Costco, one of the world’s largest retailers, is cutting ties with the contracting company that handled its in-store samples because of decreased foot traffic due to the coronavirus outbreak, according to an internal memo obtained by BuzzFeed News.
On Monday, Costco notified its warehouse managers that it would no longer employ contractors with San Diego–based Club Demonstration Services to clean its warehouses and would shift those responsibilities to its own employees.
A few days later, CDS confirmed that it was ceasing operations, effective April 6, resulting in thousands of people losing their jobs.
Earlier this month, Costco shifted some CDS contractors, who typically prepare and present single-serving food and drink samples, into roles cleaning facilities so that they could keep their jobs.
“Over the past 4 weeks you have all partnered with our CDS teams to increase warehouse sanitation for our members and employees,” Ron Vachris, Costco’s chief operating officer, wrote on March 30. “As our traffic in the warehouses has slowed due to various state directives, we will assume these duties with Costco employees effective April 6th.”
Vachris assured managers that the company would resume in-store samples “as soon as possible,” describing the service as “part of our DNA.”
Sources told BuzzFeed News that CDS was laying off all of its employees that work with Costco by Sunday. CDS did not return a request for comment. Costco declined to comment.
Costco’s shift is just the latest example in the changing labor environment as corporations attempt to deal with the economic realities presented by the novel coronavirus. Even Costco, which initially experienced a surge in business as shoppers flocked to its stores to stock up and prepare, has shown it's not immune.
Got a tip? Email one of the reporters of this story at Brianna.Sacks@buzzfeed.com or Ryan.Mac@buzzfeed.com, or contact us here.
"Nobody knows when or if the company will ever come back," a 19-year-old former CDS employee in California told BuzzFeed News in an email Thursday night. "They are giving us pretty much no information except 'thanks for the help, bye!' We deserved more than that. Also we deserved more of a job security than what they gave us, only a few days warning."
Costco shut down sample service last month, according to a previous internal memo obtained by BuzzFeed News. The company continued to partner with CDS, which reportedly employed about 30,000 people at hundreds of Costco warehouses, for cleaning and sanitation. Business Insider had also reported on the change in their roles.
Monday’s note gave no timeline as to when Costco would begin its relationship with CDS again. Vachis noted that the contracting company would be working with its employees to ensure they obtained state and federal assistance.
“CDS will offer all employees their current position and current pay status when we resume,” he said.
Current Costco employees previously told BuzzFeed News that the CDS workers were on “sanitization teams” and were tasked with wiping down shopping areas and other “grunt work.” Four Costco employees from warehouses across the country worried about their CDS colleagues doing that type of labor because many were elderly and seen as “high risk” for contracting COVID-19, the disease caused by the coronavirus.
“They had the worst job, always cleaning,” a supervisor at a Costco Warehouse in Oregon told BuzzFeed News. “Most were in their seventies.”
A manager in New Jersey said his warehouse was going to try and hire some of the 20 or so fired CDS workers, as some of the contractors had been working in that store for nearly 20 years.
“My boss told me these ladies have been with us, let’s figure this out, and hire them back as seasonal employees,” the manager said. “Our heart is broken, but anyone that stood with us this far we will try and keep. I also heard the same response from several general managers in my area.”