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A tough round of tech layoffs are continuing into 2023.
wayfair | Scott Lewis | Flickr (www.flickr.com)
Friday brought more layoffs across ecommerce, as a more difficult economic climate continued to leave tech and retail platforms seeking to reduce costs in the first month of 2023.
On Friday, the following moves were announced:
In each case, it means a person lost their job. It also points to the business reality of operating at a time of massive economic swings. Companies staffed up when demand was high and capital was plentiful. Now, they are seeing a pullback in both, and rewriting their futures accordingly.
Here’s a look at each of the situations:
The layoff news at Google was communicated in a Friday morning email to employees from Sundar Pichai, who is the CEO of both Google and Alphabet. Pichai wrote that the layoffs would cut across “Alphabet, product areas, functions, levels and regions,” but wasn’t specific about how commerce-related functions will be affected.
Pichai sounded a similar note to other leaders of the largest tech companies, referencing how the company hired quickly as tech boomed during the pandemic, and is now pulling back.
“Over the past two years we’ve seen periods of dramatic growth,” Pichai said. “To match and fuel that growth, we hired for a different economic reality than the one we face today.”
This week showed that tech layoffs aren’t relenting as 2023 begins. The news came on the same week that Amazon began a previously-announced round of reductions that will bring the total roles affected by the last several months of cutting to 18,000 roles. The layoffs are focused on the company’s commerce division, as well as people operations. Microsoft, which wants to play a bigger role in commerce but does not have as large a business as those companies, also said this week that it will lay off 10,000 employees, or 5% of the company’s workforce.
Wayfair said that about 1,200 of its 1,750 layoffs will affect people who hold corporate positions, amounting to 18% of that workforce. The reduction was described in a news release as an effort to “eliminate management layers and reorganize to be more agile.”
“The changes announced today strengthen our future without reducing our total addressable market, our strategic objectives, or our ability to deliver them over time,” said Wayfair CEO Niraj Shah, in a statement. “In hindsight, similar to our technology peers, we scaled our spend too quickly over the last few years.”
Wayfair said its job cuts are coming on the heels of a restructuring in August. All told, they will amount to $750 million in savings. The company is also working to realize another $650 million in non-labor-associated savings through reductions in spending on operations, advertising and capital expenditures.
Shah said that the holiday shopping period brought a positive topline performance, with order volume being a bright spot. However, the company has long struggled on the bottom line. It has racked up $980 million in losses so far this year.
GlobalData Managing Director Neil Saunders called the layoffs “a necessary step to right-size a business that has been profligate in spending but has been far less successful in delivering a return.” But he said the actions should have been taken “many years ago,” and said it will be a low-margin business even if it does reach sustainability through the cost-cutting moves.
At Wayfair, “the costs of customer acquisition, the amount of advertising required to drive sales, and the cost of servicing those sales are all incredibly high,” Saunders said. “Traditionally, this has been justified by a massive expansion in the revenue line. However, post-pandemic revenue has been in decline; and with the current state of the consumer economy, going back to the stellar growth of the past looks highly unlikely.”
While the layoffs at Saks.com are of a notably smaller size than those detailed above, the layoffs do underscore how challenges are affecting individual brands and retailers, as opposed to being confined to the platforms that power commerce.
It’s also a reminder of the role that venture capital played in fueling ecommerce growth over the last several years. In 2021, Saks’ ecommerce business was spun out from Saks’ brick and mortar stores by owner HBC through a $500 million investment from private equity firm Insight Partners. The ecommerce company then staffed up following the split, but is now seeking to manage costs, WWD reported.
On the Move has hiring news from Walmart US, Etsy, commercetools and more.
Judy Werthauser. (Photo via LinkedIn)
This week, retailers are bringing on C-level talent in areas such as people, operations and transformation. Plus, Kohl’s appoints an activist investor’s choice for CEO, Fanatics taps a former Snap executive for livestream shopping and Etsy brings aboard Facebook’s former general counsel.
Tom Kingsbury was appointed CEO of Kohl’s. Kingsbury was named interim CEO in December upon the resignation of now-Levi’s President Michelle Gass. Now, Kingsbury will have the job on a permanent basis. Kingsbury served as CEO of Burlington Stores from 2008-2019. Kingsbury was nominated by activist investor Macellum Advisors, which was pushing for change at Kohl’s. With Kingsbury’s appointment as CEO, Macellum has agreed to a “multi-year standstill.”
Judy Werthauser was appointed chief people officer at Walmart U.S. Werthauser comes to the teen-focused retailer from Five Below, where she served as EVP and chief experience officer. Over her four-year tenure, the chain grew from about 750 stores to more than 1,300 locations. Werthauser also served on the board of BJ's Wholesale Club, and is now resigning from that position. “I am excited to work alongside the world-class Walmart U.S. team as they bring the purpose of building a better world – helping people live better and renewing the planet while building thriving, resilient communities – to life,” Werthauser wrote in a LinkedIn post.
Mike Brewer was named chief operating officer at Crate & Barrel Holdings, overseeing operations at Crate & Barrel, CB2, Crate & Kids and Hudson Grace. Brewer brings 20 years of experience from Nike, where he served in roles including sourcing, manufacturing and supply chain. Crate & Barrel said Brewer’s appointment was part of the home retailer’s “ongoing efforts to evaluate and alter its structure in ways that help support overall growth.”
Keith Melker. (Courtesy photo)
Keith Melker was appointed chief strategy and transformation officer at JCPenney. Melker comes to the department store retailer from Wehner Multifamily, where he served as CEO. He was also a previous chief strategy officer at the Kimberly-Clark Corporation. Melker will oversee the transformation office, which includes ownership of metrics such as profitable traffic, inventory management, digital growth and strategic partnerships. With this move, Katie Mullen will remain chief strategy officer.
Blaine Trainor is joining ecommerce software provider commercetools as VP of global partnerships and alliances. In the role, Trainor will lead the headless commerce company’s partnerships ecosystem, working with companies including Deloitte, CapGemini, AWS and Google Cloud. Trainor previously served in senior leadership roles at SAP over a 12-year tenure, and also held sales roles at hybris software and Sterling Commerce.
Nick Bell, a former Google and Snap executive, will lead a new livestream shopping division of Fanatics, Footwear News reported. Bell previously led the teams behind Google Search Experience, and served as VP and global head of content and partnerships at Snap Inc. Bell will lead the Fanatics Live division, which will launch a standalone app that is geared toward collectibles.
NIck Bell. (Photo via LinkedIn)
Colin Stretch was appointed chief legal officer at corporate secretary at Etsy, effective Feb. 14. Stretch previously served as general counsel at Facebook from 2013-2019. He then spent two years as leader in residence at Columbia University Law School's Reuben Mark Initiative for Organizational Character & Leadership, and went on to the law firm Latham & Watkins.
"Colin's extensive experience will be critical to Etsy's efforts to ensure we remain a safe and trusted marketplace, broaden our reach across all our brands, and advocate for microbusinesses around the world,” said CEO Josh Silvermann, in a statement.