The global fashion retail industry was recovering from a massive 47 per cent drop in revenue during the pandemic, but was hit by global inflation among other headwinds. In the US, apparel sales are set to suffer because of cost-saving measures by consumers. After lagging behind rival Zara due to a 4 per cent drop in sales, world’s second largest fashion retailer H&M has joined the mass layoff bandwagon.
Consumers become picky, splurge less
To save costs and make up for a dent in its profits for the July-September quarter, H&M plans to fire 1500 employees. The move has been announced as consumer spending has slowed down because of cost of living rising across the globe. The Sweden-based brand with more than 50 outlets across India, has a workforce of 155,000 people, which means that the layoff will affect 0.01 per cent of its staff.
Layoff chaos spreading beyond tech
Job cuts at Europe’s major fashion retail chain shows that the US tech layoffs are spilling over into other sectors, with a recession closing in. Apart from H&M, UK-based online apparel marketplace Lyst is also reportedly planning to trim its workforce by 25 per cent. The startup aims to control its cashflow and achieve profitability amidst tough times, a lot like Indian new age digital firms such as Ola and Byjus, which fired people.
What does it mean for pan-India plans?
H&M’s current decision is part of a larger effort to save almost $190 million, and the firm has assured support for the affected employees to find the best solution for them. It isn’t clear how these measures to cut costs will affect H&M’s expansion plans to achieve a pan India presence, by opening more stores across the country. Last year, a firm making apparel for the brand in Karnataka had to rehire hundreds of workers at its factory, after firing them during the pandemic.
