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Fab employees were told by the company’s human resources department not to come into the office for work today.
Stephen Lovekin / Getty Images for Mercedes-Benz Fashion Week
Anxiety gripped Fab employees on Wednesday after receiving an email, which was reviewed by BuzzFeed, from the company's human resources department department not to come into the office on Thursday and to await further instructions for one-on-one meetings.
After a year of turmoil filled with layoffs, executive departures, and what were seen to be missteps in company culture, it appears that the future of the e-commerce company is once again in doubt. According to two sources inside the company, the remaining staff will be going in to meet on an individual basis to discuss the future of the company.
Employees are currently speculating that tomorrow will signal another round of layoffs followed by yet another change of direction, these people said. Many expect to be laid off as the staff is reduced to a small workforce to sell off inventory as it transitions to a new business model, those people said.
As it turns out, they weren't far off. Fab is planning on laying off between 80 and 90 employees — or about one-third of the company's staff — in meetings tomorrow, according to a company spokesperson. The reductions are only for Fab's New York staff, who will receive interview training and one-on-one résumé coaching as part of the separation in the form of a job fair next month.
“We are parting ways with incredibly talented individuals for whom we have only great respect and appreciation,” a Fab spokesperson told BuzzFeed. “Realigning our team is part of a broader business plan, which we began implementing last Fall and which will continue to unfold in weeks ahead. We are seeing great success in our recent private label initiatives and customized furniture launches—and we are aligning our global team to support that direction. We have every confidence in our path ahead.”
As with the company's previous rounds of layoffs, the staff is likely headed to Barrow's Street Pub this evening for another happy hour and another sendoff.
Fab raised more than $300 million in venture capital and rode a wave of optimism among flash deal sites, but has had to change its direction several times as the market dynamic has changed rapidly in the past year. At one point, Fab was valued at more than $1 billion by investors.
The company had been seeking a new sustainable business model beyond flash sales, and in the past six months put great effort into launching its own line of sofas last week. The timeline for doing so was described as “unrealistic,” but the company apparently pulled it off and that launch now stands as a point of pride internally, according to two people familiar with the company's operations. Fab launched three private label collections at NYCxDesign last week, and began hosting its first showroom in New York.
Several of Fab's top executives, including its head of communications and chief operating officer, have all left the company amid three rounds of layoffs and rapid changes in business strategy, which has gone from flash sales to selling its own branded retail products.
Shoppers can hold up to five pieces of merchandise at U.S. stores until closing the next day without any obligation to make a purchase. The chains aim to close the gap between merchandise displayed online and what’s carried in stores.
As Americans visit the mall less and spend more time online, retailers are under intense pressure to close sales when they finally do get those valuable moments of face-time. More and more, that means closing the gap between merchandise displayed online and what's carried in stores — a relatively simple idea that's a big challenge to implement.
This month, Gap and Banana Republic started offering customers the ability to reserve items in stores from the web at about 900 U.S. locations, a project that it started work on last year. Customers could already use Gap and Banana Republic's websites to see what stores carried certain items, but now they can hold up to five pieces of merchandise at those locations until closing the next day, without any obligation to make a purchase. Gap and Banana say customers have made about 500,000 reservations so far.
Reserve in Store helps the customer “know it'll be worth her getting in the car and driving to the mall,” Josh Mahoney, vice president of product management for Gap's growth, innovation and digital division told BuzzFeed. Customers can essentially plan their visits from work or home and feel confident in what they'll be able to try on in stores, he said.
I reserved a denim shirt at a Gap near BuzzFeed's New York office to see how the system worked. The website initially guessed my zip code incorrectly but once I fixed that, it said the shirt was available at that store, then gave me the option of entering either my email or phone number for a reservation confirmation in an hour. (It noted the contact information would only be used for the request.) After 30 minutes, I got an email saying the shirt would be held for me until the store closed the following day — and sure enough, there it was.
The extra work tied to this new technology is part of the reason Gap recently decided to raise its minimum wage over the next two years, an announcement met with massive fanfare, including props from President Obama. Employees are expected to offer styling tips to customers when they walk in for reserved items — for example, suggesting a scarf or sandals to go with that shirt, or a pair of pants that might look good with it. After all, they have a sense of your taste and your size based on the products you reserved, and should be able to drive bigger transactions. They should also be aware, though, of whether customers are in a rush, or don't want to be marketed to, Mahoney said. The conversion rate on reserved items is “off the charts,” Gap CEO Glenn Murphy said last September, though the company declined to provide specifics beyond saying it's “really excited” about the numbers.
Gap, which doesn't offer the service at Old Navy, is “figuring out where to go next with this feature,” and plans to start testing ordering from stores at some Banana Republic locations in June, Mahoney said.
While many retailers now let customers see what's available in stores from the web, Reserve in Store is relatively rare. For example, Abercrombie's website lets customers find items in store but notes they can't reserve or hold merchandise. Nordstrom shows availability in various locations down to size and color but requires customers to buy online then pick up. And other retailers, like Macy's, which sells an enormous array of goods, doesn't share whether an item is available in a nearby store at all.
Gap's willingness to offer Reserve in Store adds a layer of risk, but one the retailer thinks is worth it. Let's say a customer wants to buy a small denim shirt at Gap, and the only one left in the store is the one I reserved — but I don't end up purchasing it once I try it on the next day. Gap will have lost the sale.
Mahoney brushed off the concern, though.
“I obviously can't speak for other retailers, but listening to our consumers, we've created an experience she likes that makes shopping easier for her,” he said.
This is the window that pops up after clicking “Reserve in Store.”
Customers can choose to get an email or text confirmation.