To furlough or not to furlough?
A wide majority of retailers underwent furloughs to preserve cash early in the pandemic as their stores faced mandatory closures even as others deemed essential stayed open and reaped the sales benefits.
Williams-Sonoma chose to continue paying associates rather than issue furloughs even as it closed its stores. The decision created a bond with staff resulting in an even stronger customer service attitude than existed before.
“You take care of your people and they do amazing things for you,” Laura Alber, president and CEO of Williams-Sonoma, said on her firm’s third-quarter conference call.
“I’ve never seen anything as powerful as that decision for our store associates,” she said. “You go into our stores now, it’s such a different experience than so many other places in the malls because of that relationship with them [associates] and how close we are with supporting each other.”
At Shoe Carnival, CEO Cliff Sifford said on his company’s third-quarter call, “We believe our continued strong performance in an incredibly volatile operating environment is the direct result of us putting our employees first and making a decision not to implement furloughs during the mandated shutdown.”
The move, he believes, enabled Shoe Carnival to “get our team members back to the store faster than nearly all our competitors” and allowed his buying team to quickly restock comfort footwear styles. Store associates were also “busy and engaged” inside closed locations, fulfilling a significant hike in online orders.
In the restaurant space, Bloomin Brands, the parent of Outback Steakhouse, Carrabba’s Italian Grill and Bonefish Grill, likewise found the decision not to furlough or lay off employees supported a quick reopening. Healthy retention and turnover levels also resulted from the move. David Deno, CEO, said on his firm’s third-quarter call, “As the in-restaurant dining came back, we were prepared and ready to go, and our team has been very grateful for what we’ve done.”
Other non-essential retailers reportedly avoiding furloughs amid mandated closures included Lululemon, Nike, Apple, Lego, Tiffany and Zara.
Many retail employees that were furloughed continued receiving insurance benefits from their companies plus an extra $600 weekly in unemployment through July as part of the CARES act.
- Williams-Sonoma (WSM) Q3 2020 Earnings Call Transcript – The Motley Fool
- Shoe Carnival, Inc. (SCVL) CEO Cliff Sifford on Q3 2020 Results (Earnings Call Transcript) – Seeking Alpha
- Shoe Carnival, Inc. (SCVL) CEO Cliff Sifford on Q2 2020 Results – Earnings Call Transcript – Seeking Alpha
- Shoe Carnival, Inc. (SCVL) CEO Cliff Sifford on Q1 2020 Results (Earnings Call Transcript) – Seeking Alpha
- Bloomin’ Brands (BLMN) Q3 2020 Earnings Call Transcript – The Motley Fool
- Bloomin’ Brands (BLMN) Q2 2020 Earnings Call Transcript – The Motley Fool
DISCUSSION QUESTIONS: What lessons should retailers take from the use of furloughs early in the pandemic, should lockdowns return? What would be your decision tree in determining whether or not to furlough large numbers of employees?