UPDATE: July 15, 2020: With regards to an employee petition calling for hazard pay and enhanced safety procedures, an REI spokesperson pointed Retail Dive to the retailer's health and safety standards, which are "based on CDC guidelines and publicly posted on our website." The company continues to educate employees on contact tracing at REI, and teams are balancing transparency and privacy, the spokesperson said.

Dive Brief:

• REI on Monday confirmed to Retail Dive that it laid off 400 retail employees last week, about 5% of its retail staff. The company furloughed 90% of retail employees on April 15, and that furlough period is set to end Wednesday.

• The store layoffs come on top of about 300 headquarters employees who were laid off in April "as a result of COVID-19 revenue impacts," a company spokesperson said. The company has about 13,000 employees.

• "As of July 6, nearly all REI stores are open in some capacity with a focus on health and safety standards for employees and customers, and we've been able to bring the majority of those employees back from furlough," a company spokesperson said.

Dive Insight:

REI, like most others in the retail space, was forced to shutter its stores for a significant period of time as the coronavirus pandemic swept through the U.S. The retailer initially closed stores on March 15, and began reopening some mid-May, but retail's reopening has not been smooth.

Even with stores opened back up to the public, retailers have to contend with a customer base that remains wary of enclosed spaces, and also work through differing regulations at the state level. Fitch Ratings said in April that sales could decline throughout the year, and might still be 10% below 2019 levels in 2021.

That has put pressure on the financials of most retailers, especially distressed ones, and forced many to make hard decisions about which bills to pay and where to make cuts. Marketing budgets were slashed, capital expenditures postponed or scaled back, and turnaround plans were put on pause. Payrolls were also on the chopping block, as many retailers furloughed store employees when closures stretched longer, and some announced layoffs.

Layoffs have not been consigned to small retailers, either. In addition to REI, Casper, Sephora, Gap and Tapestry, among others, have announced layoffs.  

According to The New York Times, REI CEO Eric Artz announced the store layoffs in an email to employees about a week ago, and cited uncertainty about what long-term impacts the pandemic would have on the business, and on the economy as a whole. The U.S. entered a recession in February, before the full effects of the pandemic were known. Talks of a second wave could mean that stores are forced to shutter again. Indeed, in some of the most impacted states, including Florida and Texas, retailers have already reclosed certain locations.

The layoffs preceded a call from employees demanding hazard pay increases and enhanced in-store safety procedures. A petition directed toward Artz called on the company to take action on a number of things, including rehiring REI employees that were "laid off or pressured to resign," creating a COVID-19 Action Committee and immediately notifying employees where positive COVID-19 cases have been determined.

"We are coming together as employees of the REI Co-op to present this list of demands. They are not unreasonable, and they are not presented in panic — they represent a sober and realistic response to the crisis in which we find ourselves," the petition read. "We expect the Co-op to acknowledge and grant these demands, and hold itself to a higher standard during these unprecedented times."