With the unemployment rate at a threatening 8.6% nationally,
consumers have still managed to turn out in the usual drones to fill malls and
shopping centers this holiday season.
The National Retail Federation has reported an upgrade in their holiday
forecast sales figures to rise 3.8% to a staggering $469.1 billion. A promising retail season always alludes to resurgence
in both the economy and employment, but this may not be the case.
Retailers are reporting strong sales figures across the
board, though luring holiday shoppers with the motivation of deep price cuts
will take a nasty toll on end of year margins.
There is always a mix of trend setting new merchandise flowing off of
the shelves for the holiday season, but retails typically use this peak period
of consumerism to flush old inventory out of warehouses and prepare to run
skinny for their end of year audits. By
making margin concessions to incentivize discount retailers to take large bulk
orders for out of season product, the annual averaged margin will ultimately be
the one to take a beating. With the top
line shrinking at the end of the year, retailers and wholesalers alike take a
scrutinized approach to opportunities existing within their cost structure and bottom
line makeup.
A very real and always apparent cost cutting strategy at the
beginning of each fiscal year is for companies to turn to layoffs to “trim the
fat”. Little do they know that they
might not be cutting fat, but be cutting out the muscle and lifeblood of their
organization. Layoffs within any
organization effect more than the employees turning in their badges. An office environment that is already
enduring certain amounts of stress from financial shortcomings could experience
an ever greater amount of stress and anxiety from their existing
workforce. With the threat of
termination now looming above their heads, employee moral can take a sudden and
drastic turn.
Employers do have to make the hard decision when cuts need
to be made, but it shouldn’t be at the detriment of their staff. An easily effected area that so many
companies fail to examine is the relationships that they have with external
parties. Companies are too quick to
reach into their own pockets to look for holes when services they receive on a
daily level may be overpriced and unexamined for decades. A simple renegotiation of terms or use of
market professionals to re-examine supply chain costs can account for massive
savings and subsequently eliminate the need to turn to layoffs, and set the
stage for long term profitability.
Decreasing margins do have marked effects on any companies overall
profitability, but it is the responsibility of business executives to honor the
loyalty of their employee base and examine cost savings potential that might be
right under their noses.
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