Stitch Fix finds California stylists too pricey
In a cost-saving move, Stitch Fix is laying off approximately 1,400 California-based personal stylists, or about 18 percent of its workforce, and replacing them with stylists living in lower-cost cities.
The company contemplated the move for over a year.
In a recording to employees obtained by Modern Retail, Minesh Shah, VP of operations, said California was becoming more “expensive and complex” to operate in. He said, “As we scale and as we grow, it makes less financial sense for us to have such a large presence here.”
Of the company’s approximately 8,000 employees, 5,100 are stylists. With help from artificial intelligence, stylists select items for customers each month as part of the subscription service.
Stitch Fix will do most of the layoffs in September. In July and extending into next year, the company will hire about 2,000 stylists in lower-cost cities, such as Pittsburgh, Cleveland and Dallas.
Stylists affected can relocate and stay with the San Francisco-based company, although Katrina Lake, CEO, acknowledged Monday on Stitch Fix’s quarterly call that many won’t because the position is a part-time role.
“We want to continue to invest in our stylists,” said Ms. Lake. “The reality was as we look at kind of our aggressive goals, we’ve made a decision that was a hard one, the one that we needed to make.”
She called stylists a “differentiated part of our model, especially today. And as we’re thinking about being truly, a replacement for going into stores, I think that higher touch, that high empathy model is really, really valuable.”
In May, Facebook caused a stir by announcing that employees choosing to permanently work remotely will receive salary cuts if they move to less expensive areas. The decision has sparked a debate on whether corporations should look to pay remote workers based on their location.
A survey of about 1,800 San Francisco Bay Area workers from Blind found 35 percent would consider relocating even if they had to take a pay cut. Of those, 40 percent would only accept a decrease of less than 10 percent.
- Stitch Fix to Lay off About 1,400 Employees in California – The Wall Street Journal
- Stitch Fix considered moving stylist jobs away from California for over a year, according to leaked audio – Modern Retail
- Stitch Fix Announces Third Quarter Fiscal Year 2020 Financial Results – Stitch Fix
- Stitch Fix Inc. Q3 2020 Earnings Call Transcript – The Motley Fool
- Stitch Fix considered moving stylist jobs away from California for over a year, according to leaked audio – Glossy
- SF’s Stitch Fix to lay off 1,400 in California – San Francisco Chronicle
- Stitch Fix to Lay off About 1,400 Employees in California – The Washington Post
- Facebook employees could receive pay cuts as they continue to work from home – USA Today
- Why localized compensation in a work-anywhere world isn’t so simple – TechCrunch
- One-third of Bay Area tech workers say they’d consider leaving if they could permanently work remotely — even if it meant a pay cut – Business Insider
- Mark Zuckerberg Says Facebook Employees Who Move Out of Big Cities to Work Remotely May See Pay Cut – People
DISCUSSION QUESTIONS: Do you see more pros than cons in Stitch Fix’s shift to employ personal stylists from lower-cost areas? Does paying remote workers based on local cost of living make sense for both workers and companies?