GUEST EDITORIAL: CHALLENGES AND SOLUTIONS

The COVID-19 pandemic has created economic challenges for specialty apparel retailers unparalleled in recent history.  Specialty stores were forced to shut down as demand for menswear diminished due to stay at home orders.  Meanwhile, competition from online accelerated as vendor brands doubled down on their efforts to sell directly to specialty store customers online.

Despite the challenges we all face, I’m extremely bullish and optimistic about the future of specialty apparel. There is tremendous pent-up demand for experiential retail and travel. Meetings, conferences, weddings, foot traffic, and social gatherings will bloom as we begin our new normal. Additionally, many consumers permanently relocated during the pandemic and will be searching for a new favorite specialty store.

Operating Retail One Group and providing consulting and financial services to 17 specialty stores has been quite a roller coaster ride. I want to acknowledge the challenges specialty retailers are facing and solutions to how the menswear retail community can help support each other moving forward.

Finance: Every store will need a financial plan when PPP funds run out. In this environment, it’s extremely easy to get behind with vendors. Stores must have a plan to bring in new inventory and work with new vendors. We have developed unique solutions to finance inventory, including having the invoices billed to Retail One Group and the retailer pays Retail One as the inventory sells.

Inventory and Vendors: Inventory is your biggest expense. It shows up as an asset on your books, but if not managed correctly, inventory becomes a major liability. It is extremely difficult to find a buying strategy in this unpredictable environment. Stores must focus on vendors that will provide useful terms while also providing new value. We’ve found it useful for our stores to get inventory planning help from consultants from organizations like Black’s and Management One. Also, almost always, group buying power helps retailers negotiate favorable terms with vendors.

Marketing and E-commerce: There are new opportunities for specialty stores to sell online and acquire new customers that have relocated during the pandemic. Yet, many independent specialty retailers lack the in-house resources to take advantage of e-commerce and modern digital marketing.  Stores that implemented e-commerce and launched digital ad campaigns during the pandemic are performing better than their peers that did not. Look to outsource digital marketing and e-commerce solution partners, like eMarketing Logic, to help sell online and execute digital ad campaigns to acquire new customers. With many department stores closing locations and people relocating, now is a great time to position specialty stores as the best apparel solution in your respective area.

Landlords: Leases are a major problem needing to be addressed. Typical specialty store rent in the past was 6 percent to 12 percent of sales. Now that stores are doing less volume, the new rent percentage is 15 percent to 20 percent of sales, which is not sustainable. It is difficult to cut expenses enough to cover rent. Therefore, renegotiating leases is a must. Retailers should collaborate with each other and share successful strategies for renegotiating with landlords. It can be lonely being a specialty store owner trying to navigate the current retail environment. While I’m extremely bullish about the future, we all need camaraderie to help solve the challenges we face. Let’s work together as a community to thrive in the new normal

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Ed Scott and Jim Wilson founded Retail One Group in 2014 after 20 years of retail consulting experience with the Shaw Group. For more info: escott@retail-1.com