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Nordstrom Layoffs and the Truth About Retail Jobs

Nordstrom Inc. is the latest retailer to trim payroll.

Late last month the Seattle-based company laid off technology employees. It wasn’t immediately clear how many roles were cut, but one source said it could be on par with the 100 jobs eliminated. The cuts come after Boohoo plc and Asos shed jobs last year and a wave of tech layoffs that started last year is still crashing down on the national workforce. Amazon, Google, Salesforce and Meta are just some of the high-profile employers contributing to the roughly 275,000 jobs cut already this year, according to Challenger, Gray & Christmas, a Chicago-based executive outplacement firm. Tech cuts are responsible for about 100,000, or 37 percent, of those losses, it added.

A Nordstrom spokeswoman said cutting back on tech jobs was a “difficult decision.”

“As we continue to invest in technology as a critical area of our business, we have made the difficult decision to reduce our technology workforce, adjusting the team structure and eliminating certain roles to remain agile and operate more efficiently,” the rep said. “We are committed to treating impacted team members with respect and supporting them through this transition.”

One individual familiar with Nordstrom’s layoffs acknowledged that some of the reductions were performance-related. Terminated employees will receive separation benefits, including “eliminations that were related to individual performance,” this person said.

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Broadly speaking, retailers have been tightening their belts recently. Gap Inc., Kohl’s, Zalando and Neiman Marcus have all cut back on headcount in recent months. Then there’s the bankruptcies of David’s Bridal and Bed Bath & Beyond, both of which are closing stores and stopping paychecks in hopes of slimming down enough to get buyers interested.

Wells Fargo economists Sarah House and Michael Pugliese unpacked recent jobs data in a research note published Tuesday.

“Job openings fell by 384,000 in March to 9.6 million. Although still high, this was the lowest level of job openings since April 2021,” they wrote. Rising layoffs confirm the broad trend towards a cooling labor market. The economists pointed toward a “clear trend [that’s] emerging,” saying they “expect labor demand to keep receding in the months to come.”

The ratio of job openings to unemployed workers measures the labor market’s strength or weakness. Industry watchers believe the Federal Reserve is monitoring this metric to gauge what it should do next about interest rates. Many believe the Fed will likely continue lifting rates until the unemployment rate perks up.

For retailers, disappointing earnings could suggest a recession is on the horizon, putting cost cuts at the top of their totem pole.

But according to one expert, one segment of retail job seems insulated from the recent bloodbath.

“Frontline workers are safe. Retailers are still seeing a shortage of frontline workers,” said Michael Appel, former CEO and chairman of Rue21 who is now managing director at Getzler Henrich & Assocs.. “Retailers, in order to maintain earnings, will cut overhead and look at wherever they can cut. Jobs at headquarters are usually the higher-paying jobs.”

Though Appel believes retailers investing in modern tech have their wallets in the right place, many will come under pressure to whittle down costly investments. What’s more, tech investments could make some jobs redundant.

“But I think the cost-cutting in technology may be short-sighted,” he said. “You need tech people and you need technology solutions—both are critical for a lot of implementations that retailers are [bolting onto] their platforms. But you need people [with the know-how] to do it and the updated systems in place to do it all, so the [job cuts] could put retailers over the longer run at a disadvantage.”

Retailers have to figure out how to retain the people they do have, which means training them properly and keeping them engaged. “It used to be store associates put stock out and ring the cash register. Now they have a multitude of tasks that include curbside pickup, ship from store and getting customers interested in signing up for loyalty programs,” Appel said.

The irony is that cutting tech jobs will help retailers “do what they need to do in terms of wages to attract and retain employees” that are considered essential, and right now those are the frontline workers who interface with customers, Appel pointed out.

Companies have been spending more on wages and benefits to keep up with rising inflation. In the most recent Operational Impact Research Survey from Multimedia Plus, 52.8 percent of the 125 senior executives who participated in the study cited staffing and wage issues as their top concern. The 7th annual study was conducted this year between March 27-April 6. While 30.6 percent said retail positions are about the same to fill as compared to this time last year, 24.3 percent said they are now “harder” to fill and and 11.7 percent say they’re “much harder” to fill versus a year ago. In addition, 54.8 percent said their tech spend will be on par with where it was a year ago.

“While the macroeconomic environment continues to present new challenges, organizations realize that their frontline staff plays a vital role in their growth and customer acquisition.  The level of talent and training directly impacts their ability to conduct business efficiently,” said David Harouche, CEO and chief technology officer at Multimedia Plus.