Everlane and Rent the Runway laid off retail workers, but how they communicate with employees will impact their ability to rehire post-crisis.

WHAT HAPPENED: As brands and retailers confront an unknown timeframe for stores to reopen, they have turned to layoffs even if they initially said they would continue to pay their retail employees.

WHY IT MATTERS

  • While layoffs and furloughs are necessary when revenue rapidly falls by double-digit percentages, brands need to communicate openly and honestly to minimize long-term damage. There is nothing for brands to gain from pretending everything is fine, and employees already know it’s not. But some brands have struggled to navigate these tough conversations: Everlane initially emailed its customers saying it would retain and pay retail employees during the shutdown and then later abruptly let over 200 retail and customer experience workers go. Only after coming under extreme criticism in the press (and from Bernie Sanders) did Everlane’s CEO share more info about why they made the decisions. For a brand predicated on “radical transparency,” Everlane’s handling of the situation will not age well.
  • Employees appreciate when these tough conversations are approached with compassion and empathy. Rent the Runway, for example, provided its laid-off employees with two months of healthcare and a guide on how to apply for unemployment benefits. For some employees, this may be the first time they’ve applied for unemployment and providing a guide along with a healthcare cushion shows its employees that it cares about their well being—instead of treating them like they’re disposable. While both Rent the Runway and Everlane were forced to take the same action, one will face more difficulty when it comes time to rehire its workforce.