E-retailers Saks, Saks Off 5th, The Bay resort to layoffs amid turmoil in tech

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Dive Brief:

  • Less than two years after HBC split up the e-commerce and brick-and-mortar operations of its retailers, all three businesses are laying people off. On Tuesday, The Bay, the e-commerce company affiliated with Canadian department store Hudson’s Bay, “announced impacts to some corporate roles within the business, reflecting less than 2% of associates,” a spokesperson said by email.

  • Also on Tuesday, a spokesperson for off-pricer Saks Off 5th’s e-commerce site said the company “made changes to streamline our organizational structure,” including “the difficult decision to part ways with associates across various areas of the business.” The spokesperson didn’t immediately reply to a request for more information about how many people are affected.

  • After last week’s report that Saks.com is eliminating about 100 jobs, half in tech, or about 3.5% of its total workforce, a spokesperson for that business on Tuesday confirmed the details. “We are at a point in our trajectory as a digital luxury pure-play where we need to optimize our business to ensure we are best positioned for the future,” the spokesperson also said by email.

Dive Insight:

In 2021, HBC pried apart the online and offline operations at its three retail banners, spinning off their e-commerce sites as stand-alone businesses. The reasoning was that a tech-oriented online pure-play would more easily attract investment and talent, according to not just analysts but also people familiar with the operational details.

Private equity firm Insight Partners poured $500 million into the Saks’ e-commerce company, and later led a $200 million investment into the Saks Off 5th e-commerce company. The firm didn’t immediately respond to a request for comment on those companies’ recent layoffs and streamlining efforts.

Activist investors enamored of the idea soon pushed Macy’s and Kohl’s to consider the move, though neither ultimately did. AlixPartners, which worked with Saks on its split and was hired by Macy’s to explore the possibility in November 2021, didn’t immediately return a request for comment for this story. 

Now, as several tech-oriented companies scramble to contain their costs and lay off thousands, HBC’s rationale doesn’t seem to be holding up. The runaway growth of e-commerce seen during the height of the pandemic has waned, while shipping expenses and other related costs have risen. Meanwhile, many consumers have returned to shopping at physical stores. As a result, several online retailers are slashing expenses, including reducing headcount, in a quest for profitability, according to GlobalData Managing Director Neil Saunders.

Saunders, who was among analysts skeptical of the e-commerce splits at the time, said they were executed without enough thought as to what consumers actually want and how their preferences might shift as the pandemic did.  A host of e-retailers and other tech companies dependent on e-commerce have announced layoffs in recent months. Even Amazon has confirmed a series of massive job cuts, many of them in its retail operations. 

“All of this is a long way from the mood music when e-commerce was spun off,” he said by email. “Given the current state of the industry, the decision to spin off e-commerce into separate operations looks even more questionable than it did at the time. Online is under increasing pressure and most savvy retailers are using an omnichannel approach to improve profitability and efficiency. HBC has less flexibility because it has split its businesses apart.

Originally Appeared Here

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