Expecting a Rebound, Germany’s Zalando Won’t Follow eCommerce Trend by Cutting Jobs

Zalando, the biggest European online fashion retailer, doesn’t think the current slowdown on internet shopping will last, Financial Times (FT) wrote Sunday (Aug. 14).

Co-Founder and Co-CEO Robert Gentz said the global economic situation was “just a blip” and thought Berlin-based Zalando would be able to avoid mass layoffs other companies are issuing, including Amazon, Klarna and Shopify.

Zalando has been hit hard, with its revenues seeing a falloff in the first half of the year – the first time it’s happened in the company’s history.

But Gentz said the company’s plan was to “keep employment steady” all through this year.

He said the company has been more cautious about hiring.

Gentz said Zalando had been slow to follow along with the crisis in consumer confidence that was spurred by the war in Ukraine and inflation. But he said the company was now doing damage control and would “play a bit more defensively.”

He said the company has scaled back marketing spending, and slowed the progress to build new logistics centers, along with scaling back free shipping offers to avoid losses on small orders.

Gentz’s opinion is that the drain from higher inventories will “peter out in the second half” of the year.

He said cash “is not a concern” and that postponed investments would help the company save money overall.

There has been a slowdown overall in eCommerce shopping, with Zalando and Made.com warning earlier in the year of a profit fall, PYMNTS wrote.

Read more: Online Shopping Slowdown Could Lead to Glut of Warehouses

This comes as more people have returned to shopping in-person in stores, which could have an effect on the amount of warehouse space needed as retailers and marketplaces add space to meet demand.

The report noted that the U.K. has seen fewer consumers using delivery services for online grocery shopping, which has trimmed expansion plans for some companies.

In the U.S., online grocery shopping is still a habit for many people — almost 60% still use it rather than going to shop in-person for the past year, according to the PYMNTS report, “Satisfaction in the Age of eCommerce.”