While everyone is watching the impact of massive government layoffs on the job market and ultimately the economy, retail seems to be poised on a DOGE-esque restructuring that will bring major job losses as well.

It will take time for the numbers to show up in the Bureau of Labor Statistics Jobs Report, though electronics and appliance retailers lost 7,000 jobs in January.

At the company level, so far this year Party City and Joann’s bankruptcy will result in 16,000 and 19,000 jobs lost respectively, and Estée Lauder, Starbucks, Kohl’s and Walmart have major layoffs in the works.

With retailers expecting to close more than 2.5 times more stores as will open this year – 15,000 closures to 5,800 opens – the latest round of layoffs are just the tip of the iceberg.

Outplacement firm Challenger, Gray & Christmas reported retail job losses in January nearly doubled from those in December. More tellingly, retail job cuts were up 20% from the losses announced in January 2024.

Looking more broadly across all the industry sectors the firm covers, Andrew Challenger said January 2025 was more or less subdued on the job-cut front, but added, “We’ve already seen major announcements in the early days of February, so it seems this quiet is unlikely to last.”

Retail Is Nation’s Largest Private Employer

The National Retail Federation in association with PwC reports the retail trade employs 32 million workers directly and another 23 million in businesses that directly support retailers, such as management and business operations, logistics and freight transportation, finance and real estate, and more. It amounts to a total of some 55 million American jobs or 26% of the economy, yielding $3 trillion in total annual income.

Given retail’s reach as the nation’s top private employer, consumers sense turmoil coming in the employment sector. Uncertainty about job and income prospects weighed heavily on consumer confidence in February.

The Conference Board reported that the Consumer Confidence Index slipped to 98.3 in the month, the largest monthly drop since August 2021.

“Views of current labor market conditions weakened,” said Stephanie Guichard, senior economist for global indicators at The Conference Board in a statement. “Consumers became pessimistic about future business conditions and less optimistic about future income. Pessimism about future employment prospects worsened and reached a ten-month high.”

Consumers’ outlook on future business conditions took a sharp negative turn in February with 27% expecting business conditions to worsen up from 20% in January. They are onto something since Kearney predicts more businesses will fail in 2025 than in 2024 after experiencing a significant uptick over previous years.

According to Kearney, “major insolvencies” rose over 90% from 136 in 2022 to 260 in 2024. And it reported, “Experts expect this trend to continue in 2025 given the political and economic uncertainties, leading to an additional increase in corporate insolvencies of up to 25%.”

Retail Bankruptcies Hit Hard

Retail bankruptcies mean major job losses and many have happened already and more are in the offing.

Party City Puts 16,000 Out Of Work

Party City will close all 700 of its stores this Friday, Feb. 28, leaving an estimated 16,000 employees, including full-time and part-time workers without jobs.

Joann Cuts 19,000 Employees

Joann, after being acquired by retail liquidator GA Group, will close all 800 fabric, craft and hobby stores after announcing early in its bankruptcy proceedings last year that only about 500 stores would close with 300 remaining open.

That will put some 19,000 Joann employees out of a job. To help with their transition, GA Group said it will be organizing job fairs and granting workers time off so they can interview for other jobs until the final closings expected in May.

Big Lots Uncertain

Big Lots is in the throes of restructuring under new owner Gordon Brothers, which plans to keep between 200 and 400 of its nearly 1,000 stores open. How many of Big Lots’ 27,000 employees will be retained is unknown, but one expects many thousands will eventually be out of a job.

On The Vulnerable List

While retail bankruptcies are hard to predict, Moody’s has Saks Global, Guitar Center and At Home on its most distressed list. S&P Global Ratings agrees and adds Qurate to its vulnerable list. Qurate operates TV shopping channels QVC and HSN and just rebranded as QVC Group.

On a related note, iMedia, which operated competing TV shopping channel ShopHQ, has just closed down, leaving over 100 employees out of work and its many product suppliers without a retail partner.

CreditRiskMonitor identifies other vulnerable retailers, including Wayfair, Office Depot, Children’s Place, Designer Brands (shoe retailers DSW and The Shoe Company), Rent the Runway, Madison Reed, Glossier, Everlane, Vineyard Vines and Untuckit.

Also on its short list are Kirkland’s and Beyond which have just secured a deal to bring Bed Bath & Beyond back to brick-and-mortar retail.

Restructuring For Efficiency And Cost Savings

Layoffs in the name of efficiency and cost reductions are standard practice in corporate America and a number of major retailers have gone in that direction this year.

Major Cuts At Estée Lauder

Estée Lauder just announced it will lay off between 5,800 and 7,000 employees – from 9% to 11% of its 62,000 workforce. In its latest earnings call and the first one for new CEO Stéphane de La Faverie, he said, “We lost agility. It came from the complexity of the organization. The commitment is to simplify the ways of working.“

Starbucks Trims 1,100 Employees

Starbucks recently installed CEO Brian Niccol is also on the corporate simplification train. He just notified staff that the company would layoff 1,100 corporate employees and not fill hundreds of open positions, according to the Wall Street Journal.

“We are simplifying our structure, removing layers and duplication and creating smaller, more nimble teams,“ Niccol wrote in a memo to employees. “Our intent is to operate more efficiently, increase accountability, reduce complexity and drive better integration.“

Only corporate employees will be impacted, of which the company has roughly 16,000, and not those working in cafes or in roasting, manufacturing, warehousing and distribution operations. Laid off workers will receive pay and benefits through May 2.

Kohl’s Cuts 10% HQ Staff And More To Come In Store Closings

Embattled department store chain Kohl’s will slash 10% of its corporate workforce or about 250 employees and close 27 underperforming stores by April, leaving some 1,120 locations in operation. And unknown number of store employees will be impacted.

Walmart Shuffles And Cuts

Walmart, the nation’s number one retailer and single largest private employer with over 1.6 million U.S. workers, is cutting some 700 corporate jobs in New Jersey and North Carolina as it closes its Charlotte, NC offices and reshuffles management staff at its Hoboken, NJ location.

Retained management staff will be relocated to other locations, including to its newly expanded 12-building headquarters in Bentonville, which is slated to be completely opened by the end of the year.

Waiting On The Numbers

We’ll have to wait until Mar. 7 for the February Jobs Report from the Bureau of Labor Statistics or maybe a few months after to see how these jobs losses playout in the retail sector. And then we’ll have to wait even longer to see how the job losses impact the retail business specifically and the economy in general.

However, a dark cloud hangs over long term retail employment prospects in the form of technology advancements. Goldman Sachs predicts that some 300 million jobs globally could be lost or “diminished” by generative AI, most notably impacting knowledge workers.

Continued advancements in technology and robotics will also replace other retail jobs, including cashiers, sales associates, warehouse and others. While on the plus side, AI, robotics and other technology advancements will bring economic benefits and generate the demand for new jobs, it will also displace many existing jobs and workers.

The World Economic Forum (WEF) warned, “A new generation of smart machines, fueled by rapid advances in AI and robotics, could potentially replace a large proportion of existing human jobs.”

One can expect that retail, as the nation’s largest private sector employer, will experience the largest proportion of human job replacement from technology in the future.

See also:

ForbesGoldman Sachs Predicts 300 Million Jobs Will Be Lost Or Degraded By Artificial IntelligenceBy Jack KellyForbesTwice As Many Stores In The U.S. Are Expected To Close In 2025By Pamela N. Danziger