In-Depth: How the Retail Industry Can Rebound After Thousands of Layoffs

It’s been about two years since Nine West handed Kay Johnson* her walking papers. Grappling with stagnant sales
 and a lack of profitability, Jones Group — then owner of Nine West and Easy Spirit stores — had announced its plans to shutter 170 doors over
 a 15-month period. (*Name has been changed.)

Having survived multiple layoffs and ownership changes during 
her 20-plus years with the company, Kay — a manager earning $38 an hour at a top-performing New York store — was hopeful that the scenario would once again play out in her favor.

“I had worked at [several] stores that the company needed to close [for various reasons] over the years, but as a store would close, I would be moved to another location,” Kay, a single mother of two, said.

As Nine West and Easy Spirit stores throughout the region shuttered, Kay clung to the belief that she could stay on board with the company, which had promoted her — a high school graduate — from an entry-level role earning $9 an hour to a management position making four times that amount.

On Jan. 31, 2015, she was laid off when the company shuttered one of its few remaining New York-based Nine West doors in a bid to cut costs and stay afloat. In March 2017, after months of searching — and barely getting by as the money from her severance package dried up — Kay landed a management role at an Aerosoles store in New York. But she is still clawing her way out of financial strain.

For better or worse, retail is at a critical inflection point. Bankruptcy filings are piling up at a record pace, and hundreds of layoffs at once-thriving retail destinations are becoming par for the course.

The Sports Authority, City Sports and mall staples Wet Seal and The Limited are among the names appearing on retail tombstones as consumers rapidly change the way they spend money and e-commerce heavy hitter Amazon gobbles up market share.

While they have kept Chapter 11 filings at bay, department stores such as Macy’s, JCPenney and Nordstrom have had to slash hundreds of jobs over the past year and a half. Although much has been said of the strategy of fashion firms in the midst of a supposed “retail apocalypse,” the futures of thousands of workers who rely on the retail sector to support their families are at stake.

Today, there is mounting urgency around the need to address retail’s apparent downfall. However, the situation has been years in the making.

Charting the Course

Kay’s circumstance is unnervingly illustrative of the paradoxes that have long defined retail — particularly at the store level.

On one hand, it’s an industry that provides access to “the American dream” to the most disenfranchised segments of the population. On the other, it places the financial future of many of its workers in fickle hands — making their hard-fought aspirations both uncertain and fleeting.

The retail industry supports about 42 million American jobs, according to the National Retail Federation.

Matt Priest, president and CEO of the Footwear Retailers & Distributors of America, said retail’s role as a “huge employment engine” makes the sector a source of tremendous opportunity but — at times — even greater challenges.

“It is one of those [industries] where the barrier of entry is pretty low,” Priest said, noting that entry-level roles typically require good people skills. “I’m all about innovation and empowering people. One of the things we often talk about with policymakers and other stakeholders is the need for a variety of different opportunities for every socioeconomic level that there is.”

As store closures, dwindling retail employment numbers and talks of an industrywide Armageddon dominate headlines, some economists have countered with the argument that the industry is undergoing a necessary pruning as a post-recession economy works toward self-correction.

“It seems that our economy is going through a maturation process where we’re moving toward different industries that will require higher skills and more in depth and broader education,” Priest said.

Creating higher-paying jobs that could hire some of retail’s ousted workers may also address another huge challenge impacting retail.

According to Neal Newman, president of the charitable organization Two Ten Footwear Foundation, the industry has struggled to offer reasonable wages to workers for years.

“If you have just one unforeseen event — a car that needs to be repaired, a prescription that needs to be filled or a kid’s schoolbook that needs to be bought — that single event is enough to be a catastrophe when living on a retail wage,” Newman said. “Retail wages have not grown with inflation, and when you do the macroeconomic evaluation of what is a living wage, you discover that retail across the U.S. isn’t keeping pace.”

Case in point: In the midst of one of several transitional periods that Nine West has experienced over the years, in 2011, Kay’s hours were significantly cut and she found herself living in her car with her teenage son.

Newman said his organization, which offers resources and support to workers in the footwear industry, has fielded calls from struggling retail employees — like Kay — at an unprecedented rate in recent months.

“Undoubtedly, there has been [an uptick] in the number of people reaching out to us in the last two or three quarters,” Newman said. “This year, we’ll likely exceed our budget for the emergency fund — which we call our Common Good Fund.” (Two Ten has several types of endowments — among them are the Disaster Relief Fund, Cancer Care Fund and the General Scholarship Fund. The Common Good Fund is designed to help “shoe people” struggling with an extraordinary financial setback or family crisis.)

Newman said the organization has set a budget of $1.8 million for its Common Good Fund at the start of the year but is now on track to surpass it.

“In anticipation [and] with the experience we’ve had over the last couple quarters, we have proposed a budget of $1.95 million for [the Common Good Fund] next year,” Newman added.

A New Day

Many retail experts and economists believe that the retail landscape’s fractured framework will yield a new era in which jobs may be different but, nevertheless, plentiful.

According to evidence compiled by economist Michael Mandel of the Progressive Policy Institute, from 2007 to 2016, the e-commerce sector created 355,000 new jobs, which was more than enough to compensate for the jobs lost at physical stores.

Many footwear and apparel firms — DSW, Nordstrom and JCPenney are some examples — have beefed up their omnichannel initiatives by leveraging their stores as online fulfillment centers. Others have hired digital and social media teams to boost their online presence and help them meet lofty e-commerce goals — evidence that some lost jobs are indeed creating new opportunities.

“The industry is undergoing a period of radical transformation, and [in the future] there will be more tech jobs, more distribution center fulfillment jobs [and so on],” explained Jeff Van Sinderen, an analyst with B. Riley & Co. LLC.

Still, Van Sinderen said, it’s not clear whether those new roles will be filled by workers who were on the on the “old brick-and-mortar front lines of retail.”

Nevertheless, some companies — Walmart, for example — are finding unique ways to make use of the human workers they already employ. This month, president and CEO of Walmart e-commerce Marc Lore said that the company would begin testing out “associate delivery,” which would allow workers to earn extra income by physically delivering packages to customers’ homes — cutting down on delivery costs and serving as “a win-win-win for customers, associates and the business.”

“At the end of the day, the advancements being made in robotics will replace a lot of human work, and more of the jobs of the future will be tech jobs in retail,” Van Sinderen said. “As far as the macroeconomic picture, slow-growth mode continues, and the upheaval in the retail industry probably does not help in the immediate term. [But] as people who are displaced learn new skills, that should normalize over the longer term.”

** This story originally appeared in the June 12 issue of Footwear News magazine.

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