No Speeches Today. Just Information

First, Happy Mother’s Day!! It’s a shame that all mothers and children cannot spend it together this year, but what is in your hearts matters more in the end anyway.

In my continuing crusade to establish a more cooperative, productive, fair and profitable relationship amongst brands and their retail partners, last week I organized and moderated what I believe was an unprecedented video discussion. The CEOs, CMOs, Presidents and buyers of all the major retailers in the better contemporary, designer and luxury space participated. The purpose of this was to garner from them what they are anticipating the future will look like, and what they will be looking for in terms of delivery dates, product and quantities. I wanted to begin a dialogue that should and must continue. Guidance for everyone now is critical. The goals are many and leadership is essential. It’s imperative that brands and retailers recoup the losses that have been and still are accumulating in the fashion/consumer goods industries, establish a more realistic calendar, alleviate the dilution that being over-inventoried helps to create, and to ultimately devise a better and smarter partnership and path forward in order to achieve these objectives.

Everyone whom I invited attended and participated. On the leadership side, attendees were Marc Metric, Pete Nordstrom, Geoffroy Van Raemdonck, Darcy Penick, Elyse Walker, Jyothi Rao and Tony Spring. From Hilldun, I along with Cris Wassner, Josh Kapelman, Tim Moore and Grace Ree were on the call. All the participants willingly engaged in this discussion. As I said, I hope to continue this dialogue that we began on Tuesday, and with a bit of luck and hard work, create a more engaging and collaborative environment between buyers and sellers, going forward.

The global pandemic has broken the cycle of showing, buying and selling that has prevailed for so many years. There WILL be positive outcomes due to these awful circumstances. The areas that everyone agreed upon are those that will reshape the industry.

Knowing full well that clear and precise answers are not possible yet as we work our way through the crisis, much of what I’ve been relating to you over the past weeks is aligned with the retailer’s thoughts and intentions. Everyone wants to extend the shelf life of the merchandise they buy, but currently consumer demand does not match the receipt of goods. Fall receipts of goods should reflow in order to achieve the proper cadences. The seasonal terminology as we now know it has changed and in many respects is meaningless to the consumer. The timing and content of the deliveries is more critical. Seasonless was a word frequently used during this dialogue. Buy now, wear now was the focal point of everyone’s go forward plan. In the past, up to 80% of fall deliveries were completed by the end of July. They would like to see these percentages shift from 80%/20% to around 50%/50%. Deliveries of merchandise for high summer are an invitation for markdowns. The selling period is too short to achieve profits. This year and going forward, few felt that assets should be devoted to holiday/resort product. Few consumers are thinking about spring weight apparel at that selling time. Rather the retailers would like to see capsules created for November and December sales, and allow fall product to sequence on the shelves longer. All hoped that the industry can ultimately align around appropriate delivery dates.

Newness and diversity! Each and every retailer emphasized how important freshness, personality and individuality are to them. They also reasserted how vital entrepreneurial, independent brands are to them. Without all of you, the consumer might as well shop online based strictly on price. Emotionally engaging product that is refreshing and novel, as well as tried and true core product that trademarks your particular brand and guarantees healthy sell-throughs, are the desires. There is too much merchandise being ordered and delivered, and compounding this, it is being delivered at the wrong times for the consumer’s wants and needs. Design less and smarter. Deliver in smaller, stretched out waves.

Some suggested that, in order to deal with all the cancellations of spring goods, and the lack of a spring/summer selling period this year, that brands reassort their inventory and offer it, as appropriate, to the buyers for January/February deliveries. There is and will be so much inventory in the system that will need to be liquidated between now and when Fall products begin to be delivered, that it might be smarter to hold on to it, rather than dispose of it now. Talk to your buyers about this. One retailer did say, though, that you should fight back harder against outright cancellations of orders. Propose options. If the consumer hasn’t yet seen the product, then for the consumer, it’s new regardless of what seasonal label is put on it by the trade, or when it was originally manufactured. Normally I suggest that fashion inventory be liquidated as soon as possible, since the value drops so dramatically once the season it was designed for ends. But these times are unique. The consumers have not seen summer product yet. For them, it could easily be early spring if you assort it properly. I am not suggesting that you hold onto summer goods without orders for Jan/Feb delivery from your retailers. Just explore the opportunity.

Finally, we discussed sourcing. Part of the challenge for everyone is the lead time it takes to produce merchandise after the orders are placed. I would encourage everyone to work as hard as possible at pushing your suppliers to shorten the span. The retailers said that it has become harder and harder to predict the consumer’s interests, and if brands are able to accept orders closer to the delivery dates, then those brands have an opportunity to do more business going forward. If you can produce capsules or larger runs in eight to twelve weeks, then you should let your buyers know now. You will have a significant advantage over your peers in the industry. This coincides with retail’s need for newness on the racks, and it removes risk for the retailers and for you. If they can predict trend more accurately, and gauge need by demonstrated demand, then full price sales will be enhanced, and both you and your retail partners will achieve much better margins in the end. Your COGs may go up, but your dilution will inevitably go down. Weigh one against the other. These comments by the retailers also echo some of my prior Sunday remarks about taking more control over your sourcing when possible, and communicating with your distribution channels regarding what your capabilities are. Most of the retailers have no idea. You definitely want to enhance your future prospects however you can, now more than ever. Shorter lead times also translate to better cash flow for you. The time between fabric buys and manufacturer deposits, and when you deliver to the stores would be shorter. Each and every lever you can pull will help in your recovery.

We were not able to discuss markdowns, pricing and promotional cadences. Such a discussion would have violated anti-trade laws and could be considered price fixing. Everyone was cognizant of this issue before the call, and we intentionally avoided the subject completely. We at Hilldun are working now with counsel to petition the Justice Department to allow us to have these discussions going forward. Until that time, unfortunately, this subject is off limits. What we did achieve was an open, honest dialogue, as well as consensus on some other vital issues. As this dialogue evolves, we will work hard to provide ongoing guidance. This meeting was meant to establish a forum within which critical problems and concerns can be aired, and in that sense alone, the summit was a success. Though no earth-shattering conclusions were reached, the spirit of cooperation was evident. Retail can only survive if you are strong and creative. You are the food the feeds them all, and they recognize this despite the gut wrenching decisions everyone has been compelled to make these days.

I hope this is helpful. It’s a new world, and everything now is a work in progress.

Be safe. Stay strong. Stay healthy.

Gary