Klarna lays off 10% of its staff amid dwindling consumer confidence
Swedish bank Klarna has laid off 10% of its staff amid regulation crackdowns and falling consumer confidence.
Klarna has struggled in 2022
Klarna’s chief exec Sebastian Siemiatkowski has informed his 6,500 workforce that the war in Ukraine and global inflation have begun to bite and forced the company to rethink its aggressive expansion plans.
“When we set our business plans for 2022 in the autumn of last year, it was a very different world than the one we are in today. Since then, we have seen a tragic and unnecessary war in Ukraine unfold, a shift in consumer sentiment, a steep increase in inflation, a highly volatile stock market and a likely recession,” Siemiatkowski said.
Over the past two years, Klarna entered 10 new markets, added a slew of financial products including a credit card, and acquired businesses including Price Runner and Piggy. But the rapid growth plans left Klarna shouldering $470m in losses in Q4 2021, and last week The Wall Street Journal reported that Klarna risked losing one-third of last year’s $46bn valuation.
Klarna has previously told The Drum how the brand wants to move out of the buy now, pay later category and prove itself as a global retail bank with multiple product offerings.
Consumer confidence in the ballooning buy now, pay later category has taken a hit recently with the UK government considering tougher rules. Klarna’s decision to report new transactions to credit rating agencies could also seriously affect consumer choice to use its products.
Klarna couldn’t confirm how many marketing roles would be affected by the redundancies, but the news opens questions about future marketing budgets. Marketing and brand building is a major part of Klarna’s business. The company has tapped the likes of Snoop Dogg and A$AP Rocky for campaigns, sponsored events such as Mighty Hoopla festival and created award-winning out-of-home (OOH) campaigns.
Klarna’s creative is largely managed in-house, but it has MediaCom as its global media agency.
In his note to staff, Siemiatkowski reaffirmed Klarna’s “strong position in the market” and said its diversification “distinguishes” Klarna from the competition. He added: “I do remain relentlessly optimistic about Klarna’s future, despite what we now need to go through.”