The top down economic impact of the COVID-19 pandemic will be staggering with mind-boggling numbers of people unemployed and revenue lost. Entrepreneurs are forced to deal with a crisis unlike any before, and a situation that was never imagined in any business class scenario. While the current economic landscape is stark, savvy business owners can survive now and ultimately thrive if they employ a solid strategy.
Harvard educated Marissa Tilley, owner of Lady Black Tie, a formalwear dress shop in Massachusetts has employed a multi-prong plan to weather the COVID-19 storm. The fashion industry has been particularly hard hit. The Business of Fashion and McKinsey & Company estimates that if stores remain closed for two months, 80 percent of publically listed fashion brands in Europe and the U.S. will be in financial distress. If a global brand is that at risk, one can imagine how a small retailer with a brick and mortar and online presence will struggle to survive. Despite the odds, Lady Black Tie is confident it can remain afloat. Even if your business isn’t in the fashion realm, you can employ Tilley’s strategy to your own company to make it through the COVID-19 crisis.
No one likes to slash prices, but in this climate unless you’re selling essential goods, it’s a buyers market. Tilley immediately reduced prices and offered better deals and promotion codes than her competitors. While the demand for dresses has dropped, there are still enough buyers online and you can bet they are price comparing. She made the decision that the company isn’t going to lose a sale because of price.
It’s time to take a good hard look at what you’re spending money on and cut costs wherever you can. At Lady Black Tie they cancelled subscriptions, reduced buying and cut the advertising budget to align with current revenues.
Negotiate with Suppliers
Work with your vendors and suppliers to renegotiate orders and contracts to preserve cash flow in the short-term. Tilley went back to a designer that requires a 50 percent deposit on large orders. When COVID-19 struck she asked the vendor to ship only half the order and consider it paid in full. This allowed Lady Black Tie to bring in fresh styles for spring, but without being stuck with a lot of inventory and a big bill due.
If your business has suppliers globally, pay attention to currency fluctuations and use them to your advantage. For example Lady Black Tie has started to buy more from Australian designers because of the favorable exchange between the Australian and U.S. dollar.
Everyone is hurting during the COVID-19 crisis, but if you want your business to survive, you must set return and cancellation policies and hold firm to them. Tilley has had many customers asking for a special exemption, and while she’d love to be able to do it, the math doesn’t add up. For the company to survive and for her to keep paying employees during this time, she can’t possibly return every special occasion dress bought for an event that isn’t happening. The key is to have one policy for everyone and gently explain it to the consumer. In Tilley’s case she points out that there will be upcoming events and occasion where the purchased dress can be used.
Continue to Market
It’s a tricky time to be marketing, especially items that are not essential, but it’s critical to stay top of mind so when your consumer is ready to buy again they immediately think of your brand. Instead of overtly trying to sell, Tilley has videoed her team in their dresses dancing, playing games and having fun at home. The videos posted to TikTok have received hundreds of thousands of viewers and are driving sales. While the COVID-19 pandemic is impacting all businesses and industries, small business owners can come out on the other side by making smart decisions now.