The pressing issues of excess inventories, deliveries, cadences, seasonality and sourcing are weighing heavily on the fashion industry’s mind in light of the global pandemic.
Gary Wassner, chief executive officer of factoring and finance company Hilldun Corp., organized and moderated a video discussion last week with major retailers in the designer and contemporary space tackling these very topics.
Among those who participated in the May 5 video meeting were Marc Metrick, president of Saks Fifth Avenue; Pete Nordstrom, president and chief brand officer of Nordstrom; Geoffrey Van Raemdonck, chief executive officer of Neiman Marcus Group Inc.; Darcy Penick, president of Bergdorf Goodman; Elyse Walker, owner of her namesake Los Angeles boutiques; Jyothi Rao, president of Intermix, and Tony Spring, chairman and ceo of Bloomingdale’s. Those from Hilldun who attended included Cris Wassner, executive vice president; Josh Kapelman, executive vice president, and Tim Moore, executive director.
“It was the first conversation we had,” said Wassner, in a telephone interview Thursday. “I think it would be helpful to have an open dialogue. The intention was to understand what the pulse of retail is today, with regard to delivery and cadences, seasonality and just to get some guidance for brands today so they know how to prepare.”
Wassner said his clients have been asking what they should be developing product-wise and what they should be anticipating delivery dates to be. Should they develop resort? Should they develop pre-fall? “They were hearing [from retailers] sporadically and individually, and there wasn’t any uniform [response]. It needed coordination,” said Wassner.
He wasn’t able to discuss promotions and markdowns with the retailers because that would violate anti-trade laws and would be considered price fixing. Wassner told WWD he’s working with his lawyers to figure out the best approach so they can discuss all the issues that are relevant. “We can’t talk about anything to do with pricing. It’s one of the key things. We are working with antitrust lawyers and legislative lawyers and are trying to figure out the best approach to create a lobby for Washington. This is a legislative issue, the discussion of pricing and sequencing of promotions. We’re just exploring that, independent of the group. We’ll present our results to the group as to what our options are,” he said.
As reported in WWD earlier in the week, a different movement has begun in Europe and participants held a small Zoom gathering Tuesday to unveil an industry effort to fix a broken fashion system. Operating under the web site forumletter.org, the loose-knit group includes Dries Van Noten; Andrew Keith, president of Lane Crawford and Joyce, and Altuzarra ceo Shira Sue Carmi, who unveiled the initial proposals. They are hoping to seize on circumstances created by the coronavirus pandemic — later deliveries for fall 2020 collections due to factory shutdowns in Europe — and make that the new normal.
Wassner wasn’t sure if he will be working with other groups to develop solutions to the industry’s issues. “I’m leading this group because they are our clients. I hope other brands will be able to have input and to benefit from anything that results,” he said. He hasn’t determined how often he’ll meet with this group of retailers, and they agreed to schedule a follow-up.
Asked if the retailers were receptive to making changes, Wassner said, “Absolutely, they were extremely responsive. Everyone whom I asked to join joined, and they brought their general merchandise managers and their buying team to the video call. Nobody declined and nobody dropped out last minute.” The meeting lasted a little over an hour. “The goal is to establish a better partnership between brands and stores so that everyone can make money in this industry, considering all these cataclysmic changes that have occurred. That’s the bottom line — to recover from this crisis and move forward in a way that’s going to enhance [their businesses] and enable them to make a living in this industry.”
While Wassner declined to divulge specifics of what was discussed in the meeting, he sent an e-mail to 500 clients, obtained by WWD, elaborating on the discussion. The e-mail said the purpose of it was to garner what retailers anticipate the future will look like, and what they will be looking for in terms of delivery dates, product and quantities.
“It’s imperative that brands and retailers recoup the losses that have been and still are accumulating in the fashion/consumer goods industries, establish a more realistic calendar, alleviate the dilution that being over-inventoried helps to create, and to ultimately devise a better and smarter partnership and path forward in order to achieve these objectives,” wrote Wassner in the e-mail.
The goal of Wassner’s meeting was to create a more engaging and collaborative environment between buyers and sellers, going forward, the e-mail said. The meeting focused on the fact that the global pandemic has broken the cycle of showing, buying and selling that has prevailed for so many years. “There will be positive outcomes due to these awful circumstances. The areas that everyone agreed upon are those that all reshape the industry,” Wassner wrote.
As the e-mail explained, “Everyone wants to extend the shelf life of the merchandise they buy, but currently consumer demand does not match the receipt of goods. Fall receipts of goods should reflow in order to achieve the proper cadences.”
In the past, up to 80 percent of fall deliveries were completed by the end of July. The retailers would like to see these percentages shift from 80/20 to around 50/50. “Deliveries for merchandise for high summer are an invitation for markdowns. The selling period is too short to achieve profits this year and going forward, few felt that assets would be devoted to holiday/resort product. Few consumers are thinking about spring weight apparel at that selling time. Rather, the retailers would like to see capsules created for November and December sales, and allow fall product to sequence on the shelves longer. All hoped that the industry can ultimately align around appropriate delivery dates,” Wassner wrote in the e-mail.
Each of the retailers emphasized how important freshness, personality and individuality are to them. They also reasserted how vital entrepreneurial, independent brands are. “Without all of you, the consumer might as well shop online based strictly on price. Emotionally engaging product that is refreshing and novel, as well as tried and true core product that trademarks your particular brand and guarantees healthy sell-throughs, are the desires. There is too much merchandise being ordered and delivered, and compounding this, it is being delivered at the wrong times for the consumer’s wants and needs. Design less and smarter. Deliver in smaller, stretched out waves,” wrote Wassner.
Some retailers suggested that in order to deal with all the cancellations of spring goods, and the lack of a spring/summer selling period this year, that brands re-assort their inventory and offer it, as appropriate, to the buyers for January/February deliveries. “There is and will be so much inventory in the system that will need to be liquidated between now and when fall products begin to be delivered, that it might be smarter to hold onto it, rather than dispose of it now,” said Wassner.
“Normally I suggest that fashion inventory be liquidated as soon as possible, since the value drops so dramatically once the season it was designed for ends. But these times are unique. The consumers have not seen summer product yet. For them, it could easily be early spring if you assort it properly. I am not suggesting that you hold onto summer goods without orders for January/February delivery from your retailers. Just explore the opportunity,” he said.
Finally, the group discussed sourcing. “Part of the challenge for everyone is the lead time it takes to produce merchandise after the orders are placed,” he said. “I would encourage everyone to work as hard as possible at pushing your suppliers to shorten the span. The retailers said that it has become harder and harder to predict the consumer’s interests, and if brands are able to accept orders closer to the delivery dates, then those brands have an opportunity to do more business going forward. If you can produce capsules or larger runs in eight to 12 weeks, then you should let your buyers know now. You will have a significant advantage over your peers in the industry. This coincides with retail’s need for newness on the racks, and it moves risk for the retailers and for you. If they can predict trend more accurately, and gauge need by demonstrated demand, then full price sales will be enhanced, and both you and your retail partners will achieve much better margins in the end. Your cost of goods may go up, but your dilution will inevitably go down,” he wrote.
Wassner has been sending weekly e-mails to his clients, and previously mentioned that taking more control over their sourcing when possible and communicating with their distribution channels regarding what their capabilities are.
Wassner closed his e-mail saying that what they achieved was “an open, honest dialogue, as well as consensus on some other vital issues. As this dialogue evolves, we will work hard to provide ongoing guidance.”
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