Canceled Orders Drive Creative Business Strategies For Designers

Closing non-essential retail stores across the US and Europe resulted in an unprecedented amount of canceled orders. Despite this uniform challenge for designers and brands, the subject remains taboo lest it signals an “ok” to cancel more. But facing these issues head-on demonstrates innovative and intuitive business moves that will lessen the pain of the luxury retail slowdown.

Amy Smilovic, the founder of TIBI, became cautious while following developments in China and opted for an intimate presentation and party in her store versus the runway for Fall 2020. Her design team reduced the upcoming Resort collection by 40%. “I didn’t follow my gut and took a sales trip to Paris in late February,” said the designer. Regular wholesale traffic is 115 clients, but they embarked with only had 65 appointments. They saw 35 accounts in total, ironically mainly from Korea and Japan, despite being told stores were “optimistic.”

“The third delivery of my Spring collection which targets the US market was completely wiped out.” said Smilovic.

Sensing this would be the case, Smilovic, whose Hong-Kong founded brand has strong ties to the Asian market, set up short term warehousing there. “If these goods made it to the US, I would have paid for duties, skyrocketing shipping rates due to coronavirus and warehousing in the States. Instead, 85% of this delivery is in Asia where I have a better chance my sales team can sell it using Joor,” she said, referring to an online wholesale platform. The remaining 15% will be offered on Tibi.com

Smilovic managed further deliveries pushing them further out. “The flexibility now is with the fall collection that was in the fabric order stage before the Italian mills shut down. So ideally, we will push pre-fall up a month to align more with a fall store delivery.” she said. This disruption to the supply chain for brands and stores may be challenging but has an upside. Smilovic added,”It’s substantially less product as compared to last year, but people may discover it’s enough inventory to get through a depressed demand situation.”

Designer Victor Glemaud is taking a similar approach to his knit-centric collection and forgoing his pre-fall collection altogether. He aims to reset his brand to two main collections a year with multiple deliveries.

Thinking to the next seasons to come, Smilovic has encouraged her team to recall how fashion changed during the war years due to fabric rationing, noting that Italian fabric innovation for Fall 2021 will be “minimal” thanks to the shutdown.

Also sensing a shift to come, commercial director of British shoe brand Rupert Sanderson, Andrew Stewart, worked with the designer to reduce the main fall collection offering a few key on-trend styles. Luckily the brand mainly avoided spring delivery cancellations by staggering shipments and extending payment terms. As global lockdowns occurred, sales appointments continued via Google hangouts.

“We noticed the majority of our buys were for pre-collections, so, fortunately, those orders were placed; now those deliveries will be pushed up to July and August, with fall delivering in September,” said Stewart.

Their factory in the tiny village in Italy’s Emiglia Romagna region had zero coronavirus cases thanks to a quick-thinking mayor. The hope is they will be able to open much sooner once the lockdown ends.

But in general pre-Coronavirus, brands are accustomed to extra product due to the canceled order here and there. A brand can liquidate those products by directing them to new accounts for immediate delivery. Beyond that, the brand’s website, sample sales, or outlet stores are viable outlets which may also be the case for Coronavirus cancellations.

“You can find new channels. It’s an opportunity to upsell in wholesale. Pre COVID-19, we saw a lot of growth from independent luxury boutiques like Hamden Clothing in Charlotte, NC. Fortunately, we aren’t reliant on the big department stores that are suffering.” said Stewart.

Danielle Frankel, who launched her game-changing bridal business seven years ago, faces a different cycle and challenge than ready-to-wear and accessories. “Bridal is one year ahead, and we were a week away from finishing a delivering what we call Autumn 2020 before Italy shut down its factories,” she said. In Frankel’s case, they were the ones to do the canceling, although it was most likely to a sigh of relief for many retailers.

But what to do with $300,000 worth of stock? “The lockdown has forced us to make considerable new strategies within a day or two,” said Frankel. Thanks in part to being awarded the runner-up for the CFDA/Vogue Fashion Fund prize in November of 2019, the bridal firm had a website revamp planned. Now the majority of the items that were not shipped to new and existing wholesale accounts will be available on her website for pre-order and ship in June. Her bridal and ceremonial dresses that require fittings are conducted through Facetime.

Frankel’s business approach is off-the-rack bridal and separates to be worn long after the ceremony with traditional custom bridal dresses. “Currently, we are working with 50 brides since before the lockdown. Coordinating the final alterations to surge post lockdown is our focus now. But I’d rather figure that out than nothing at all,” she said.

Frankel can’t offer the salon experience for new brides in her Midtown store right now but has plenty on her website. “Having the stock available is what customers need right now. They don’t want to see something they can’t have,” she said.

Julie Gilhart, chief development officer of business development agency Tomorrow, notes that designers face some grim realities. “If a designer is sitting on canceled goods for the remainder of Spring Summer 2020 and Pre-Fall 2020 and potentially Autumn Winter 2020, they are looking to sell that by ramping up sales via e-commerce with online sample sales to replace a public sample sale, the most traditional option to generate cash,” said Gilhart, whose firm reps brands like Marni, Marco de Vincenzo, and Rebecca Minkoff. Gilhart has proposed an idea borrowed from the days of Seventh on Sale, a designer collective sample sale launched in 1993 to raise money in the fight against AIDS.

“It’d be great to see designers coming together to support multi-brand sample sale with support from the industry. Another option would be marketplaces like Farfetch or even in some cases a luxury resale platform like TheRealReal taking in the merchandise,” she said.

In some cases, she said, inventory “can be repackaged and possibly presented at a later date.” For younger, mid-size brands that will bear the brunt of the slowdown, it’s best to stop production, keep fabrics unfinished and repurpose for future collections. “This is easier than repurposing fully-made garments,” said Gilhart.

For designers, that may be true. However, for manufacturers, it just pushes the problem further down the line.