Apparel and accessory rental service Rent the Runway, once a beacon of hope for the evolution of retail, has seen its bright light fade in recent months.
With the spread of the coronavirus, brick-and-mortar has virtually ground to a halt. While e-commerce channels are working overtime to pick up the slack—and finding some success—rental models, which rely on sophisticated fulfillment solutions requiring extensive physical handling, are faltering.
In a world racked by a highly transmissible contagion, the idea of donning garments recently worn by strangers is likely losing its appeal amid heightened coronavirus anxiety. Even with RTR’s seasoned dry cleaning and sanitation infrastructure, fear could very well win out over the desire to have an endless selection of outfit options.
And compounding the conundrum, many couch-bound consumers have little need for a rotation of stylish new clothes. Like a tree falling in an empty forest, a new Loeffler Randall blouse doesn’t elicit compliments when worn in a vacant home office, though some customers had traded down to renting athleisure styles.
An April consumer questionnaire shows that RTR’s marketing team was hoping to get to the bottom of what subscribers were looking for amid pandemic uncertainty. “How are you feeling about the current COVID-19 situation?” and “What is your current work situation?” gave way to more pointed questions like, “Are you considering pausing or canceling your membership for next month?”
The company also queried members about whether they’d like to see more perks and benefits—rewards for staying with the brand during this “challenging time”—now, or in the future.
The questions seemed to skirt one pivotal ask: are apparel rentals still relevant to your life, or have we lost you?
RTR has tried to engender goodwill by curating a Work From Home edit with comfy, casual essentials and Zoom-worthy blouses. The company has also made attempts to connect with its base through weekly Rental Recess emails, meant to serve as pandemic pick-me-ups. The correspondence spotlights company news and promotions, as well as feel-good content gathered from around the web.
And, jumping on the PPE bandwagon, RTR has mobilized its operations to create non-medical-grade reusable face masks. With support from other factories in New York, the company has committed to donate a five-pack of the face coverings to charity for every pack sold.
But the cracks—which first appeared last fall amid a massive software malfunction that upended the company’s operations, causing widespread outrage among members—are continuing to deepen.
The company furloughed more than one-third of its corporate employees in late March, as the virus took hold across the country, Business Insider reported on April 25. RTR also laid off “less than ten percent” of its overall staff, including associates from all five of its stores.
A HuffPost story published Wednesday detailed the harrowing experiences of RTR workers at the company’s New Jersey warehouse, questioning the company’s drive to stay open through the coronavirus crisis and fulfill orders even though non-essential businesses in the state have been ordered to close.
A group of employees, fearful of contracting the virus at work, reported the company to New Jersey’s state authorities in early April. They asserted that RTR had taken advantage of a loophole in the executive order, which exempts fulfillment center operations. According to HuffPost, the provision was intended to ensure that warehouses aiding in the distribution of necessities can stay open. However, any discretionary retailers’ fulfillment center operations remaining operational while stores are shut down.
One employee interviewed by HuffPost said she was sent home after just two hours on the job one day last month because there were so few orders to fulfill. RTR has put workers in the impossible position of prioritizing their livelihood over their health, she claimed, charging that the company has not offered hazard pay, and those who stay home won’t be paid at all.
Workers who have made the decision to stay home have gone unpaid for weeks, according to reporting by HuffPost, which pointed out that millions of laid-off and furloughed employees across the country are able to collect unemployment. However, laws governing New Jersey stipulate that workers whose hours are drying up, thanks to the pandemic’s impact on demand and business operations, are eligible to collect state benefits. Texas, where RTR’s other distribution center is located, has similar labor laws, which note that workers given reduced hours due to COVID-19 “probably” qualify for unemployment benefits.
An April 17 memo from the Department of Homeland Security’s Cybersecurity & Infrastructure Security Agency designates transportation and logistics employees under the “essential worker” umbrella. That includes workers employed by firms “providing services, supplies, and equipment that enable warehouse and operations, including cooling, storing, packaging, and distributing products for wholesale or retail sale or use, including cold- and frozen-chain logistics for food and critical biologic products.” The designation has allowed the majority of discretionary retailers to continue e-commerce operations, largely based out of fulfillment and distribution centers, while the pandemic has kept brick-and-mortar stores—and their lion’s share of revenue—out of commission, a fact co-founding CEO Jenn Hyman cited in her defense of the company she helped launch.
On Friday, RTR responded to HuffPost’s allegations, publishing an open letter from Hyman on the rental firm’s blog, The Shift. The executive addressed the allegations made in the HuffPost article, refuting claims that the company acted irresponsibly in keeping operations open and did not provide enough support to its workforce.
“The COVID-19 pandemic has challenged us all in ways we’d never imagined,” Hyman wrote. “An already incredibly difficult situation has been made more challenging by recent media coverage that, unfortunately, relies on inaccuracies to paint a picture of a company I don’t recognize.”
In the letter and a corresponding blog post, RTR said it was well within legal bounds to keep its fulfillment centers open, in accordance with both New Jersey and Texas executive orders.
The blog post also said warehouse employees were given the option of staying home and using their paid vacation or short-term disability benefits. “Each associate has a minimum of 10 days of paid vacation per year with days increasing by tenure, 5 days of paid personal sick leave and another 10 days of paid family care leave,” the company wrote, adding that all time-off requests have been approved, and 80 percent of warehouse associates have utilized these paid benefits since the outbreak started.
Warehouse workers in “certain circumstances” were eligible under expanded unemployment rules for benefits under state and federal programs, RTR added. And, on Friday, the company enacted a new policy allowing associates to undergo voluntary furloughs for the purpose of seeking unemployment—a measure that will remain in effect until the end of June. Those who opt to do so will retain their healthcare benefits during this time.
“The effects of COVID-19 have forced us all to make decisions we never could have contemplated even a few months ago, and in this short period of time, we’ve found ourselves having to choose between a series of terrible options,” Hyman wrote, adding that the company’s decisions in recent weeks had been among the most difficult of her career.
“I fully recognize that our actions have had unintended consequences, and I am heartbroken that some of our warehouse associates are struggling right now as a result of the decisions we made,” she wrote.
Amid the tumult, one of the company’s most senior leaders and champions, president Maureen Sullivan, has made her exit.
Business Insider reported on April 30 that Sullivan had been transitioning out of the role for six months prior to officially stepping down. The departure of one of RTR’s most prominent architects, who said she would take some time off before plotting her next move, seems an ill-timed loss.
“I am honored to have had a part in helping to build a company that has forever changed how people think about getting dressed and even more importantly, has created a new model of dynamic ownership,” she told the outlet. “Rent the Runway is a one-of-a-kind company with an incredibly exciting future ahead. I will always remain Rent The Runway’s No. 1 champion.”
Additional reporting by Jessica Binns.