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Digital generated image of multiple robots working on laptops siting in a raw. Smart technology, automation and artificial intelligence concept. Retail job losses are running three times ahead of last year’s pace through September, according to employment advisory firm Challenger, Gray and Christmas, and now Amazon and Target are becoming part of the broader trend. Each just announced plans to slash its corporate workforce up to 10%, with 31,800 jobs on the line. While the scale of job cuts differs by company size – and Amazon’s cutbacks cover more than retail-related positions – the losses within the retail sector are substantial. Coming this early in the season, well ahead of the typical post-holiday layoff peak in January and February, these cuts signal broader restructuring across one of the nation’s largest employment sectors. Different reasons are given for the layoffs, yet they collectively point to a structural weakness in the retail industry, driven by a perfect storm of poor corporate performance, tariff headwinds raising costs, and the growing power of AI to perform routine administrative and managerial tasks. In related news, Carter’s, the baby and children’s apparel company noted for the Carter’s and OshKosh B’Gosh brands, announced it will lay off 300 corporate staffers before the end of the year – 15% of its corporate workforce – and close 150 underperforming stores in North America over the next three years. The number of store employees affected was not revealed. Tariffs are blamed for much of the forced cost-cutting, with duties rising from $110 million in fiscal 2024 to between $200 million and $250 million this year. Retail Employment Shifts Currently, about 16 million Americans are employed in retail, according to the latest Bureau of Labor Statistics report, now on hold due to the government shutdown. Nearly half (46%) hold frontline sales-related positions, while roughly one-fourth are in management, business, and financial roles (13%) or provide office/administrative support (10%) to those on the front lines. The rest are involved in other aspects of retail, most especially in production, transportation, and warehousing functions (23%). MORE FOR YOU Overall, Challenger, Gray and Christmas reports retailers have announced 86,233 job cuts through September – less than 1% of total employment – but more troubling, this year’s job cuts are up from 28,440 through the first nine months of 2024, a 203% increase. Even more concerning, U.S. employers across the board have announced just shy of one million job cuts, up 55% from the job cuts announced through the first three-quarters of last year, making the 2025 year-to-date total job losses the fifth-highest in the 36 years Challenger has been reporting this data. Hiring plans are also down 58% year-over-year to just over 200,000 new jobs, largely due to a sharp cutback in retail seasonal hiring. Through September, employer hiring plans are at their lowest point since 2009, during the Great Recession. In effect, many of the nation’s industries are dealing with the same factors that are taking away jobs in retail. “Right now, we’re dealing with a stagnating labor market, cost increases, and a transformative new technology,” said Andy Challenger, the firm’s labor expert, in a statement. “Previous periods with this many job cuts occurred either during recessions or, as was the case in 2005 and 2006, during the first wave of automations that cost jobs in manufacturing and technology,” While he believes a much-hoped-for interest rate cut could help stabilize the job market in the fourth quarter, the other factors impacting the labor market, in general, and retail in particular, are not going away and could get worse. Amazon’s Largest Layoff Ever According to numerous reports, Amazon is preparing to cut up to 30,000 corporate positions or about 10% of the corporate workforce. However, a blog post from Beth Galetti, Amazon’s senior vice president of people experience and technology, stated only about 14,000 roles were on the immediate chopping block. Amazon reports on Thursday, so we may learn more about the layoff plans. If Amazon’s layoffs reach the 30,000 mark, it will be the company’s largest restructuring in history after letting 27,000 people go in 2023. It would also rank among the highest corporate layoffs over the last 25 years. In Galetti’s blog post, the layoffs are explained in familiar corporate talking points about streamlining bureaucracy and reallocating resources to better meet current and future customers’ needs. However, reading between the lines, they are largely pinned on AI. “Some may ask why we’re reducing roles when the company is performing well,” she wrote. “What we need to remember is that the world is changing quickly. This generation of AI is the most transformative technology we’ve seen since the Internet, and it’s enabling companies to innovate much faster than ever before (in existing market segments and altogether new ones). We’re convinced that we need to be organized more leanly, with fewer layers and more ownership, to move as quickly as possible for our customers and business.” GlobalData’s Neil Saunders reads the news as a “deep cleaning of Amazon’s corporate workforce,” noting the company has become more complex and layered over the years. He applauds the company for moving quickly in the face of rising costs affecting corporations across the board, yet he sees the restructuring as “a tipping point away from human capital to technological infrastructure.” Target To Eliminate 8% Of Corporate Jobs After Target announced plans last Thursday to eliminate 1,800 corporate jobs, including laying off 1,000 workers and closing 800 open job slots, pink slips went out on Tuesday to affected employees. Putting the blame on the usual suspects, in-coming CEO Michael Fiddelke wrote in a staff memo obtained by the Wall Street Journal, “The truth is, the complexity we’ve created over time has been holding us back. Too many layers and overlapping work have slowed decisions, making it harder to bring ideas to life.” It may be true that Target’s headquarters has become lethargic due to increased complexity in the corporate ranks, but the deeper truth is that Target has been hampered by 11 consecutive quarters of falling or weak comparable sales growth. While some of the blame for poor performance can be attributed to outside economic and competitive forces, that is likely not the largest part. Target’s controversial Pride Month offerings in 2023 sparked protests that turned off many culturally conservative shoppers. Then, earlier this year, the company decided to roll back its diversity, equity and inclusion program (DEI), which raised the ire of many other shoppers, who have since abandoned the retailer amid calls to boycott it. Placer.ai, which tracks retail foot traffic, reports Target’s footfall has declined every month since January, including a 7.6% drop in September. Since boycotts were called February 28, Target’s average daily foot traffic has been off by 4.1% from the previous year, while Walmart’s has risen 7.2% in the same time period. The direction of change at Target has hurt employee morale, particularly after its DEI reversal. A company-wide survey earlier this year found about 40% of the 260,000 employees surveyed said they didn’t have confidence in the company’s future. No retailer can be expected to pull out of a sales tailspin with such a high level of dissatisfaction in its ranks. Hoped-for change emerged when longtime CEO Brian Cornell announced his retirement and Target-lifer Michael Fiddelke, noted for his financial expertise, previous efficiency initiatives and an advocate of technology transformation, would replace him this coming February 1. However, Cornell, chiefly responsible for the company’s unravelling, won’t be exiting the company but will move up to executive chair of the board. GlobalData’s Saunders is dismayed by what’s going on at Target, calling for a need to change the corporate culture. “Leadership has been in seeming denial about many of the challenges and has not been nearly open enough about them with either staff or stakeholders,” he said. The culture challenges are likely to be further exacerbated by the layoff news. “The job cuts will dampen morale at a company where the mood is already somber. That in turn will raise a question in many minds: why does the CEO who presided over the mess Target is now in get elevated to the position of Chairman, when so many others will lose their roles?” Retail’s Restructuring The story of these two companies – Amazon and Target – collectively reveals shared problems in retail, including rising costs, increased complexity and customers abandoning previously favored status brands for alternatives. While retailers look to consumer-facing AI as a way to re-engage customers – Amazon’s Rufus and “Buy For Me” AI shopping assistant, Target’s AI-powered “Bullseye Gift Finder” and Walmart’s “Instant Checkout” on ChatGPT – it is also enabling retailers to cut the headquarters’ fat. AI can increasingly do much of the work faster and more effectively than people. “The discussion about AI taking jobs, or at least good jobs, is generally framed as tomorrow’s problem. However, there are some hints that AI may already be taking ‘knowledge worker’ jobs,” commented J.P. Morgan’s chief U.S. economist Michael Feroli in a white paper. Microsoft just published a study entitled “Working with AI: Measuring the Applicability of Generative AI to Occupations,” which found that office and administrative support, business and financial operations, management, and sales-related jobs are among the top occupations most at risk of being replaced by AI. Retailers are top-loaded by all of those functions. Despite the popular belief that AI has yet to make a significant impact on the job market, Challenger, Gray and Christmas’ most recent report challenges that idea. It found that AI ranked third among the reasons for corporate job cuts in September, behind closures and market conditions. Walmart CEO Doug McMillon sees it accurately and while Walmart hasn’t announced any layoffs, it is holding the line on adding new staff. “It’s very clear that AI is going to change literally every job,” he said during a workforce conference with executives from other companies hosted at the company’s Bentonville headquarters and reported by Wall Street Journal. “Maybe there’s a job in the world that AI won’t change, but I haven’t thought of it.” Regrettably, some 32,000 employees of Amazon and Target are going to learn it the hard way. Editorial StandardsReprints & Permissions
