Shinola Planning to Outsource Some of Its Operations amid Fierce Competition in Retail

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The company laying off employees and externalizing the process

The Detroit based luxury goods retailer Shinola, who known to employ the original natives of Detroit is lying off nine employees. This comes in the backdrop of the on-going plan to outsource some of its operations. In a statement to the press, the company has informed that they are letting go of 9 of these employees and externalizing the process of leather design and product development. The recent decisions are made to remain competitive in the fast-changing retail landscape.

Matthew Roling, Interim Chair of the Accounting Department at Wayne State Mike Ilitich School of Business said, “Shinola is discovering how expensive it is to create their high-end watches. It all comes down to whether or not the perception of the consumer will survive the maturation of the company as they try to size the cost structure.”

The company to reposition itself as a luxury brand

He also said, “There’s a reason that most of our retail goods are made in the developing world and labor is a lot less expensive. I think they have found it very difficult to make those products here in the US and make a profit.” The plan is to outsource the leather design and product development that can bring in profit while not compromising with the quality of its leather product.

Roling also mentioned that the company really tried to position itself as a luxury brand. Shinola had produced many watches that were profitable but most of its products are high on the price tag. The company will keep the production of straps for watches with itself and will not hamper the watch strap factory.



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