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Employment-related concerns for retailers when sales slump

It appears that retail sales have slumped a bit here in Texas as of late. 

An index measuring retail activity was at a negative level, -3.1, in the state in March, according to Dallas' Federal Reserve Bank. This indicates contracting retail sales. This is the second month in a row the state has had a negative level in this index, as the index was at -5.1 in February. 

It's been around five years since the last time this index showed negative levels in the state for two consecutive months. What do you think is behind this retail sales downturn?

Retail sales levels can obviously have very big financial impacts on retailers. Sales slumps can make many things more difficult for a retailer, including growth. The retail sales drop is one of the things that is believed to be contributing to a recent slowdown in the expansion of the overall private service-providing sector in Texas.

When retailers are facing financial challenges, such as difficulties related to reduced sales, one thing they may have to look into is trimming their employment-related costs. Examples of potential employment-related cost-cutting measures a poor financial environment may cause a business to have to consider include reducing pay or benefits or lowering staffing (through things like hour reductions or cutting employees). When considering employment-related cost-cutting measures, it can be very important for businesses to make sure the measures considered wouldn't run afoul of the terms of the employment contracts they have with their employees or create other legal troubles. If an intended cost-cutting measure ends up leading to litigation, it could end up weakening a retailer's overall financial position rather than strengthening it.

Experienced business lawyers can help companies that are considering employment-related measures in response to tough financial times with determining if there are any litigation risks connected to the measures they are considering and what they could do to lower the likelihood of litigation.

As a note, despite the recent sales slump, optimism among retailers in Texas actually went up in March, according to the Federal Reserve numbers. One wonders if the retail sales index will return back to a positive level in the state in the near future.

Source: Austin American-Statesman, "Texas retail sales fall again, slowing service sector growth," Dan Zehr, March 29, 2016

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