How we are coping as a business during the Covid-19 Pandemic
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All,
I thought it would be useful/interesting for you to know how Iron Heart as a business is dealing with the current situation.
Our goal is to keep everyone in the Iron Heart ecosystem (IHJP, IHUK, retailers, the mills and the workshops) healthy enough so we have a business when we get out the other side. If any link in this chain breaks, we are all at risk, obviously, there is little point in IHUK surviving if we have no workshops left to make product.
This is a complex juggling act, because we absolutely need to slow production down to deal with lower demand, but if we put our foot on the brakes too much, the workshops become unviable.
Currently, our online sales are holding up remarkably well, our biggest issue is that most of our retailers around the world have had to close down their physical stores, though of course most of them are still running their online shops. That means that their ability to pay for product already received and product already in the pipeline is seriously compromised. And, of course, if they are shut, we can't ship to them. Bottom line is that even if we slow production down, we are going to have significant cash flow problems.
Then, of course, we have the issue of trying to run the business with the safety of all our staff at the forefront of our minds. We only have 2 people going into the offices at the moment, all the rest of the staff are working from home. If we do not have work for them, we are asking them to take holiday. They, as expected, are being absolutely brilliant.
From an IHUK point of view, we believe we have secured a decent sized loan from the bank (our business hitherto, has been healthy, so we have good accounts). We have also been offered a substantial loan by a friend of the family at virtually zero interest. Haraki has also secured some government-backed loans.
On Monday, we have a conference call with H to discuss what and how we slow production down. Then he will visit all of the mills and factories next week (a 4,500km round trip) to discuss the situation with them and reassure them that we will do our utmost to support them.
We understand many of you are not able to consider buying anything other than essentials right now. But, we have to keep trying to do the best we can do to keep this business viable for the long term. So, please forgive us if it appears that we are just carrying on as normal and are unaware of the gravity of the situation, we are acutely aware and are trying to be as respectful and as empathetic as we can possibly be in all our outward-facing communications.
We are happy to answer questions if you have any, but given how rapidly the situation changes, we simply may not have firm answers….
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Thanks Giles. I’ve been hoping for a post like this that would explain how you guys are managing the situation.
My industry has shut shop completely and at the moment I’m looking at no financial support.
As soon as I can afford that Iron Heart cardigan, I’m bloody buying it!I wish you all nothing but the best of luck through this.
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Yeah all the best to you guys. I am batterning the hatches down financially and riding this thing out as best I can.
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I’m not at all surprised to hear that the Iron Heart crew are meeting this challenge with thought and care for everyone involved. Thank you.
I’m very glad to be a part of your customer base/community, and hope we all make it through to the other side.
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We are living in very trying and scary times, I greatly appreciate the business plan that IHUK and IHJP has projected. I also appreciate what the coworkers at IHUK and IHJP are doing to maintain this business, which I feel will succeed in the long run. It's reassuring to hear this. Thank you.
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Shout outs on social media… may or may not help. Always worth punt though...
https://www.instagram.com/p/B-PnGM_jkY1/?igshid=1dixz1jyxzlor
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thank you for sharing G. I can only imagine how difficult this is for everyone involved in the supply chain. I've been thinking of you all a lot recently and am hopeful you can find a way to ride through this safely. It sounds like everything that can be done is being done, fingers crossed!! -
One of the issues we have is that the Japanese side of the business has been shrinking for some time, it has been the international market that has been helping out. The Japanese market will shrink a lot more because of CV-19, we have to hope that the international side of the business can keep it's head above water enough to compensate for the domestic drop in demand. It's going to be tough…...What we look like when we come out the other side depends entirely upon how this thing lasts (obvious point, sorry)....
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Thanks for the explanation. Not a situation to be lightly taken. This has become a global problem. I am hopeful everything will work out for everyone at the end.
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when stringent measures starting taking place, shops began mostly trading online as an alternative. now, i'm slowly starting to see online shops closing. hanon boutique, a store that mostly do sneakers and based in scotland, announced their closure of online shop and warehouse for outgoing shipment a few days ago.
do you think it'll ever come to this situation? is there a way to mitigate it from becoming that way?
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For us to continue with the online store in the short to medium term, it depends on 4 main factors.
- That our staff remain well. One of the reasons we only have only 2 people in the office, is to protect the others. If one of the 2 contract the virus, then they will both have to self isolate, but we can back-fill with other staff.
- UPS still pick up in Japan, still deliver to our office and still deliver to customers
- The Kojima store remains open, Haraki is working on implementing a staffing regime like we are doing in the UK
- The UK government continue to allow our staff to go into work
We are doing everything and will continue to do everything we can to keep the online store open. In all honesty, we need to create as much revenue as we can to survive until the other side.
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We have just had a very useful and uplifting video call with H, Tom and Sarina. We discussed our individual challenges, so we are all aware of what is working and or hurting each party and we discussed what each party could do to make things easier for us as a whole. Haraki is off to visit the factories now, so he can have similar discussions with them. He liked te Zoom meeting so much, that he will probably start doing the same thing with the factories going forward.
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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.
