The coronavirus has already closed U.S. retail far and wide, but it’s a game of hit-and-miss for fashion and beauty businesses trying to stay viable online while operating out of California and in other states under what are essentially lockdown orders.
There was a wave of confusion among California business operators in the immediate aftermath of the “safer at home” mandate, issued late last week by California Gov. Gavin Newsom and Los Angeles County officials in an effort to limit the spread of COVID-19. All citizens were formally urged to stay home outside of essential activity, “social distancing” became decree and all nonessential businesses were ordered closed.
So what does that mean for e-commerce and manufacturing? Can a company keep shipping orders if they are able to “social distance” employees? What counts as an “essential” part of the country’s business infrastructure?
The office of L.A. Mayor Eric Garcetti could not be reached for comment on clarification around exactly what sort of online business is impacted under the coronavirus mandate, nor could the California Chamber of Commerce. For now, the answer seems to depend wholly on where each business’ activity is taking place and how big a given company is.
Nordstrom, for example, headquartered in Seattle but with 86 retail locations in California (the most of any state it operates in), said its distribution and supply-chain business is so large that it’s “considered essential business” by the government. So while its entire North American brick-and-mortar retail operation is temporarily closed, it is still fulfilling online orders and even doing in-store fulfillment for curbside pickup with limited employees at some retail locations.
“These services are essential to our ability to continue supporting our business and employees and serving customers,” Nordstrom said in a statement. “Given the very limited number of employees in our stores during this time and based on guidance provided by local and national health experts, we feel confident we have ample space in our stores to allow for social distancing to keep employees healthy.”
Nevertheless, “a select few” of its distribution centers have been closed “at the direction of local authorities,” the company said. A spokeswoman would not specify where the closed centers were, but the company has several centers in California as well as New Jersey, another state that has ordered all “nonessential” businesses to close.
On the other end of the size spectrum, Clare V., a popular handbag and leather accessories brand operating out of Los Angeles, including manufacturing and distribution, is seeing the “safer at home” mandate impact its ability to fulfill online orders as normal. But the brand is still able to operate online, to a degree.
“There are some exceptions for shipments that can occur at fulfillment centers and we’re trying to maximize our efforts to accommodate our customers as best we’re able to at the moment,” designer and founder Clare Vivier said.
As for her ability to get new product later in the year from her local manufacturer, along with any possible long-term effect on the business due to coronavirus, that is unclear.
“It’s really too soon to tell the scale, but there will certainly be a lasting impact on the reality we knew even just a week ago,” Vivier said. “The ripple effect will be huge and I think we’re only just beginning to wrap our heads around what this will mean both in the near term of day-to-day and the longer term.
“The challenge that we’re all dealing with right now is the uncertainty,” Vivier added. “We’d love to think that as soon as we open our stores’ doors again there will be the same level of business as before. There will continue to be uncertainty for some time, I imagine.”
Vivier’s main hope, right now, is that state and federal governments will “step in to do everything to help support the regrowth of small businesses like ours.”
Laura Dowling, chief marketing officer for L.A.-based fashion holding company Digital Brands Group, said none of the company’s five brands are able to ship at the moment. The company is hoping to get back to shipping by April 1, but Dowling admitted it could be longer as “new terms are being rolled out on a daily basis by both local and federal governments.”
DBG was already looking to move its distribution center out of L.A. to another, more centrally located state, something that will be happening “in the near future.” But Dowling said the effects of coronavirus and related measures will be felt in the business for months after lockdown measures are lifted.
“From a selling perspective I am positive that the effects of this will be felt all the way up to Holiday at this point,” Dowling said. “Consumers will come back to spend but it will be way more methodical and cautious. It is going to take a good six to nine months for retail businesses to get back to any sort of normality as each day that goes by we lose more and more consumer confidence.”
As for the business on the whole, DBG is braced for increased shipping costs for merchandise from Europe, but it is expecting to make a full recovery. It’s also still planning to go public this year with even more brand acquisitions under its company umbrella. The effects of coronavirus on smaller brands already working with slim margins may even mean more acquisitions DBG initially planned. “There are more brands than ever approaching us about this roll up… it may be their only way to survive,” Dowling said.
Indeed, fashion on the whole is hurting. Tom Ford, designer and chairman of the CFDA, told WWD that he and the organization have been inundated with calls regarding the fallout for fashion and related businesses due to coronavirus measures in Europe and the U.S.
“Like most industries, the fashion business has been hit very hard and from every angle,” Ford said. “Our suppliers are suffering, and our supply chain interrupted as literally the entire world has been all but shut down. And retail in most regions, and certainly in the U.S., has ground to a halt.”
Online business, overall, has been severely impacted for brands. Even those in the direct-to-consumer space, so those operating online only, as well as those in luxury and retail. According to data gathered and updated daily by Within, a performance branding agency, revenue from e-commerce has plummeted since the first week of March by more than 40 percent for the businesses it works with. It’s clients include Nike, Hugo Boss, Rihanna’s SavagexFenty, Spanx, Diesel and Facebook, among others. Data is based on a sampling of clients reporting directly to the agency.
At least some relief is expected to be included in the up to $2 trillion proposed federal relief package still working its way through Senate negotiations, but it’s unclear how much and how accessible it will ultimately be for smaller businesses.
Until government relief makes its way to the industry, likely still weeks away, businesses are left to make do — where they can. Some with larger manufacturing operations under their control are coming together to produce medical-grade essentials like face masks and gowns. Unfortunately, some other businesses, mainly those operating on a smaller scale, are having a harder time of it.
Popular women’s brand Reformation has had to close its factory and online fulfillment center, both based in L.A., saying on Instagram that all shipping for online purchases will be delayed until it’s able to reopen. Doen, a women’s apparel brand based in L.A., has closed all of its fulfillment and shipping operations, with no orders going out after March 20, last Friday. With Garcetti putting an end-date to “safer at home” for L.A. of April 19, Doen said it’s “hopeful the order will be lifted before” that date. If it isn’t lifted early, the brand is looking at a minimum of a month of no business at all.
“This situation is not one we could have ever imagined,” Doen said in a statement, “but ultimately, we know that this order is an act of care.”
Tatcha, a beauty company based in San Francisco, which issued a “shelter in place” rule a week before the rest of California went to “safer at home,” has closed its sole distribution center there. The company said it’s in the process of switching to a new one, presumably out of state, but that deliveries and availability of products are being impacted. A company spokesman did not respond to a request for further comment.
Even a larger-scale business like online luxury reseller The RealReal is feeling some impact on virtual operations. The company said it closed an e-commerce center located in Brisbane, Calif., and has reduced all onsite staff to 50 people or less at warehouses in New Jersey, both main portals of its business.
“In line with local directives, our e-commerce centers are currently either operating in a limited capacity or temporarily closed,” a spokeswoman said. “We are still fulfilling orders, though customers may experience delays in the processing and shipping of their orders.”
Online-based subscription apparel box service Stitch Fix, too, said it closed distribution centers in California and Pennsylvania, expected to last several weeks. The company would not comment further. Everlane, also based in California, declined to comment beyond confirmation that it was still able to fulfill online orders. Fashion Nova declined to comment on how its online business is being impacted by coronavirus measures. Representatives of Techstyle Fashion group, which operates Kate Hudson’s Fabletics and Rihanna’s Savage x Fenty, could not be reached for comment, nor could Goop.
Still, some California companies are able to operate close to normal, at least online, mainly due to happenstance of where they fulfill and distribute from.
Beautycounter, the beauty and skin-care brand based in Santa Monica, is able to ship all e-commerce orders. Its main distribution center is outside California, but it’s also considered an “essential business” under FDA guidelines, and allowed to operate, regardless, the company said. Nevertheless, Beautycounter is operating with a smaller workforce in distribution, in line with coronavirus efforts around “social distancing” and keeping workers healthy and so there may be “some shipping delays,” according to Ana Badell, the company’s chief operating officer. Even with shipping delays, Badell struck a fairly positive tone and said Beautycounter has “multiple contingency plans lined up to support surety of distribution.”
“Although things continue to evolve every day, as of today, we don’t foresee a longer-term effect on our business,” Badell said. “It’s possible we may see a situation where product launches we have scheduled for later in the year or 2021 are delayed a bit, but nothing drastic.”
She also expects the business, when coronavirus measures lift, to make a full comeback.
“As soon as this passes, I expect a normal return to business,” Badell said. “As with our distribution, we are staging our production capabilities to respond to however long it takes to get back to full volume.”
B8ta, a young company based on a new concept of retail stores (all 21 of which are temporarily closed), has distribution for online orders based in Austin, Tex., which is still allowed to operate, according to chief executive officer Vibhu Norby. The company’s main business is physical retail, however, and on Monday it furloughed its in-store staffs due to the financial impact of coronavirus, as WWD reported. It’s president Phil Raub also stepped down from his post, remaining only on the company’s board.
The impact on brick-and-mortar retail across the sector is expected to be severe, from layoffs to permanent store closures to bankruptcy. Business groups at the end of last week sent a letter to the White House asking for immediate action to aid the retail sector, the largest private sector employer in the U.S.
Tech-driven shoe brands Rothy’s and Allbrids, both of which only operate a handful of stores, are still able to fulfill online orders, however. A Rothy’s spokeswoman said it’s able to operate online unimpeded because it ships directly from its wholly owned factory in China and its distribution centers in the U.S. have so far not been affected by any coronavirus-related orders. Allbrids said it’s working with fulfillment centers outside California to fulfill its current online order demands. But a spokeswoman said the company is “having daily leadership meetings to align on how teams can cross functionally be working towards creating and maintaining stability for the brand.”
“During uncertain times, you must navigate with logic and rational perspective; it is not a time to make hasty decisions,” the Allbirds spokeswoman said. “Having started as a small business, proactively thinking through and instituting measures of protection and core values has been a practice of ours from day one. The current pandemic we are facing together as a society is completely unprecedented, and we must continue putting one foot in front of the other.”
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