Gary Wassner’s Guidelines To Help the Fashion Industry Through This Situation
Gary A Wassner, CEO of Hilldun Corporation, has written some important advice for the fashion industry, which he recently shared with CFDA.com. In case you missed his guidelines on how designers and the business can rebound from the coronavirus crisis, we’re also sharing his words.
Purchase orders are contracts. Say no to outright cancellations. Offer options to your retail partners instead. Let them know how devastating these cancellations will be to your businesses. Don’t hesitate to draw comparisons to the larger companies whose balance sheets can carry them through a bad quarter or two or three, or who can borrow in the public market. Remind them who you are! Remind them of their responsibility to the industry and to you as their partner.
But first, before you begin the negotiations, review your own production to determine what you can still halt the production of. Even if you have already purchased the fabric, you will limit your losses if you can stop adding additional costs to something you will probably not get your costs out of in the end. Once you do that, you can then cancel these items with your stores.
Review your line sheets. See which styles can be pushed to later deliveries. You’ll find many that are less seasonal and can easily sell later in the season. Offer to cancel those items immediately and reduce the order amounts.
Scrutinize your collections closely. For the merchandise that you have already committed to and paid for, divide it into categories based upon which opportunities may surface first.
E-com certainly will have more eyes on it, and assort your product so that you’re not trying to sell evening dresses online to consumers who are sequestering at home. Comfort clothing, just like comfort food, will get better traction in troubled times like these. Talk to your online retailers as well. Instead of accepting cancellations, offer them a different assortment that addresses these considerations.
Cash flow is key. If you can get your cost of the orders for APRIL, MAY and JUNE, you will at least have revenue coming in and you won’t be sitting on huge inventory. Offer to discount the product from the previously agreed upon wholesale pricing. Everyone’s margins are different. Gear your discount to your specific margin. And many line items have higher or lower margin than others in the collection. First review your best margin products with the above in mind.
Offer to extend the delivery dates. The new inflection of sales, when they begin again, will be different than any we’ve known in the past. Q2 will be a loss for everyone. Hopefully selling will start to ramp up slowly by the end of May, 70-some odd days from now. But it’s not necessary to sell Fall product in June and July. It really never was. Now we need to be proactive with the consumer and re-educate them. Buy now, wear now has been a catch phrase for retailers to date. Let’s make it a reality in the industry. Consumers have been shopping this way for years now.
Offer staggered deliveries. Break your collection into groups that reflect the stages of the situation we’re currently in. Right now, we’re in panic mode. Little is selling on any platform aside from stay-at-home comfort product. Soon we’ll evolve into a stabilization phase when planning will begin again and sales will start to generate some revenues. At this point, you want to be positioned to fill the immediate needs of retail. We don’t know how long the phases will last, but ultimately, they will all evolve. During this phase, retailers will need product but they will be very selective and very cautious. Do your homework now so that you have the appropriate inventory on hand to meet these needs. As the consumer returns to the market, assuming the employment situation recovers and the government has provided the financial assistance that the economy needs, what will they want to buy from you? Make sure you think this through carefully, and have that product separated out and ready to ship.
At this time, everyone will be looking at what comes next. Retailers will have modeled this out during the stabilization period and will be ready to receive new merchandise as we all move into the recovery mode. You must be prepared as well. Do your cash flows utilizing three different cadences based upon the stages outlined above; panic, stabilization and recovery. No one can accurately predict how long each will last, but for planning purposes I would assume each phase will endure for one quarter, with recovery being in full swing for resort deliveries.
The key is to get from here to there. Everyone is facing the same challenges, up and down the supply chain. Without retail purchases, there will be no recovery. It all begins there. The dollars that filter down through the fashion ecosystem are all generated by the consumer. The flow is clear –consumer > retailers > brands > contractors > fabric and findings> sampling and product development.
No piece of our sourcing chain will be unaffected. And this is the main reason why you, as a brand, must look both up and down the supply chain, and work with each segment, if we want the industry to survive and recover.