Saks Global’s recent layoffs have reignited concerns that fashion retail may be bracing for a broader wave of job cuts—driven not just by inflation, but by new tariff pressures.
While circumstances have been challenging for most fashion retailers due to inflation and a consumer spending pullback, impending tariffs have added another thorn in their path. With many retailers reliant on manufacturing hubs such as Vietnam, China, and Bangladesh—all of which now face exorbitant tariffs—companies are already employing cost-cutting measures. Unfortunately, staff reductions are often part of the cost.
“These layoffs aren’t isolated incidents; they’re a strategic response to fundamental shifts in retail economics,” Nora Kleinewillinghoefer, partner in the consumer practice of Kearney, told Retail Brew via email.
Brett House, professor in the economics division at Columbia Business School, told Retail Brew via email that the “entire retail sector is coming under immense pressure.”
“Most retailers are likely to impose cost-cutting measures to protect margins and revenue amidst the damage being inflicted by the president,” he said. “These steps are likely to include staff reductions, more automation, and store closures.”
Although the possible layoffs may seem like a sign of deeper trouble, experts caution against seeing them as a full-scale industry retreat. In fact, most layoffs seem to be a precautionary measure on the part of retailers anticipating higher tariffs.
“The US economy entered 2025 in strong health; the probability of a recession was at its lowest point in three years,” House said. “The current round of layoffs we’re seeing in fashion retailers is being driven mainly by the misguided trade policies emanating from the White House.”
Lauren Beitelspacher, professor of marketing at Babson College, said via email that she believes layoffs are likely just a strategy to “appease” shareholders in order to reduce costs, and that there are other ways to address the current challenges.
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“They don’t want to reduce staffing and impact the customer experience if they can help it,” she said. “Rather, they will try to find other ways throughout the supply chain, like improving operational efficiencies, as a cost-saving strategy, before they start to lay off employees.”
Diversifying supply chains and nearshoring manufacturing to Mexico or other parts of Asia is another potential viable solution that many experts have strongly recommended if tariffs do go through.
“The most logical starting point for brands and retailers is to reassess supply chain strategy,” Brittany Steiger, principal analyst of retail and e-commerce at Mintel, previously told Retail Brew. “In most cases, this would involve forging relationships with new manufacturers in regions that may be less affected by tariffs than the ones they work with currently.”
But even if companies resort to staff reductions, it likely won’t impact all retailers in the same way. Kleinewillinghoefer cites internal Kearney research showing that “luxury brands have 30%–40% more pricing power to absorb costs than mid-tier retailers.”
While that doesn’t mean luxury retailers are immune to any damage, they just might have more time on their hands as many luxury consumers are not as price sensitive. According to Kleinwillinghoefer, a key tell of where the economy is headed will be when premium retailers start cutting staff.
“It signals deeper systemic pressures that will likely cascade throughout the industry by Q3 2025,” she said.