Throughout 2020, major clothing labels had hundreds of thousands of dollars of merchandise lying idle in warehouses, with store doors closed and retailers not accepting inventory--or paying invoices. Direct-to-consumer companies saw sales halt, and then pick up with a vengeance, right as their supply chains got tangled. Two years into the pandemic, though, some retail companies have not only survived but grown quickly. The founders of a few have shifted not only their business strategies but also their mindsets.
At Fast Company's virtual Most Innovative Companies Summit Tuesday, associate editor Yasmin Gagne asked a slate of founders and investors how they've continued to innovate through the economic conditions, labor shortages, and supply-chain crunches of the past two years. When they look to the future, here's how they think retailers can thrive.
Plan for an increasingly stressed supply chain
Figs, the direct-to-consumer medical scrubs company that ranked No. 21 on the 2018 Inc. 5000 list of fast-growing companies, and was named a Best Workplace of 2021, entered the pandemic with a significant market share, community of loyal customers, and small slate of core styles that don't rotate out. "We're a replenishment-driven company," said Trina Spear, co-founder and co-chief executive of Figs, which is based in Santa Monica, California. "Inventory is where apparel companies go to die. We don't have any inventory obsolescence, because so much of our business is core." This has served the company well through the pandemic, though it has had to continually tweak its shipping methods, using airfreight and alternative truck routes to get scrubs to medical professionals on the frontline.
Spear said looking forward, companies need to plan for longer fulfillment times--and improve their long-term forecasting. "What do your customers want, and when do they want it? And what quantity do they want it in?" she said. "You have to predict that over the next six months, 12 months, 18 months, and 24 months, as lead times get even longer because of the supply-chain crisis."
Forecasting has never been more important. Or more challenging. "It's been a really hard time for founders and entrepreneurs, because you're trying to grow your business and at the same time you're constantly planning for a worst-case scenario," says Eurie Kim, managing partner of Forerunner Ventures. She says for founders, the mindset has shifted to: "I have to make sure there's a tomorrow." Fortunately for fast-growing companies, she's seeing more flexibility from investors and board members. "From a board perspective, we're being a lot more realistic," she says. "It's not just 'grow, grow, grow.'"
Prior to the pandemic, New York City-based Food52 planned to open retail locations. It is still eager to, says founder and CEO Amanda Hesser. But, despite that desire, she's waiting. "It doesn't make a lot of sense for us right now when there are a lot of unknowns in our business," says Hesser. "We've decided to hold off."
With supply-chain crunches and materials shortages in the headlines, sustainability in production and transit should be top-of-mind. But it's not. "A lot of businesses want to get back to 'normal,' and do business as usual, but there can't be any going back," says Tracy Reese, the founder and creative director of Detroit-based sustainable fashion brand Hope for Flowers. "There's still so much waste and unsustainable fashion that goes on. We need to get so serious about this." Hope for Flowers uses ethical sourcing of organic and natural fabrics, and strives to produce its garments closer to the consumer to minimize the carbon footprint of shipping goods globally. To compete in a future in which consumers become more aware of the power of their purchasing, she says, "you have to get out of the mindset of how do you compete with whatever has market share at the moment."
Put authenticity first in branding
Spear says Figs has decommoditized a commodity product by having built a loyal community around the brand. But, she says, "I think over the next 10 years it's gonna be even harder to build an authentic brand." The marketplace is crowded--and so are social media feeds. Her antidote? Put on blinders, and be consistent. "You've got to be yourself every day. Not look left, not look right," she says. "Focus on your own execution, and innovate."
Listen intently to your fans--and act on their input
Five Two, which is Food52's in-house line of merchandise, takes the idea of "brand community" and ratchets it up a notch. Five Two designs products by "taking our community and involving it in everything from product to launch," Hesser says. One of its bestsellers: a cutting board with an iPhone holder built in for reading recipes. When it came out, customers wanted a less expensive, more sustainable option--so Five Two designed it in bamboo. Hesser says after incorporating community input, the product is superior. "We can't respond to every community ask, but it's something we've built into our process in a really meaningful way," she says.