The uncertainty surrounding the ability for large brick and mortar stores to remain open nationally is growing, as many anticipate a second wave of COVID-19.  As the virus spreads in many areas of the country and recedes in others, doubts and hopes rise and fall simultaneously regarding third and fourth quarter projections. I’m frequently asked by editors, retailers, and clients to give them my thoughts on the next 12 months.  Honestly, I don’t even try to now beyond only a few months.  There are far too many uncertainties that the best advice I can give is to be versatile, flexible, conserve cash, and always look for opportunity. But what do those suggestions translate to in practical terms?  How can we mitigate these unprecedented issues and position ourselves appropriately to better manage the multiple contingencies we and the world are currently facing?

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 been 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.    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.

So, what in the world does this have to do with managing sales contingencies today? Everything!  Individuals now are looking inward. Many are dressing for comfort and many just to make themselves feel purposeful in a cloistered world.   The new emphasis is now on how we appear to ourselves, and how what we choose to wear makes us feel each day.    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 percent – 30 percent drops in the PSF pricing in the NYC commercial rental market, and I expect this percentage to continue to grow over the next six months.  In fact, many specialty stores have told me recently that their rents have been cut in half by their landlords throughout 2021. Renegotiate your leases now, both retail and office.  If you had been contemplating opening a store pre-COVID-19, 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 is well worth exploring. Several of our clients at Hilldun 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. If you already have stores of your own, then spend time learning who the consumer is now, not previously, in other communities you’ve considered, and make sure they are the right consumer for your evolving products.  We’re all looking at future opportunities though entirely new lenses.

Never forget the thousands of specialty stores in the U.S. market. They are generally loyal and not nearly as promotional as the majors. It’s remarkable to me that throughout this pandemic, the countless smaller stores made such laudable efforts to pay their bills to us for their vendors, communicate with us regularly, work out payment plans so that they can receive new merchandise while paying off older invoices, despite having done virtually no business for the months of  March, April and May. For us at Hilldun, the vast majority of these smaller stores seem to more fully understand the meaning of partnership, and they have been far less likely to call moratoriums on their payments, cancel everything they’d previously purchased, refuse to answer the phones or work with their vendors.  Rethinking our distribution channels must include adding a new value to obtaining and maintaining multiple points of distribution. During crises, we now know that being dependent upon a small group of retailers for the majority of your sales volume is dangerous. The feeling of helplessness and vulnerability that prevailed when so many orders were being canceled and deliveries were being refused, was disheartening to say the least. Each town in America has at least one specialty store that caters to its local fashion savvy clientele. Rekindle those relationships. Balance your distribution. Make yourselves less susceptible to the whims or needs of any one wholesale partner. As we all know, we are a country of independent states with independent governments. They choose when their state’s retailers can open and stay open. And there will always be provincial areas of strength and safety.   These regional mom-and-pop stores can collectively keep you alive.

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 circumstances. 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 and the best venue for the new consumer’s mentality will prevail.