people buying? I was in two Old Navy’s on Friday and both of them had moderately high clearance levels with high foot traffic, buoyed by the “50% Off All Clearance” sale that had quietely gone up in this area on Friday afternoon. Great for the consumer, not great for the bottom line. Judging by the amount of clearance that was sitting around, it didn’t appear that consumers in this area reacted very positively to Old Navy’s fall offerings.
Estee Lauder’s Beautybank division has signed an agreement with Coach to produce a new, exclusive fragrance for the handbag maker. Beautybank currently produces four exclusive cosmetic lines for Kohl’s and this is the first non-Kohl’s deal that they’ve announced. It is also the first major move they’ve announced since Julie Howard took over as SVP Brand Development & Global Marketing. She had previously been with Estee Lauder’s Clinique division.
Electronics is a very cut-throat, bottom line driven market. Just as quickly as retailers have scaled back their electronic offerings, in face of competition from retailers like Best Buy and Circuit City, it appears that more than a few non-traditional electronic retailers are ramping up their flat screen plasama and lcd television offerings (see: Unlikely retailers selling big screen TVs).
And finally, a really great article hit the wire this past week about the makeover of Saks (see: Upscale Makeover). After years of unsuccessfully chasing the younger crowd, Saks is reevaluating their business plan and going back to their core, “well-heeled” consumer. The article has a lot of detail over the business moves that got them to where they are right now and what they are doing to get back on top.
