Popular online retailer, The Iconic, defends recent job cuts as a sign of growth despite industry wide concerns over the health of the retail sector.
Co-founder Adam Jacobs told the Financial Review Sunday the company’s balance sheet and a recent round of job cuts, saying that the cuts reflect the business shifting from start-up to a more established phase.
“Last year we invested heavily in market entry. Our focus was on growth. And we experienced hyper-growth and that was great for us – it was a validation of our business model,” Jacobs said of the company’s initial $14 million losses.
Laying off close to 10% of its 300 employees in recent weeks Jacobs says come with the development of the business.
“We’ve now moved into the next phase that, again, any startup would go through, and that’s making sure our cost base is on line for ongoing success.”
According to the Financial Review Sunday retailing is the most protracted in 25 years, at least for traditional bricks and mortar stores which have been battling a high Australian dollar and fierce online competition.
As the popularity of online shopping amongst Australian’s continues to grow, Myer chief executive Bernie Brookes says the retail sector is enduring some of the toughest conditions he‘s ever seen.
“We’ve seen something like 2200 retail businesses close in the last 14 months – everything from Wow Sight and Sound to Borders.
So, there’s no doubt there is a transformation underway in retail – a rationalisation. There’s a bit of a survival of the fittest,” said Brookes.
While e-retailers are predicted to continue to flourish, expects agree that they will need to improve profitability to remain sustainable.
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