The high-end clothing rental startup Rent the Runway has said it will permanently close all of its physical stores and will operate online only after laying off its entire retail staff in the midst of the coronavirus pandemic.
Rent the Runway will shutter its stores in Chicago, Los Angeles, San Francisco and Washington DC, and convert the New York City location to a permanent drop-off site, the company told CNBC on Friday.
‘This has been an evolution over the past two to three years,’ Anushka Salinas, Rent the Runway president and COO, told the outlet.
‘We always knew we wanted and will continue to have a physical presence strategy. What we know now is the physical presence strategy is about drop boxes,’ she said.
Rent the Runway’s West Coast flagship store in San Francisco is seen on opening day last year. The company is now closing all five of its physical stores
Rent the Runway co-founder and CEO Jenn Hyman (above) recently told the Wall Street Journal that she was hopeful business will bounce back after the pandemic
It comes as many retailers move to permanently close physical locations, particularly those in major cities that have suffered under months of harsh lockdowns with no end in sight.
J.C. Penney and Neiman Marcus, the anchor tenants at two of the largest malls in Manhattan, recently filed for bankruptcy and announced that they would shutter those locations.
Microsoft in late June announced plans to permanently close its 83 retail locations, and Kate Spade and Coach owner Tapestry said this week they are planning a wave of closures.
Rent the Runway, which had raised $541 million in venture capital funding, was forced to cut costs early in the pandemic, laying off all of its retail staff.
The company declined to say how many workers were laid off, but said that costs had been cut by 51 percent
However, the company’s online arm was deemed ‘essential’ because it shipped fashionable clothes to remote office workers for Zoom meetings, and warehouse employees complained about being asked to work in the pandemic.
The Rent the Runway DC store is seen on its opening in 2014.The company was forced to cut costs early in the pandemic, laying off all of its retail staff
A photo obtained by the Huffington Post shows a packed Rent the Runway warehouse break room full of staff sitting side by side without gloves or masks on March 19
Its warehouses were kept open under New Jersey’s and Texas ‘s executive orders around essential businesses, meaning staff who turned down work might not have been eligible for unemployment benefits.
Dozens of employees complained to the Huffington Post about crowded and unsanitary conditions.
‘They don’t care about us,’ one worker, Sofia, told the outlet. ‘We come from other countries, but we have rights. They have to treat us like human beings.’
The company, on its press page, touts another Huffington Post article gushing that 71 percent of its employees are non-white.
Rent The Runway told DailyMail.com the company was not operating through a loophole but had continued to keep its warehouses open in compliance with the executive orders in Texas and New Jersey.
The company said it began implementing social distancing and other measures to protect staff mid-March, in line with CDC guidelines and state and local laws.
Anushka Salinas (right), Rent the Runway president and COO, is seen attending the Benefit for Grace Outreach: Helping Women and Giving Them a Second Chance benefit in 2017
Rent the Runway works by sending designer clothing to a membership of women, who rent the garments for a limited time before sending them back to warehouses where they are cleaned and inspected by staff and sent to the next customer.
The company has encouraged its members to maintain their subscriptions, and Salinas, the COO, told CNBC that the company had not seen a steep drop-off.
‘The vast majority of our subscribers didn’t cancel their accounts,’ Salinas said. ‘They put them on hold or just kept items at home. … That tells me there is optimism.’
Rent the Runway co-founder and CEO Jenn Hyman recently told the Wall Street Journal that she was hopeful business will bounce back, and said the company would come out of the pandemic stronger than ever.
‘We repositioned the company financially and structurally to benefit coming out of the pandemic,’ Hyman said in the interview. ‘We don’t need people to go back to work. We just need people to leave their home.’