The coronavirus outbreak has triggered an unprecedented number of collective layoffs. In North America, Under Armour (6,700), Sephora (3,000), GE (2,500), Air Canada (5,100) and Cirque du Soleil (4,450) are just a few of the many companies engaging in layoffs. In Europe, major airlines are announcing the collective layoff – albeit sometimes temporary – of up to 80%-90% of their workforce. This includes Norwegian Airlines (7,300), Scandinavian Airlines (10,000) and Air France-KLM (32,000, out of which 2,000 in the Dutch subsidiary).
These moves raise legitimate concerns about the impact of collective layoffs not only on employee morale but also on firms’ brands and commercial operations. Therefore, the American Marketing Association (AMA) has just selected a recent paper by MTI²’s founder, prof. dr. Stefan Stremersch on the commercial consequences of collective layoffs into its prestigious “Scholarly Insights series”. Through its scholarly Insights series, the editors of AMA’s journals such as the Journal of Marketing and the Journal of Marketing Research curate articles they deem relevant for practitioners.
Through its scholarly Insights series, the editors of the AMA's journals such as the Journal of Marketing and the Journal of Marketing Research curate articles they deem relevant for practitioners. The paper, coauthored with prof. dr. Vardit Landsman from the Erasmus University Rotterdam and published in AMA’s flagship journal (Journal of Marketing) in February 2020, shows that collective layoffs can hurt sales and advertising effectiveness while increasing price sensitivity.