Rent the Runway, a popular clothing rental brand, laid off its entire retail staff via Zoom yesterday. The company, which primarily operates online, has brick and mortar locations in California, New York, Chicago, and Washington DC. All stores are currently closed due to the coronavirus pandemic, and the company is not sure when or if they will be able to reopen.
During a Zoom meeting with retail staff, a company executive said the business has been forced to “dramatically reassess” its current operations in order to sustain the business. “All teams at RTR are being impacted in some way today,” she added. “With the current uncertainty and continued government restrictions that are aimed to protect public health during this unprecedented pandemic, we have no visibility into when or if we will be able to reopen our stores. As a result of this, all retail roles are being eliminated. This was a heartbreaking decision.”
Employees say their email accounts were disabled shortly after the call, which lasted less than 30 minutes. Retail employees are receiving their final paycheck on or before April 3rd, and hourly employees are being paid for any shifts they had scheduled prior to March 31st, according to documents reviewed by The Verge. In addition, employees are receiving severance pay and two months of health insurance. The company also sent out an email with details on how to apply for unemployment.
Rent the Runway already contacted customers earlier this month to address coronavirus concerns. “First, according to Harvard Health, there is currently no evidence that COVID-19 can be transmitted from soft surfaces like fabric or carpet to humans,” the email reads. “In addition, our cleaning agents and practices are designed to kill viruses such as the common cold and flu. While scientific information is still developing, we have no reason to believe that our processes are ineffective against COVID-19.”
In September, Jason Del Rey at Recode reported that the company was experiencing significant last minute delays on orders, resulting in hundreds of angry customers. Jennifer Hyman, the CEO, said the issue was the result of the company upgrading its warehouse system. In the immediate aftermath, it had to stop accepting new customers. By October, the operation appeared to be back on its feet.
But the coronavirus pandemic has dramatically reshaped the economy. State governments have asked non-essential businesses in California and New York to stay closed to stop the spread of the virus, and business owners are being forced to make tough decisions.
For companies like Rent the Runway that operate mostly online, closing retail locations is likely a necessary choice. “Rent the Runway has always been like a little too good to be true,” a former retail worker told The Verge. “We’re not selling anything, there’s not a lot to do in the store.” She asked to remain anonymous because her severance was conditioned on signing a non-disparagement agreement.
In a statement to The Verge, a Rent the Runway spokesperson said “We are striving to make this transition as seamless as possible for our employees, from compensation to continuation of health insurance coverage. While we don’t have a sense of how long our business will be impacted, we remain committed to serving and supporting our employees and customers during this challenging time.”