How we are coping as a business during the Covid-19 Pandemic
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That’s good to hear, Giles.
I clumsily mentioned to the other half at breakfast that I’d like to buy something from you guys to help out. You know, selflessly.
She’s not exactly onboard, but I think I may break her yet. -
I have noticed a number of retailers are having a sale. Would this be a viable fix to smooth out cash flow in the short term? This is far from being a "normal" business cycle, every stage from the supply chain to its end users are influx. I do not own/run a business, so my perspective and knowledge is very limited.
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Personally, for a brand and the brand's whole ecosystem, I think that holding a sale is very bad business. If the reductions are not policed, reductions become a race to zero and everyone loses out. If we did suggest that IHUK and our all of our retailers do reduce product by a set amount, IHUK would be the ultimate winners. We are an online store, that's really all we do, so we are fucking good at it. We have stacks more inventory than any of our retailers and certainly some of our retailers cant even run their online stores at the moment. So basically we would screw our retailers. And say we did hold a sale to shift stuff, we could come out the other side with compromised inventory levels and it would take months to build up stock with money we don't have because the retailers have not had bricks and mortar customers for weeks if not months, so they still need extended credit terms. I have heard of some shops that have already had sales, let's say at 25% off, the sale went amazingly well, but guess what? They now have fuck all product and less money to purchase restocks.
We agreed this morning with Haraki, IHUK will take out loans to protect our business from the impact of retailers slowing down payments and/or possible bad debts if a retailer simply can't pay (we think we have a $20K exposure in this regard already), Haraki will give us plenty of leeway with payment terms to him. Haraki, on the other hand, will take out loans so that we can still place orders on the workshops, we need to protect them so that they stay in business.
Have we got it right? Have no idea, never been here before. Could my position change? Yes, the world changes every day at the moment. Twelve days ago I wrote to Haraki and said, when I met with you 4 days ago and I had said "by the middle of next week the whole of our retailer network will likely be shut", you'd have thought me mad. When I went out for dinner with him 2 and half weeks ago, the biggest problem we discussed was a possible shortage of constructional thread…
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I really enjoyed that response. Because relatively speaking IH is a small operation it made it easy to wrap ones head around the impact of the current situation to businesses.
In the meantime money isn’t going to my barber or bartender so a CPO and a Westpoint are one the way. -
Thanks all for your encouragement and support
As G said we've never expected or encountered anything like this before. One of the questions from the bank about the emergency loan was:
"When the Pandemic is resolved, how long do you believe it will take you to start recovery?"
I found that tricky to answer. I wanted to say "We've no bloody idea when it will be resolved, so I've no bloody idea!"
Instead I wrote "Another difficult question to answer, because none of us knows when the Pandemic will be resolved. If we base this on a period of 4-6 months before the Pandemic is at least considered “under control” then we should be able to start to recover quickly. We expect to keep our staff team intact and motivated, and we are extremely fortunate to have a very large, loyal, international customer base." Which is the truth, and we're very grateful for it.
If they ask any more impossible questions, I might be reaching out to you guys to help with my responses!
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Nice - if very different - tactical suggestions @Snowy and @Seul
Happily I think we'll be fine getting the loan, just may take time because we entered this strange phase of our business life in a strong position, my bank manager will understandably be prioritising the businesses who need the dosh soonest.
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I appreciate Iron Heart's practical approach to this outbreak. Good communication really helps us plan a route through this working together.
We started out online in 2012 so it feels like we have temporarily returned to those halcyon times before we opened the physical stores. Although the London and Manchester stores are closed to the public we are able to receive deliveries and ship to our online customers.
3 days a week one of our employees on a voluntary basis goes to the store (mainly James who lives near the London store and can crack on with his PHD in peace and quiet) He gets online orders ready to ship and leaves them by the door 8 metres away from the DHL driver who comes to collect. He also cycles a short distance to the store thus avoiding any public transport.
We too are talking to the banks about loans to get us through this period. We have to support the brands as without them we won't have a business on the other side of this. We are grateful to everyone who supports us at this time. We are very much all in this together and together we'll come out battle weary but in tact at the sunny end of this dark tunnel.
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Thanks for update, @Danny RnH - as you say, good communication is key, and it just so happens that we love talking to you, so it's a bonus to stay in touch even more often
Good luck with everything.
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@Madame Buttonfly Let's have that social catch up via Zoom in the coming days -Have you got enough "supplies"?
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@Danny RnH - yes let's do that. Supplies are good, thanks - Giles bought 3 more bottles of white wine today, not exactly a business essential, but it definitely helps with the anxiety!
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Haraki, Alex and I have made the decision to cut about a dozen items from FW2020. None of the UHF's will be cut, if that is any consolation.
Online sales are holding up well, but as each week goes by with us unable to ship to some/most retailers, our cash flow will get tighter and tighter as the weeks/months roll by (remember, we obviously could not stop any of the SS20 production).
Whilst we hated cancelling, actually think of it as postponing, any product, we need to reduce our outlying financial exposure in as prudent a fashion as possible…
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Haraki, Alex and I have made the decision to cut about a dozen items from FW2020. None of the UHF's will be cut, if that is any consolation.
Online sales are holding up well, but as each week goes by with us unable to ship to some/most retailers, our cash flow will get tighter and tighter as the weeks/months roll by (remember, we obviously could not stop any of the SS20 production).
Whilst we hated cancelling, actually think of it as postponing, any product, we need to reduce our outlying financial exposure in as prudent a fashion as possible…
Understandable… focus on core business and classic?
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Yes, we will focus on core and classic.
However, well over 50% of first-time customers buy a pair of jeans. So we have to have lots of jeans. Alex and I will order 100 pairs of XHS and XHSib in each of the following cuts, this weekend.
555
634
666
777
888BUT, we also need to have other stuff to interest them in coming back for more, so we will not stop dreaming up new stuff…...
