Special occasion dress retailer Lady Black Tie took a huge sales hit as schools canceled or postponed proms and graduations and brides canceled showers. Here’s how the retailer handles returns and is planning its recovery during the coronavirus pandemic.

In March 2020, Lady Black Tie was on track to have its biggest sales month yet. The special occasion dress retailer experienced surges in sales for prom dresses and bridal shower dresses. Plus, sales for graduation dresses would soon follow. Then, the coronavirus and subsequent stay-at-home orders swept across the U.S.

Marissa Tilley, CEO Lady Black Tie

Marissa Tilley, CEO Lady Black Tie

The retailer launched in November 2018. About 90% of its sales are online, and the rest are from its one showroom near its Massachusetts office and warehouse. In 2019, its first full year in business, Lady Black Tie sold 10,000 dresses and were on track to do six times that amount in 2020, says CEO Marissa Tilley.

After the first few weeks in March, sales became extremely rocky, with frequent, downward swings, Tilley says. Consumers were adjusting to their new life at home and setting their children up for remote learningnot shopping for prom dresses, Tilley says.

“That consumer sentiment is reflected in sales,” Tilley says.

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Luckily, sales in the month of April were more promising. Sales are still down compared with the beginning of the year, but there are fewer day-to-day sales swings. Plus, because the retailer grew so much in 2019, sales are still up compared with April 2019, Tilley says.

Data from Signifyd Inc., which is based on data from its 10,000 global clients and 3,000 apparel clients, supports this as well. The ecommerce security and fraud prevention vendor finds that online fashion sales increased 12% week over week for the week of April 28-May 4 after falling 32% in the first month of the pandemic.

“The first six weeks we were tracking apparel, the category was performing below its pre-COVID benchmark, down single and double digit percentages,” says Ashley Kiolbasa, head of product marketing, at Signifyd. “It wasn’t until week seven of our analysis that the category began to perform above it’s benchmark, and it has stayed in high-performance mode for the past three weeks now. Early signs point to promise for apparel merchants.”

Handling returns

One of the biggest challenges Lady Black Tie has to contend with is its seasonal inventory and its return policy. Prom dresses—which are roughly 35% of its annual sales—are highly seasonal, and what is popular in 2020 will not be in 2021, Tilley says. Plus, prom dresses are long while many homecoming dress styles are short, so the retailer cannot resell the dresses in the fall, she says.

With this in mind, Tilley made the decision to stick with its 14-day return policy. “If I accept one dress, I have to accept thousands,” Tilley says.

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If it extended its return policy, the retailer would be saddled with outdated inventory that it couldn’t resell and this would hurt the retailer’s bottom line. As it is, Lady Black Tie has reduced its staff from nine employees to three, including herself, she says. However, Tilley says, a few of those employees elected to stay at home, and she plans to rehire those employees once sales increase again.

“I am stuck between my customers and my employees, which is not a fun position to be in as a business owner,” Tilley says.

Lady Black Tie has had an increase in customer phone calls and emails asking for exceptions for their returns. The retailer tries to emphasize to shoppers that there will be other formal events in the future, such as college formals or galas, where they can wear the dresses.

From a business standpoint, every year there will be new shoppers looking for prom dresses, Tilley says, so she is not worried about the long-term impact of disappointing these shoppers.

However this may be a short-sighted approach, as retailers should be looking for ways to showcase their value, says Forrester Research Inc. principal analyst Brendan Witcher.

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“Airlines are extending point programs, hotels are allowing for free cancellations, retailers are offering free same-day delivery and curbside,” Witcher says. “Brands who fail to find a way to add value in these difficult times may find the brand so damaged that future sales may also be at risk.”

Still, Tilley checked in with other boutiques that sell special occasion wear and found they all have stuck with their return policies, she says.

For orders that were made near to when cities issued stay-at-home orders or when schools canceled events, many shoppers did return their dresses. Orders within that period “boomeranged,” Tilley says, as shoppers quickly returned their dress back within the 2-week period. Returns were elevated compared with normal although Tilley did not quantify how much.

How much and when Lady Black Tie is going to buy its future inventory, however, is unknown. Right now, she is keeping a close eye on if students will be returning to school in the fall. At the latest, Tilley will need to purchase homecoming dresses in July, so she is looking at what universities decide—as they usually start the earliest—and make a decision based on that.

“Right now, if we just coasted along until summer, things will be fine,” she says. “Really planning for the fall, that’s where it gets tricky.”

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On a bright note, parts of the U.S. are opening, and some schools have rescheduled events. Lady Black Tie already has experienced sales increases from parts of the country that are starting to reopen, such as Oklahoma, Tilley says. In fact, consumers are calling the retailer asking if it is still fulfilling orders. So much so that Lady Black Tie put a pop-up on its homepage alerting shoppers that it is still shipping orders as normal.

 

Ladyblacktie.com's homepage fulfillment announcement

LadyBlackTie.com’s homepage fulfillment announcement.

The retailer is hopeful that as more parts of the country open, it will continue to see increases in sales. What’s more, even with stores open, shoppers may be wary of going in person, which will benefit Lady Black Tie, Tilley says.

“We’re going to get the (sales) recovery first,” Tilley says.

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