BIRMINGHAM, Ala. (WIAT) — On Tuesday, 3.5% of Shipt employees in Birmingham were handed a pink slip.

While Shipt did not confirm the exact number of staff who have been let go, the company’s mass dismissal is a cause for concern.

Shipt released a statement saying in part that in an effort “to keep Shipt competitive and healthy, we ultimately made the difficult decision to eliminate select positions across the organization.”

Dr. Patrick Murphy from the Collat School of Business warns it may actually be more of a necessary adjustment.

”So if you are a company like Shipt, or any other technology venture, now’s the time when they have to get back to basics and look at the business fundamentals that really matter,” Dr. Murphy said. “And unfortunately, when you shift perspective that way, it typically comes with some retrenchment and layoffs and restructuring.”

Steve Ammons with the Birmingham Business Alliance sees the Shipt layoffs as more of a reaction to falling consumer confidence.

“Consumers are tightening their belts with interest rates rising. The consumer confidence is not as high wondering where the Fed is going with the rate next time. Are we going up another 50-basis points or not?” Ammons said. “So, they are being a little more conscious — That extra spending, that discretionary spending, maybe they are holding back a little bit and that’s where we are seeing a little bit of a pullback in our local economy.”

While both Ammons and Murphy predict more challenges ahead, they are confident that capable leaders will navigate the future successfully. In fact, Ammons sees lessons learned from the pandemic coming in handy once again.

“We saw over the pandemic how to pivot and how to do things, even in hard times, to make your business continue to work,” Ammons said. “And you are able to continue to figure out, what makes it work, how can you do better, what sector do you need to be in and long term, what’s going to make you profit.”

Dr. Murphy is betting on the talent of bright entrepreneurs to rise to the occasion, especially as Shipt is considered one of Birmingham’s brightest success stories.

”In times like this, we are talking about entering right now. This is when entrepreneurial activity thrives. It’s the entrepreneurial mindset that turns problems into opportunities,” Dr. Murphy said.

One great concern Ammons has is workforce participation. He says jobs remaining open and the inability to fill them is a challenge for businesses across the board.