Nike to cut about 2% jobs to lower costs as demand weakens | Reuters
Nike, the renowned sportswear giant, is set to trim its workforce by about 2%, equating to over 1,600 jobs, in response to dwindling demand for its shoes and sneakers. This decision is part of a larger effort to reduce expenses amidst challenges posed by higher rental and interest rates, which have prompted consumers to scale back on spending for high-priced items. Nike’s cost-saving strategy, outlined in December, aims to achieve $2 billion in savings over the next three years through measures like supply chain adjustments and streamlining management.
According to GlobalData managing director Neil Saunders, these job cuts are a proactive measure by Nike to address concerns that demand may further weaken. The company faces competition not only from established players like Adidas but also from newer brands such as Decker Outdoors’ Hoka and On Holding, which have been gaining traction among customers seeking trendy and innovative footwear options. To counter this, Nike intends to focus more on areas like running to reclaim market share, necessitating a balancing act between investments and cost reductions.
The anticipated layoffs, as reported by The Wall Street Journal, are expected to commence promptly, with a second phase slated for completion by the end of the current quarter. However, these cuts are not projected to affect employees in retail stores, distribution centers, or the innovation team. Despite this strategic move, Nike’s shares took a hit, declining by 4% following a downgrade by brokerage Oppenheimer, citing concerns about inconsistent consumer demand in the coming quarters……….
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Rising Dough
How might fluctuations in consumer demand impact a company’s strategic decisions regarding workforce management and market expansion efforts?
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In the case of consumer demand, an organization might decide to lay off workers or otherwise if they are not getting as much sales as they should. They may also stave off continuing to expand at a mass level if they feel that their strategy is not up to the demand of their consumer base. There are many reactions an organization may have based on the simple needs of supply and demand.
When it comes to consumer demand it all depends on how many people buy it and reviews on it because if less people buy a product the cost gets lower and if it gets to the point where no one buys it or anything it gets hard for the company because workers get laid off and it could even get to the point where the business gets shut down. So it is never up to the company how well a product does but it always depends on how well the product sells and how much consumers are willing to pay for the product.
Laying off workers could cause more revenue or it could decrease it because less people are working which could cause less production.