Small design labels and independent boutiques are quickly assessing the grave toll the coronavirus crisis could take on their respective businesses. The virus’ global lockdown has put supply chains, offices and, perhaps most importantly, shopping on near-total pause, leading some small brands to consider abandoning production of their fall collections, giving them a safety net from what could become a global economic meltdown.
In what has become a quickly escalating chain of events, designers — most of them now under lockdown themselves — are assessing how to sell their spring collections (now shipping) to a population that is largely working from home in jogging pants with few fashionable places to go.
“In a time of crisis, people are not thinking about buying luxury goods or clothing,” said Ashley Turchin, co-owner of the SoHo boutique Anthom that has been closed since last week and who says its sales are down 70 percent over this time last year. “Two more weeks of this will put us out of business,” she said.
Elizabeth Hilfiger, founder of the unisex streetwear brand Foo + Foo, just set up an installation at Dover Street Market in Los Angeles. “I haven’t announced it yet. I don’t want to encourage people to go and I can’t write, ‘Don’t go,’” she said of the conundrum.
Hilfiger, like many other designers, is waiting on late payments from retailers for her spring collection. This has become a major consideration as she plans her next collection, which is scheduled to be introduced at Paris market in June. “I’m cutting [the collection] in half and keeping it essential. Right now people don’t need clothes unless they really want to buy things as an escape and I feel like a lot of my customers don’t have a big income to begin with,” she said.
Designers who showed at February market in Paris this season say they already experienced a drop-off in sales that buyers attributed to global uncertainty. Emilie Helmstedt, a Copenhagen-based designer shortlisted for this year’s LVMH Prize, had expected a big boost in stockists for fall. Instead, many buyers “canceled their appointments. The big stores from the U.S. said their health insurance wouldn’t cover it if they got sick on the trip. A lot of others canceled from China and Japan. People said they are being more conscious about buying — almost 70 percent of our stockists are closed right now. When we are on the other side of this, they have a lot of work to do to come up with all the lost money,” she said.
Batsheva Hay of the label Batsheva was more frank, saying, “Bigger brands have their hands in all sorts of places. If you are a smaller brand and take a hit for a year, you might not be able to survive, so the question becomes whether to shut down and wait it out. But you don’t want to ruin your reputation and not make good on all these orders.”
What concerns Hay the most is cash flow. “I’m working two seasons out and have bought all my fabric for pre-fall and are starting to produce styles for fall-winter and I don’t know what to do — it’s big amounts of money,” she said.
“The thing is whether to push through and how to make things work, and are people going to want the things we make?” added Hay.
This is a primary concern for Nikki Chasin, who operates a namesake fashion line and multibrand boutique in New York’s Lower East Side that is frequented by successful artistic freelance types. She thinks that when the COVID-19 crisis is over, “We are going to emerge into a new world — especially because so many events have been canceled into the summer. It’s the things that people shop for — weddings, music festivals, bachelorette weekends.”
Some independent boutiques that were already operating on slim margins are now mulling whether to renew their leases, Chasin said, prompting her to consider a solely direct-to-consumer model. “For fall I’m not sure what I will be producing,” she said. “I feel like I will need to wait at least a month before I put it into production. I feel like I’ll produce some things but it will be very small — less than half of what I produced last fall.”
For many designers, the macro effects of COVID-19 have become overwhelming.
Emerging New York-based handbag and accessories label Coming of Age was meant to have its debut season at retail this spring, taking prized real estate on the shelves of trendy independent boutiques like No. 6 and Assembly as well as the online store Need Supply. Retailers have been slow to post the brand’s merchandise on social media as well as their e-commerce sites — delaying any momentum Coming of Age would have received going into the next season.
“Everything is pushed back,” said Coming of Age founder Amanda Lurie. “Fall orders were pushed back as well and if I don’t get enough sales it’s not worth me buying my fabric and I have to have the down payment for that. I might not even do this season because it depends on the orders. When you are a small brand, you depend on the store orders to produce — their buys help me because their payments give me money to put into my own e-commerce. It all trickles down.”
Lurie likened business in this time to “kind of a game. I either risk buying 50 yards of fabric and having five stores buy from me and waste all this money or not risk it and give up the whole season.”
Christine Alcalay has owned a women’s shop in Brooklyn for 18 years and a men’s store for five, while also operating a namesake label that is sold in some 30 stores worldwide.
The virus has already taken numerous tolls on small businesses and hourly workers. Alcalay started the year out 20 percent ahead in sales, a figure that quickly evaporated as New York began to shut down, leaving her with multiple zero sale days in a row.
“I’m already saying ‘no’ to things coming into my stores, questioning if I should produce fall and what will spring be like,” Alcalay said. “I’m not dealing in panic, I’m just trying to be realistic about what’s happening. I’ve contacted my landlord, I’ve stopped shipments and talked to staff about hours and what that’s going to look like. I’m cutting my own salary and all of these things have happened in the last few hours — it’s so real for small business owners,” Alcalay said late last week.
Anthom’s Turchin said, “This will put us back a good year for sure. The problem is the trickle-down effect — not just Anthom and its employees, but we have started a season where everyone has begun selling spring-summer 2020. You usually get these shipments on net terms of 30 to 60 days, so you can sell the product before you pay. But if you are closed, you can’t pay them and that potentially puts other brands out of business and they can’t pay their employees. It goes down from there, where factories aren’t paid and they cannot pay the factory workers.”
Courtenay Nearburg, partner and chief executive officer of Krammer & Stoudt, admitted that these times are “financially very scary.”
Tough business conditions forced the men’s wear brand to pivot last year from producing a full collection in favor of a smaller, American-made denim-focused offering. But that has turned out to be a blessing in disguise as it does not require the brand to source fabrics from the Northern Italian region as it had in the past, or produce outside U.S. borders.
“It’s ironic, but we were totally right when we decided to source our textiles here. We just hope our factory in Tennessee survives this,” she said.
When factories do get back up and running, small brands like Paris-based accessories designer Amélie Pichard feel they may be brushed aside by manufacturers in favor of bigger clients. “When life is normal again all of the factories will be in a rush and small brands like us will be overlooked, so I don’t know how it will be before fall. I’m happy I don’t do a delivery for July like everyone else because all of that production is totally stopped,” said Pichard, who is now planning a fall collection that she imagines will be “very small.”
Emily Bode of the men’s wear brand Bode was forced to close her downtown Manhattan store, which represented a large portion of her business, and shift production of her collection to her home and the homes of her staff.
Although she was able to rush some completed orders out to people who were getting married and had other special events, the fulfillment centers she uses are closed so “we’re sitting on spring orders and can’t ship them.” She said she hasn’t received any cancellations yet and is hoping to be able to send orders out by April 15, which could still hit the window for most stores to flow spring goods.
Beyond that, she said while her factories in India remain open, Peru has shut down so her spring sweaters are unable to be shipped. But her studio staff in New York has taken fabrics and orders home and is doing its best to continue to create product.
As brands wait for factories and stores to reopen, they are pivoting attention to their own e-commerce channels. There was initial hope that consumers working from home or under quarantine would become bored and binge shop online, but multiple designers say that e-commerce sales have been uncharacteristically slow.
As spring clothing is delivered, labels are under pressure to sell goods while they are fresh, but also recognize that marketing during the COVID-19 crisis requires a heightened degree of sensitivity.
PriscaVera designer Prisca Vera Franchetti said “the biggest struggle is trying to make sense in this time of communicating with the customer and being sensitive to this moment we are living in.”
Some businesses are getting creative to incentivize online sales. Trendy base-layer company Matek relies heavily on sales at ski resorts, many of which are now closed for the season in light of COVID-19’s spread. Stern has installed a widget on Matek’s web site that “usually gives 1 percent of purchases to a charity of someone’s choice and I’ve changed it to 10 percent in case people are shopping, they can feel good about what they are doing,” she said.
Help may be on the way. One designer who wished to remain anonymous says that Vogue editors, at the direction of editor in chief Anna Wintour, have begun reaching out to young designers to assess COVID-19’s potential damage. The magazine, which holds an annual competition for young designers and sprung to action after the 2008 financial crisis with Fashion’s Night Out, may be preparing a program to help shepherd small labels through this difficult time.
Additionally New York City Mayor Bill de Blasio last week revealed preliminary plans to help small businesses via zero-interest loans or grants to keep their payrolls afloat. Multiple brands say they are assessing these options as they are finalized by the city.
In the meantime, Turchin and Chasin have begun holding sales through Instagram Stories and Instagram Live in order to generate excitement. Lurie says she has noticed a spike in traffic to her own e-commerce site during the COVID-19 lockdown and is strategizing how to convert that into sales. Many brands, like hers, have begun offering free shipping.
The popular piercing and jewelry boutique Studs, which opened its first location in November to much fanfare, has closed its two retail locations, which attract around 2,000 shoppers a week combined. E-commerce only accounts for 10 to 15 percent of Studs’ sales, but is now a focus going forward, according to cofounder Lisa Bubbers. “The advice we are planning on getting from our investors is ‘plan for the worst and hope for the best,’” she said, noting Studs is paying its employees as usual through April 1, and the company will reassess after that.
Men’s wear brand Rowing Blazers sent an e-mail to customers on Monday afternoon saying its New York City retail locations have closed but its Los Angeles pop-up is still open, as is the company’s e-commerce site. “While there may be slight delays due to reduced staffing and safety measures, at the moment we are running on schedule and do not anticipate any disruption to our e-commerce,” wrote the brand’s founder Jack Carlson. Twenty percent of sales this week will be donated to Save the Children.
Looking ahead, Carlson said he’s pushing ahead with production of the fall collection despite the fact that much of it is manufactured in Europe. “But we’re lucky that we’re not primarily a wholesale business so we can control our own destiny more and we don’t have to worry about people canceling orders,” he said. “One thing we have going for us is that our clothes and brand are fun and colorful and hopefully what people need in this depressing and dark moment.”
Private Policy, a New York-based men’s brand, was able to report a ray of hope. Its factories in Shanghai, which had been closed for around two months — due to local holidays and the coronavirus — have reopened. “We had finished our spring production before Chinese New Year,” said cofounder and codesigner Siyinq Qi. “And our factories are now producing our fall ’20 collection. We really got lucky.” She said the brand has not received any cancellations, but retailers who had expressed interest in adding the collection have put that on hold for the time being.
Savannah Yarborough, a Nashville-based designer of leather goods, was hit with a double whammy. First, her city was devastated by a tornado earlier this month and now is dealing with the COVID-19 pandemic.
“Business has almost stopped,” she said. “Clients are not coming in or reaching out. It’s like crickets.”
Most of her high-quality leather is imported from Italy and the tanneries there were operating at around 25 percent of capacity about a week ago. That means she has enough materials to hold her over for a while. But Yarborough believes this situation will lead to a new way of living. “People are going to be making things, knitting, sewing, to occupy their time and hopefully it will impact how people spend their money,” she said.