Dive Brief:
- January 2023 saw a substantial uplift in retail job cuts, with a staggering 6,419 job losses. Compared to the previous month, this marked a whopping 96% increase, and a 20% surge when compared to the same period last year, according to the outplacement firm Challenger, Gray & Christmas.
- U.S.-based employers announced a total of 49,795 job cuts in January, a 28% rise from the previous month but a 40% decrease compared to the same period last year. This figure also represented the lowest January job cut total since 2022, as per Challenger's report.
- Albeit employers reported a planned hiring of 6,089 workers in January, down by 24% from the nearly 8,000 announced in December, this figure represented a 13% year-over-year increase. January 2024 saw the lowest hiring on record for that month.
Dive Insight:
Job reduction in retail sector increases by 20% in January
Challenger attributed 32% of January's job cuts across sectors to store closures, while restructuring efforts were responsible for 25%.
"January 2023 was relatively uneventful in terms of job cut announcements," Andrew Challenger, senior vice president of Challenger, Gray & Christmas, noted. "However, major announcements have already surfaced in February, so this calm may prove transient."
Market and economic conditions, cost-cutting measures, bankruptcies, acquisitions or mergers, and natural disasters like California's wildfires were among the factors that impacted employment changes, as per the report.
"The holiday season of 2023 was successful for retail, despite a noticeable drop in in-store traffic on main shopping days like Black Friday, reports indicated," Andrew Challenger added. "The retail job landscape has transformed dramatically over the years, with automation and online shopping requiring different skills compared to a decade ago."
While retail job cuts fell by 47% for the full year, they soared nearly 3,000% in the last month of the year. However, retail sales in December climbed by 5.6% to $325.4 billion in the segments monitored by Retail Dive, based on the latest data from the U.S. Department of Commerce.
In the wake of these job shifts, the unemployment rate dipped to 4%, and total nonfarm employment expanded by 143,000 in January, as per the U.S. Bureau of Labor Statistics. Despite the overall retail trade employment seeing little net change in 2024, the sector experienced job gains in January, with employment in retail trade rising by 34,000.
Within the retail industry, general merchandise and furniture and home furnishings retailers reported the majority of gains, while electronics and appliance retailers saw a loss of 7,000 jobs, as per the BLS statistics. Overall retail trade employment remained steady in 2024, with January's job gains following this trend.
- The increase in retail job cuts in January 2023, as reported by Challenger, Gray & Christmas, could potentially signal a shift towards automation and online shopping in the retail industry, affecting the labor force.
- The uptick in AI and automation, evident in the retail sector through rising job cuts and store closures, could have implications for traditional labor roles in finance, business, and trade, as well as other industries that rely on manual labor.
- The changing retail landscape, driven by advances in AI and online commerce, might disrupt trade patterns and business strategies, requiring a reevaluation of skills and jobs in these areas.
