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Everybody's Doing It: Cutting Jobs, Closing Stores, etc.

Written by George Anderson
By George Anderson

Retailers are in pull back mode. Ann Taylor, Eddie Bauer, Home Depot, J.C. Penney, Sears, Starbucks and Wal-Mart are among the companies that have recently announced that they'd be taking a variety of actions to deal with what each sees as a challenging retailing environment in the months to come.

  • Ann Taylor announced it would close 117 stores over the next three years (25 in 2008) and cut its headquarters workforce by 13 percent. It also said it would slow the pace of new unit openings, delay the launch of a new concept and focus on opening more factory outlet locations to offer consumers lower priced alternatives to flagship stores.
  • Eddie Bauer laid off 123 workers at its corporate offices as part of a plan to cut expenses by $30 million.
    Home Depot announced it would cut 500 of its roughly 5,000 employees at the headquarters level.
  • J.C. Penney's CEO Myron "Mike" Ullman said the company would merge the buying functions for its online and store offerings and cut up to 200 jobs. He also said the company would slow the pace of new store openings and concentrate more on new, exclusive lines to differentiate itself from the competition.
  • Sears announced the resignation of its CEO and a reorganization of its business units.
  • Starbucks plans to close 100 underperforming stores, cut back on plans to open new locations, eliminate breakfast sandwiches and possibly introduce a $1 cup of coffee to induce trial among consumers, as part of the company's rebound strategy.
  • Wal-Mart is moving its apparel merchandising functions to New York and laying off up to 200 people at its office in Arkansas. John Fleming, executive vice president and chief merchandising officer for the company, said the move was designed to "strengthen apparel relevance and speed of product to market."

Discussion Questions: Does it seem to you that many retailers misjudged the degree to which consumers would pull back on spending? Do you think we will be seeing many more announcements about layoffs, store closings, etc. from retailers? Generally speaking, are the retailers cutting back now going to be in a better or worse competitive position as a result of their actions when the economy picks up again?

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