February 10, 2011

Powell’s Layoffs


Powell’s, the largest independent new and used bookstore in the world, announced via press release (PDF) Tuesday that it would lay off 31 employees. The layoffs affect only unionized employees; no corporate/management jobs were axed. According to the release, the cuts were made due to changes in “consumer behavior,” which

has changed dramatically over the past several years. It’s a story that’s hard to miss with daily articles about the book industry, the future of physical bookstores, and the rise of eBooks. As technology evolves, Powell’s expects consumer reading behavior to continue to change as new options and formats for reading develop and improve over time.

The cuts — which affect employees at retail locations in Portland and Beaverton and in the company’s warehouses — were announced by Emily Powell, who said, “I feel it is critical to make some very difficult adjustments at this time, to address our current reality and to prepare the company for success in the future, a future that looks very different than our business today.”

A report in The Oregonian by Laura Gunderson quotes union rep Ryan Van Winkle saying that the layoffs represent more than 7 percent off staff, not counting management and security guards. The laid-off workers were predominantly full-time and most were retail sales staff. About 25 percent worked in technical operations on the store’s website. It was the first round of layoffs since the workers formed an union in 2000.

In an internal e-mail memo distributed to employees and posted on the Portland Mercury site, the company notes that

Sales for this fiscal year are down and we expect this trend will continue. The largest decreases have been in new book sales. We see this as a clear indication that we are losing sales to electronic books and reading devices. Given the company’s declining sales, combined with industry data on the rapid growth of electronic book sales, we expect to see continuing erosion of new book sales over the next few years. While we believe we can compensate for some of the loss with solid used book sales and growth in gift sales, the erosion of new book sales will continue to take its toll.

The memo further points out that Powell’s will reduce benefits to non-union employees by initiating a pay freeze on July 1, and suspending the company’s 401(k) contributions effective Feb. 21st–both for at least a year. Employees who are members of the union will receive complete pay and benefits, the company said. While those cuts should be enough to offset the current fiscal year’s sales decline, further drop in sales would mean more cuts.