Kendra Scott is navigating the coronavirus crisis with a mix of digital, philanthropic and community engagement-driven initiatives. The company said its sales during the crisis have generally surpassed original projections set for 2020 when its retail stores were still fully operational.
Now with a stable of 108 brick-and-mortar stores, 46 of which have reopened for curbside pickup across 16 states, Kendra Scott president Tom Nolan said the company is focused on direct-to-consumer initiatives and charitable messaging to keep the business moving forward. In 2016, the company received a minority investment from Berkshire Partners, giving it valuation in excess of $1 billion.
“Our business continues even through a global pandemic, we are relatively strong. We have been forced to close retail stores for employee and community safety. Our pillar of philanthropy is so important to us and it’s really resonated with customers and employees [during this time]. Heading into the year we were up double digits across all channels and even for the year 2020, our direct-to-consumer business is also up double-digits,” said Nolan.
The brand regularly holds community engagement events at its local stores and clocked some 10,000 total gatherings in 2019. This mode of business continued during lockdown, albeit remotely, as the Kendra Scott label hosted virtual styling seminars, local college gatherings and give-back events on Zoom, Facebook and Instagram. One initiative — the company’s Everlyne bracelet — has generated enough sales for the company to provide 2.1 million meals for those in need during the COVID-19 crisis.
The brand said these combined efforts helped it beat sales projections originally set when stores were still open. “In most instances our e-commerce has overdelivered on our original plan, including retail,” said Nolan. “One of the reasons it’s so strong is that experience is at core of our brand. We spent time thinking about that. We’ve seen that a lot of the web customers coming to us are traditional retail customers. We’ve also picked up 35 percent new customers, which for us is huge. This crisis is a terrible thing and tragedy but it’s also been an opportunity for us as a brand.”
In recent years, Kendra Scott has pivoted from a primarily wholesale business to one that relies on direct sales. The company expects between 20 and 25 percent of its sales this year to come via wholesale. While the brand has an expansive stable of brick-and-mortar locations, about 30 to 40 percent of its business comes through e-commerce. The company declined to provide further sales data or numbers.
Kendra Scott is the rare label that gained popularity in the middle of the U.S. before spreading out to either coast. A sizeable portion of its retail locations are in the South, particularly in states — like Texas — that have been given a green light to reopen for business by local government.
During lockdown, the company’s “Southern stores turned into distribution centers, so we could get people to go to work and keep busy in regions where they were allowed to by government,” said Nolan. Web orders were shipped to consumers from their nearest retail location rather than a central warehouse — a program established in partnership with Manhattan Associates.
Kendra Scott has been readying a curbside pickup option for consumers for the last year, with plans to launch in 2021. Those plans were expedited for launch in a matter of days, and is now an option for shoppers in states like Texas where the company said it is operating 23 stores, “really safely with a minimum number of employees,” said Nolan.
The brand said its Texas stores fielded more than 3,300 calls from consumers during the launch weekend of its curbside pickup program. On May 1, Texas stores will begin offering one-on-one appointments to shoppers. Curbside pickup is also now available to shoppers in states including Georgia, Oklahoma, Alabama, Nebraska, North Carolina, South Carolina, Ohio, Kentucky, Illinois, Tennessee, Virginia, Arkansas, Louisiana, Colorado and Wisconsin.
Nolan added that, “As cities and states give guidance on how to open, we are not going to open the floodgates. We are concerned about employees, customers and that our surrounding communities are safe in regions open for retail. We will be cautious about it.”
On April 15, Kendra Scott expedited plans to introduce a virtual try-on option on its e-commerce site — giving shoppers the opportunity to understand the scale of the company’s statement jewelry designs.
The brand has not applied for government assistance during the crisis because, “much of the government stuff is for companies smaller or larger than us. Liquidity is important and we don’t want to take on extra debt when taking on a challenge like this. Paying rent is important, so we have great partners that we’ve reached out to. Everyone is in the same boat, there are a lot of different ways of working with landlords. It’s a mutual problem so we are trying to solve it together and have had a reasonable amount of success,” Nolan said of the company’s real estate overhead.
This year was meant to be a time that the Kendra Scott brand would start focusing on an international strategy. Those plans will now take a backseat to new production diversification plans, including research into domestic manufacturing.
“Our national awareness in the U.S. is still really low, we only have one store in New York City. Our point of view now is that we’d rather get the brand to a bigger place here and have more awareness in New York,” Nolan said.
While Kendra Scott’s production was “negligibly” affected by the COVID-19 crisis in China, as it requested expedited product before the start of Chinese New Year, Nolan said the situation is cause to research expanded production closer to home.
“We are exploring, we have a lot of product sourced in the Asia region and are researching North American partners. Leading into this, our supply chain has included great partners that have evolved and moved with us as we go to the right kind of places including sustainability,” Nolan said.
“Anytime a large percent of business is based far away, it’s something to think about. We have to make sure goods get here on time for a fair margin. First and foremost, it’s about making sure it’s fair labor and safe. After that, I care about speed and how fast we can get product to our customers. It’s about speed to market and obviously the closer things are, the faster we can get it to market,” the executive added. The company is looking into various U.S. jewelry-making hubs, including Rhode Island, as well as certain locations in Mexico.
Now looking toward a full reopening of retail in the months to come, Nolan is still unsure of how to best ensure consumer safety and confidence. Kendra Scott is in talks with other fashion labels to brainstorm solutions to the ongoing crisis and its aftermath.
“I’m taking a lot of cues from the restaurant industry. Food service has to be so clean, I have friends that run food service businesses and they are so smart how they do it, setting up timers at moments to sanitize the whole building. We are figuring it out; I think the whole industry is trying to answer the same thing,” Nolan said.
“I think there is going to be technology born out of this, whether it’s UV cleaning or something to make it easier. The whole retail industry is talking. I’m connecting with colleagues at former competitors — everyone is sharing information right now because it is essentially a wartime scenario.”