EDITOR’S LETTER: VOICES FROM THE BATTLEFIELD

Despite a fair amount of arrogance and blame (“What are vendors doing to help retailers?” vs. “Why are retailers putting their vendors out of business?” and “How can they just not pay?”), most retailers and brands are working together to figure out how they can both survive until the world gets back to normal. The extent to which both sides are making masks and protective gear for those on the front lines is beyond wonderful; a charity component added on to store gift certificates is another great idea.

But charity begins at home and specialty retailers can surely use some help. Brax has come up with a $100 gift certificate for specialty stores to send to their customers, explaining that they can buy the latest style pants at a reduced cost on the Brax website, with proceeds going to help that store. Stantt is working on a similar concept for multiple brands (more info on this soon!) Eton was among the first brands to contact 1000 specialty stores; among their offerings: to hold unshipped summer/pre-fall goods and reassess in May with 30-day dating if delivery resumes; to ship in-stock, made-to-measure and custom orders with a 10 percent discount; to include a 15 percent discount on holiday; to adapt as needed “because we are in this together, now and for the long run.” Raffi Shaya is sharing masks and health tips with his retail partners/friends.

Ken and Jim Giddon from Rothmans NY have been doing a ton of social media featuring photos of their quarantined clients wearing fabulous clothes from Rothmans (mostly casual but also some suits!) Rothmans was one of the first NYC stores to close before closures were mandated, posting a terrific letter to customers, explaining that small businesses are struggling and while they’re doing everything in their power to keep employees and customers healthy, they’d truly appreciate support in this time of need. “Whether it’s your favorite restaurant, florist or men’s store, we’re asking you to support small business if you can.”

Many experts believe that as catastrophic as the current business decline appears, this could actually prove a good opportunity for retailers to right size, pare down, curate assortments, try something totally new, create an active website, or even move to a better (cheaper, smaller, busier) location.

Here, a few reader thoughts on how they’re surviving the months ahead.

David Rubenstein, Rubenstein’s, New Orleans: Fortunately, we’ve always been conservative, and Hurricane Katrina taught us well. We have plenty of cash (not forever but three or four more months is easy). Early on, I wrote some big and small vendors saying I would pay them at once at 20% discount. After Katrina, we felt it best to write off the season with no profit for us or our vendors, just make everyone (us and them) whole on cash flow. I offered everyone 120 days full pay at 20% discount. Everyone took it and we all ended up cash even, if no profit. Now, I find that most of our vendors want to wait until this is over and make one offer to all their accounts rather than negotiate with each individual. We did pay some of our new small vendors full cost as they can use the money and appreciate the gesture.

Truth is, when the time comes, both sides will give up profits in some form or other for cash. Part of the 20 percent discount is that we will have sale into August to get rid of on-hand inventory (we’re fortunate to have visitors and hot weather so a longer season). Also, we’re not overbought for fall since we generally take early November delivery; for our climate, we can sell spring merchandise through October.

Jeff Farbstein, Harry Rosen stores:“Communicating with vendors is key, I’m talking to our brands two to three times a week. It’s also essential to talk to your customers, letting them know you’ll still be there when this is over. Unfortunately, most stores have to lay-off sellers and tailors; it’s a matter of survival. Retailers shouldn’t be paying anyone at this point. But you can’t just not pay people; you can’t just demand a discount. You need to work with your vendors to compromise. (Perhaps get your lawyer or accountant to help you.)

I think one of the ramifications of this crisis will be redefining work: there will be more business run remotely; tailored clothing sales will suffer for six months to a year. I believe there will always be a luxury business but what percent? Price will become more important, and sale business is already huge in tailored clothing. But it will come back—hopefully in six months to a year. The luxury guy might not re-join the golf club or buy a new Porsche but a new sportcoat to lift his spirits: why not?”

Michael Kiewe, JS Edwards, Baltimore:“The off-price market will be booming when things open up: everyone is already discounting goods all over the internet and e-commerce. So I think it’s okay for retailers to ask our vendors to help us in the weeks ahead. We need to pull together and join forces to keep this business alive. God knows it’s going to be challenging: a lot of sidewalk sales when things open up. One bright spot: I’ve never seen so many families outside, six feet apart of course: kids riding their bikes, people walking their dogs. I, for one, will keep fighting the good fight.”

Bruce Levitt, Mur-Lees, Lynbrook: “My biggest worry is that March through June is generally our biggest season, with weddings, bar mitzvahs, communions, graduations, etc. It’s bad enough that our store is closed through our busy season but even worse that department stores get the advantage of guaranteed margins from many of our brands. Several vendors are trying to be helpful: Peter Millar is offering 10% off future purchases; some vendors are offering 25% off and free shipping on fall orders. But what do we do about spring product that’s in-store while our doors are closed? An extra 30 days dating won’t do the trick, especially since when stores finally re-open, we’ll be competing with markdowns on vendor websites…”

Ed Boas, Lanes, Miami: “I’m more worried about people dying than losing business. But we’re doing what we can to stay connected to our customers. We’ve been selling some gift cards but rather than give shoppers an extra 20 percent, we’re donating that to the United Way Response Fund. We’re also sending out closet-cleaning suggestions to our customers, asking for gently used suits and coats that we donate to Suited for Success ($150 off a new suit if you donate a used a one; 20 percent off alterations for your suits that no longer fit.) Every email we’re sending has a charity component: it seems less self-serving and feels like the right thing to do. Tikkun Olam: Repair the World. That’s what we’re here for.”

Jim Foley, Woodbury Men’s Shop, Long Island: “On March 20th, Woodbury Men’s Shop made the difficult decision to furlough our employees and temporarily close. Since then, we’ve been reaching out regularly to our customer and friends via email, phone calls and social media to keep them informed of our status. While this is an extraordinarily challenging time for us, we haven’t forgotten our commitment to our community. We continue to support charities in our area by donating 10% of gift certificate sales to Hope for Youth, an agency that helps kids and young adults in foster care.

“We’ve not stopped planning for future business. We’re following every detail of the SBA loan programs and are hopeful the loans will allow us to bring back our team, and continue to pay our landlord and vendors until our business gets going again. We meet regularly via video conference with our Threadwize group and Management One consultant Marc Weiss which has been invaluable. My partners and I still go to the store to do inventory, change out windows and personally deliver tailored clothes. 

“Our biggest fear is the unknown: When will people be healthy enough to shop and how deep into recession will the economy fall? Will we receive fall deliveries and will they be on time? Will we have enough revenue to make it through? Regardless, we’re staying optimistic: we take it one day at a time with the hope that everyone stays healthy. The work to which we’ve dedicated our lives is equipped to carry us home. The relationships and friendships we’ve nurtured for decades will be there when we’re ready to reopen.”

To conclude on a positive note: Financial advisor Debra Clark (Horner, Townsend & Kent) recently sent out a notice describing differences among three types of bear markets. A structural bear market (caused by factors like over-leveraged banks) has an average decline of 57 percent, an average duration of 42 months, and an average recovery time of 111 months. A cyclical bear market (a natural slowdown after a growth period) has an average decline of 31 percent, an average duration of 27 months and an average recovery time of 50 months. An event-driven bear market like the one we’re in (caused by unpredictable shocks like natural disasters or health crises) has an average decline of 29 percent, an average duration of nine months and an average recovery time of 15 months. So hang in there my friends: we can do this!