Indie beauty brands seem to be coping with the impact of the coronavirus pandemic for the time being, buffeted by online sales that haven’t yet plunged dramatically. But for smaller retailers, it’s a very different story.
“It is changing minute to minute, but we’ve gotten a lot more information in the past day,” said Natasha Cornstein, chief executive officer of Blushington, which has five stores in Texas, California and New York, and is slated to open its largest outpost yet in New York this spring. “Everyone is coming together to try to help. For most entrepreneurs and smaller brands, we’ve been in growth mode — focusing on expansion and opening stores. This is new territory — survival mode.”
Top of mind is the fate of the hourly workers. Blushington has committed to paying its retail salesforce through April 3. Follain, the six-store clean beauty retailer with locations in Texas; Washington, D.C.; Maryland; Massachusetts, and New York, has agreed to do the same. But one challenge for smaller retailers is grappling with the differing labor laws and relief efforts of various states in the absence of a current federal relief program.
“It’s not a one-outcome scenario,” Cornstein said. “It’s state by state.”
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Added Foley, “We’re going to have to figure it out, and no one has the answers yet.”
While she focuses on that element of the business, Foley has asked store employees who are on the payroll to focus their attention on digital efforts, like doing online visual consultations.
“Store teams are still working — we’re hoping that increased content will lead to a bump in digital sales,” she said, noting that she’s seen an increase in online sales “but nothing crazy.”
“It is going to be very painful, unless there are ways that the customer does decide to support mission-driven businesses like ours digitally.”
Shen Beauty, too, is in expansion mode, preparing for what was scheduled to be the April 30 opening of a store twice as large as its current location in Brooklyn.
Owner Jessica Richards saw a surge in brick-and-mortar sales over the weekend before closing her existing store on Monday, with about $20,000 in sales each day.
Richards has also been trying to activate Shen’s social media audience of almost 18,000 followers, but striking the right tone has been difficult.
After noting the nationwide run on zinc — said to help boost immunity — Richards posted that Shen was in stock with ZitSticka’s Skin Discipline Dietary Supplement, which contains 30 milligrams of zinc. Almost immediately there was some backlash from the community accusing Richards of profiteering from the crisis
“I’m trying to help people,” she said, “but I’m also a small business, I’m trying to make money.” Now, when she posts, she does so with that caveat.
“Every small business is just trying to stay afloat and figure out what the right thing to do is,” she said, noting that online orders are helping to generate the cash flow she needs to procure inventory for her new location.
That push-pull is being felt on the brand side, too. Online sales have been a bright spot thus far for many Indie beauty brands, but it’s unclear if that’s enough to mitigate the loss of brick-and-mortar. “In-store sales have fallen off a cliff,” said Barbara Sturm, founder of Dr. Barbara Sturm skin care, “but online sales are stronger than normal. It is too soon to tally the damage, but there will clearly be economic pain.”
Osea cofounder and chief executive officer Melissa Palmer is also reporting strong online sales. But having shepherded the brand through the dark days of both 9/11 and the 2008 economic crisis, Palmer is actively making contingency plans.
“Our DTC sales have gone up, which shows me we have a super-loyal customer base and a huge amount of our volume is repeat business,” she said. “So I know our customer sees us as an essential they are going to maintain. But in these uncertain times, everything has to be approached day-to-day and hour-to-hour.”
Currently Osea’s warehousing and distribution facilities are still functional, but for all Indie brands, if third-party logistics providers are forced to cease operations, the consequences could be catastrophic to business.
That means the focus for most is inventory management, controlling cash flow and slashing investment in non-revenue producing areas of the business.
“You need to make decisions understanding that cash is king and it’s important to make the right decisions now to insure that your business can weather the storm,” said Shaun Neff, whose Beach House Group launched three brands last year, including Tracee Ellis Ross’ Pattern hair-care line and Florence by Millie Bobby Brand skin care and makeup.
“Do you increase or decrease manufacturing? What is the best way to distribute a social message to your fan base? One of the benefits of being a small Indie brand is we can react quickly,” continued Neff. “We’re looking at weathering the storm, rather than pivoting the strategy of the company as to where we are going to get growth.”
At Virtue Labs, founder Melisse Shaban had already started building out inventory in early January, reacting to tariff and freight issues. Currently the company has six months worth of finished product in its third-party distribution facilities, versus a 13 week supply pre-coronavirus. About one-third of Virtues distribution is comprised of the salon channel, and Shaban is also focused on how to stem the losses of those small business owners, from implementing increased terms to a buyback program.
Internally, the company is also tightening its belt. The 60-person workforce has all agreed to a 10 percent salary cut for the next three months, which Shaban is trying to offset with equity.
“We’re all in this together,” said Shaban who, like Palmer, led brands through both 9/11 and the 2008 financial crash. “We are dealing with the day-to-day one step at a time, and then we have to be prepared to come back, because it will — whether it’s three weeks, three months or six months. We have to make sure we’re not limiting our ability to run our businesses for when things get back to normal.”