Robert D’Loren, chief executive of Xcel Brands in New York City – the parent company for fashion brands Halston and C. Wonder by Christian Siriano– ruminated on Thursday morning about more than just his breakfast order from two hours prior. With a $9 cost tag attached to his two egg whites with toast, it was no mundane wondering: rather he questioned how average people could afford such prices amidst pandemic repercussions continuing into 2021 that point towards high inflation and even potential recession. Such musings are now commonplace as trendsetters shape their paths around this ever-evolving reality.
Executives face the challenge of finding novel ways to keep workers motivated and satisfied, despite dwindling resources leading to more layoffs. The heightened social awareness from 2020 remains an active force in decision-making; it affects all aspects of business, including hiring practices, customer service execution, and brand identity formation. As the future is uncertain for many companies at this time, leaders need to be prepared with alternate plans depending on its direction–which requires a certain level of flexibility that can adapt quickly when needed.
D’Loren has seen how a simple breakfast is evidence of the financial volatility in retail, challenging many business owners to remain afloat during moments of recession. Speaking out on this issue he exclaimed with startling gravity, “I never really thought about things like this but it’s becoming very, very serious.” It would seem that while the costs may be rising and consumer confidence slipping – leaders such as D’Loren are learning new ways to navigate these tumultuous waters.
The Layoff Landscape
As the economy stutters and companies take drastic steps to stay afloat, layoffs are no longer seen as a quick-fix solution. With an increasingly competitive labor market, employers recognize that cutting jobs may do more harm than good in the long run – especially when it comes to certain positions such as store roles which remain difficult for businesses to fill. According to recent stats from the Bureau of Labour Statistics (September 2020), there were 1.9 job openings available per worker in America indicating these tough decisions must be made with caution and foresight.
Despite filing for bankruptcy as a public company in 2020, Francesca’s – an acclaimed Houston-based women’s clothing retailer – is making their return with the support of CEO Andrew Clarke. Refusing to consider layoffs at this point, he and his team are keeping true on the pledge to open even more stores by 2023; illustrating determination and progress under these uncertain times!
In a bold move to anticipate economic woes, Xcel recently took decisive action by selling off a majority stake in their long-time-owned Isaac Mizrahi brand. For an impressive $68 million (with the bulk of that being approximately $46.2 million cash), Xcel made sure they would remain afloat and avoid any potential layoffs during uncertain times ahead.
“We’ve already pulled our biggest lever,” he said. “What you don’t want to do is to pull your assets [the people] who are coming up the elevators every morning and driving the business.”
Obsess, an augmented reality platform that partners with Dermalogica, Ralph Lauren, and Farfetch to build virtual stores online has experienced explosive growth this year. With 85 employees already on staff – twice what it was at the start of 2020 – its executive team is determined to reach its goal of 90 by end-of-year despite revising initial targets down slightly. To meet these objectives they plan on adding sales and account reps alongside crucial engineering and 3D design roles; making Obsess primed for continued success in 2021.
Despite the current economic downturn, Saks Off Fifth CEO Paige Thomas is expecting to see double-digit growth in resale business and an abundance of high-end inventory this holiday season. Since she’s still keeping her eyes on market trends for any necessary shifts down the line, Thomas’ focus primarily lies on how they can become more efficient while managing payroll and capital expenditures accordingly. It looks like off-price retailers may be in luck as consumers prioritize discounted prices during these uncertain times.
The Culture Component
Despite a recession looming on the horizon, job-seekers are still standing firm in their commitment to demanding competitive compensation and flexible work arrangements. With employees from all backgrounds increasingly seeking out employers that prioritize diversity equity initiatives – companies must channel valuable resources into long-term strategies centered around culture building if they hope to come out ahead of the competition. By investing time and energy now towards internal growth, businesses can leverage these benefits as lasting rewards for both employee satisfaction and profitability down the road.
Clarke emphasized the importance of having a strong diversity strategy that goes beyond simply reacting to events and is instead integrated into every aspect of the company. To demonstrate its commitment, Francesca’s took swift action when Roe v Wade was overturned this summer; by issuing a statement addressing an issue important to their 97% female workforce, which largely consists of young people. Clarke expressed it best himself: “Our associates expect us to take a point of view”. It seems clear from his words that Francesca’s values are in lockstep with those they employ–and are stirring up an environment where diverse perspectives can thrive.
Singh at Obsess believes in the power of strong office culture and has chosen to restrict her team’s work environment options, allowing them only to gather together since 2021. She shares that this decision enables her staff “to be in a social environment” while still being able to “collaborate,” resulting in steady growth for their company. Whereas Saks Off Fifth allows its corporate teams some freedom by implementing what they call “moments that matter,” empowering employees with an array of choices about when it best suits them or their groups’ needs — as well as projects’ targets — voraciously pushing efficiency all around.
Innovation in Focus
The holiday season is expected to be a tricky one for retailers, with inflation likely putting a dampener on consumer spending. To weather the storm, brands are honing in on their core capabilities such as supply chain management and e-commerce while avoiding experimental technologies like Web3 and NFTs. However, there is hope that investments in creating an amazing online or store experience could give some stores an edge – Obsess recently helped launch virtual stores for Coach & Maybelline which showcases this approach.
Even though the Metaverse might not be a priority for companies, they are still determined to improve customer experience this holiday season. To stay ahead of their competition, firms must come up with creative solutions that will entice shoppers who may be constrained by financial limitations. According to Singh, “[Companies] need to inspire [consumers], and stand out from their competitors.”
Francesca’s is taking the shopping experience to a new level with cutting-edge technologies and automation that make discovering their products easier, faster, and more exciting. These innovations include innovative warehouse management systems enabling optimized offerings like buy online/pick up in store as well as ship from store services.
