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The online retail crisis is at an all time low

Like Ssense and The RealReal, Zalando is forced to cut back on employees

The online retail crisis is at an all time low Like Ssense and The RealReal, Zalando is forced to cut back on employees

Since the beginning of 2023, online fashion retailers have felt cornered by the post-pandemic crisis. After declaring profitable years between 2020 and 2021, German giant Zalando had to lay off hundreds of employees company-wide. The same fate befell Ssense, which laid off 138 in January, and TheRealReal, which in recent weeks has closed four stores and dismissed 230 employees. For the first time since the arrival of the Covid-19 virus, Zalando had to admit that it had bitten off more than it could chew, investing in a future without foundations that now seem on the verge of collapsing. «In recent years, parts of our company have expanded too much,» Zalando said in a press release, «we have added a degree of complexity to our organisation that has affected our ability to act quickly.» According to the Financial Times, the company is in the process of reducing its workforce by 5 per cent

The crisis hitting the retail world is not only targeting conventional clothing retailers such as Zalando, but also niche businesses such as Ssense, famous in the fashion industry as an online retail platform for independent brands. In an interview with BoF, the company explained that it had reduced its corporate population by 7% - a decision that had never been made before in Ssense's 20-year history - following a slowdown in e-commerce market growth and an uncertain economic climate. Ssense, too, has therefore felt the effects of the post-lockdown return to normal life, seemingly helplessly witnessing a recent turnaround in its customers' purchasing trends, which, according to a Harvard Business Review analysis, increased online purchases by more than 200% in 2020 (+217.3% in April). A prime example of this shift was Asos, which was forced to lay off 100 employees last October following the revelation of an operating loss of nearly £10 million in the summer of 2022. 

Among the reasons for retailers to cut staff numbers on a large scale is not only the post-pandemic economic downturn. Running a business like Zalando and TheRealReal requires costs that are increasing severely, especially with regard to logistics in warehouses. In the case of TheRealReal, the closure of four stores in America and the consequent dismissal of 230 employees came as a surprise to the company itself, which last year said it was certain to become profitable by 2024, but has lost more than 80% of its market value in recent months. During the first lockdowns, the world's population turned to the internet to fill their days, either by consuming digital content, or buying from sites like Zalando, TheRealReal and Ssense. But the vast amount of data exposing daily environmental disasters caused - among other factors - by fast fashion and extreme consumerism seems to have appealed to the collective conscience of consumers, who for the first time in years are turning their backs on the retail giants and forcing them to review their investments. Modern problems require modern solutions: to remain relevant in 2023, a new-generation strategic plan is needed