Retail Hit by Layoff Wave as Macy’s and Wayfair Cut JobsJan 25, 2024
It's the year of efficiency all over again
2024’s layoff wave finally hit retail as Wayfair and Macy’s have both opted to make significant cuts to their respective workforces. Let’s break it down.
Macy’s was first to the layoff push—announcing that they’ll cut 3.5% of their workforce—around 2,300 workers. Macy’s intends to add a lot more automation to their supply chains and flatten their management structure. At the same time, Macy’s will close a handful of underperforming stores nationwide.
Meanwhile: Wayfair will make steeper cuts by laying off 13% of their workforce. Wayfair is focusing on simplifying their corporate structure and becoming as efficient as possible. This is Wayfair’s 3rd round of layoffs since mid-2022.
For both retailers, these layoffs are still more of a reaction to overhiring during the boom period in 2021 and early 2022. Consumer spending stayed strong enough in Q4—though Macy’s and Wayfair both have not released earnings results yet. Given some compressing budgets, both companies talked about relying on discounts during Q4’s holiday shopping season. Cutting staff is one way to help recover margins after heavy discounting potentially crushes profitability.
WHY IT MATTERS
With automation and more efficient workflows, we’re seeing a lot of pressure being put on labor as companies fight to be as profitable as possible in 2024. While consumer spending stayed relatively strong, credit card debt is creeping up in a way that could weigh on retail budgets in the future. Layoffs like these are the best safety valve retailers have as they enter a potentially challenging 2024. What’s wild is the completely opposite reactions here. Macy’s actually declined ~4% at open while Wayfair surged near 10%.