Sunday on Friday

Good Morning,

How can we profitably maximize top line sales in this environment? The uncertainty surrounding the ability for large brick and mortar stores to remain open nationally is growing. As the virus spreads in many areas of the country, doubt is once again being cast upon third and fourth quarter projections. So how can we mitigate this and position ourselves appropriately to better manage contingencies?

First, we need to understand the mindset of today’s consumer. If you know your customer, and it’s more critical that you do today than ever before, then it’s essential that you cater to them very personally. Personal attention and genuine concern is desperately needed. We’ve all be sequestered, and we’ve all had to learn and accept a new way of living. Physical interactive deprivation has changed everyone. This is not easily replaceable by digital contact, but it is our best alternative at the moment. Consumers are not interested in purchasing new apparel or accessories for the same reasons that they did pre-pandemic. In the past, we shopped for events, we shopped to impress, we shopped to make a statement in public, we shopped to enhance our self-image in the physical world. We shopped knowing that we will be seen. Though we might not admit it even to ourselves, we shopped knowing that in some way, shape or form, we will be judged by anyone who sees us. Getting dressed every morning was purposeful. If you had a meeting scheduled, a business lunch, a class, a social event, you thought about the impression you would make. This isn’t vanity in a bad sense. It’s human nature. And even if you are the strongest of personalities with a bullet proof ego, what you choose to wear expresses this about you. Who we appear to be in the world may differ from who we really are, but nonetheless, each of us has control over how we represent ourselves to others, and it dominates our choices. Even for those who deny caring and dress accordingly, that too is a choice and it is reflected in our appearance.

So, what in the world does this have to do with managing sales contingencies today? Everything! Individuals now are looking inward. We’re not dressing for events, for meetings, for travel. Many are dressing for comfort and many just to make themselves feel purposeful in a cloistered world. We are dressing to avoid depression and complacency. We are dressing to remind ourselves that we are alive. If a tree falls in the forest and no one is around to hear the crash, did it really make a sound? Yes, it did. Do we need others to see us in order to validate our existence? Clearly no. The new emphasis is now on how we appear to ourselves, and how what we choose to wear makes us feel each day. It isn’t any longer about how we are being viewed or judged, simply because we aren’t being viewed or judged like we were in the past. And therefore, every company and brand selling consumer products needs to fully respect this and design accordingly. This is a fundamental change in perspective, and one that requires true analysis. For those who are willing to spend the time on thinking through what this means for your brand, it will pay off significantly.

As everyone searches for channels of distribution today that will protect the brand and generate cash flow, the quest should be for as risk free an option as feasible and practical. It is more critical than ever to communicate with your customer as directly as possible. Small, personal venues feel safer to many now. The commercial rent landscape has shifted so dramatically that brick and mortar can once more be seen to be very viable going forward. The capex is of course still an issue, though landlords are proposing many options on all the expense fronts. Commercial rents are dropping precipitously, as companies shrink their work forces, work from home, and explore all the alternatives to traditional office space that they never contemplated before. We are seeing 10% – 15% drops in the PSF pricing in the NYC commercial rental market, and I expect this percentage to continue to grow over the next 6 months. Renegotiate your leases, both retail and office. If you had been contemplating opening a store pre-covid, rework your projections. The scenario is very different today, and it might actually be the best time to start planning this again. There are several options to doing this on your own. Risk free or reduced risk opportunities with a quantifiable downside are out there. One such is Leap, which I’ve mentioned before. http://leapinc.com Since then, several clients have contracted with them for both pop-ups and permanent store fronts. Their platform develops and operates the retail store for you. They make the opening of a store turnkey and thus less risky, and if this idea is on your table, I suggest you explore it with them.

We are all dealing with a new world, a new consumer, new platforms for sales, both wholesale and retail, as well as a totally altered and constantly changing panorama of the future. But basic business best practices regarding safeguarding your cash and cash flow, margin retention and margins in general, risk management, concentration in your wholesale distribution channels, as well as overhead and credit protection, still remain critical to your ability to move forward profitably, along with new models and needs foisted upon us by current circumstance. Diversification and nimbleness have proven to be categories, the lack of which the pandemic has brought front and center, particularly regarding your channels of distribution, your sourcing, product development costs and time, and your various product categories. The bottom line is, rethink all of the above, never forgetting that ultimately, the best product for the new consumer’s mentality will prevail.

Stay Safe. Stay Strong,

Gary