In fashion, companies are now trying to rebuild the right teams. “There was a lot of over-hiring during the pandemic because of so much activity going online,” says Karen Harvey, founder of the eponymous consulting and advisory firm, which finds talent for clients such as Adidas, Calvin Klein and Coach. “There are two things happening right now: economically, there’s an imperative to pare down a workforce, but at the same time, there’s an imperative to innovate and focus on areas that were not focused on before [such as the physical retail experience].” As companies reach the end of the financial year and begin to evaluate the workforce, certain roles or teams may appear redundant, she adds, which results in wide-spread layoffs as those teams may not “be the focus or emphasis of the strategy going forward”.
“Many of these companies benefited during a time when people were working from home and doing more online, but now that the consumer is more out in the world, we do have a reawakening in terms of how people want to engage and shop in more physical environments,” she continues, adding that these businesses are likely to invest more into the physical side of their business. Overall, she expects hiring to slow down as companies become more cautious and rethink their hiring practices.
Luxury is proving more resilient, says Paul-Christian Bassett, founder and CEO of Christian Bassett, an executive search consultancy recruiting for the likes of LVMH, Prada, Bottega Veneta and Burberry. “We haven’t seen anything like the level of redundancies in the luxury sector compared to the tech sector and some other areas,” he says.
Focusing on growth drivers
What is unfolding is a correction to what was initially projected, says Kristy Hurt, founder of the eponymous fashion and luxury focused recruitment consultancy, as well as The Co-lab, a networking community for brand professionals. “Business was booming, and executives were forecasting massive increases in hiring to accommodate for the huge growth,” she says. Now, brands are proactively cutting costs to remain profitable. “This sort of cautionary decision making feels more strategic rather than necessary at this point,” she argues.
After the pandemic e-commerce boom, fashion retailers are more aware than ever that online is not the “silver bullet” it was once thought to be, says analyst Hyman. “People imagined that if you trade online you don’t have rent to pay and it must be more profitable,” he says. “The reality is that returns are high and they eat into your profits. It’s not that easy to make money [by] retailing online.”
Hyman warns that a company restructuring “shows that costs are too high and revenues are too weak… disinvestment is quite often a symptom of distress”. However, other analysts, such as Streeter, argue that in some cases it’s recognised as a method to streamline the business, keep costs low and create effective business models by focusing on areas that are growth drivers for the company.
Growth in areas such as clienteling could also be the catalyst for new job creation, points out recruiter Hurt. “When these companies are investing in new categories, it’s because they feel that they can drive growth with these new areas of business, and in turn they’re hiring entirely new teams to support the businesses.”
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