One day, before the pandemic hit the United States, Rae Nicoletti just happened to email her contact at the Italian factory where she sourced most of the vegan leather for her handbag line. The abrupt reply was a retailer’s worst nightmare: The facility was closing permanently within the month.
Thankfully, the founder of Hozen, a Los Angeles-based digitally native brand, placed a big order with a vendor in December and purchased a ton of extra material, which got her company through until mid-summer. But with holiday orders looming, Nicoletti was left scrambling. After reading about biodegradable leather made from cacti in a fashion trade publication, she tracked down the alternative textile and partnered with a Mexican manufacturer.
“Unless something goes on there, too, I should be OK,” Nicoletti says. “I feel pretty lucky—I have a lot of friends in the industry who can’t get materials from overseas because plants have shut down. Even friends who do production in the states—those factories have closed because of social distancing. And here we are staring down peak season.”
Holiday forecasting and logistics planning is tough enough for retailers in a normal year. But developing a fulfillment strategy that adequately addresses supply chain, inventory management and delivery options for the all-important November-December period has become a herculean task in 2020. Merchants are sidestepping landmine after landmine with the uncertainty around COVID-19, and news of spikes in cases around the country has left retailers wondering just how merry the holidays will be.
“The best advice is to do contingency planning and get as prepared as possible for multiple scenarios, depending on where we might be by the holidays. What are the things that would spell disaster, and how do you avert those?” says Emily Pfeiffer, a senior analyst at Forrester Research Inc. “This unprecedented time uncovered a lot of breakdowns in everything from supply chain to last-mile delivery, and it calls for retailers to be as flexible as possible. The ability to pivot quickly and put a plan B in place is really, really key now.”
The pandemic has caused a particularly “lopsided mismatch” of supply and demand, so it’s entirely possible many retailers will be stuck with a lot of leftover inventory after a lackluster shopping season, Pfeiffer says. Conversely, others may miss out on opportunities to sell more to consumers buying online in greater numbers this year as they try to avoid crowded stores or can’t access them altogether. So retailers need to rethink their quantities and timing to mitigate issues or capitalize on buying patterns.
Bean Box got the memo. The online coffee subscription retailer has still been able to get enough beans from artisan roasters as shuttered cafés have resulted in a surplus. That allowed the company to keep up with surging demand for premium coffee at home during COVID-19 even though sales were triple Bean Box’s forecast for the period, according to CEO Matthew Berk. For December, he expects sales to be 3-3.5 times higher than last year. Since Bean Box’s products are perishable, the retailer can’t stockpile months’ worth of inventory in anticipation of a crazy holiday peak, but Berk has started placing orders 10-14 days in advance rather than a week out as a buffer for any sourcing snafus.
Potential packaging woes have given Berk some anxiety, too. Bean Box uses coffee bean bags that are manufactured in Taiwan, and shipments are taking much longer to clear customs because of the backlog. In previous years, the retailer ordered bags in more conservative quantities since it was easy to place another order later into the season if necessary, but things will be different when Bean Box orders Q4 packaging this summer.
“Normally, we don’t even have to think about it, but this year, we’re like ‘My gosh, it’s a huge cash flow hit, but order a million of those instead of a couple hundred thousand,’” Berk says. “And make sure you have two or three folks that you can turn to waiting in the wings in case—god forbid—something happens.”
Bean Box makes a little less than half of its annual revenue in Q4, so being prepared for the influx of holiday orders is crucial, he adds.
Ministry of Supply, a web-mostly brand that sells high-performance dress clothes, is facing the opposite dilemma as it tries to figure out what and how much customers will buy in an era where overall apparel sales have been plummeting. White-collar workers are largely clocking in from a home office, events like weddings have been canceled for the foreseeable future, and no one knows whether holiday gatherings will even take place. Additionally, although the retailer’s six shops just reopened after being closed for several months, Ministry of Supply has to be prepared for another round of store closures if the pandemic isn’t under control soon, according to Nicole Mazzola, retail operations manager. Considering the stores bring in…
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