Not my favorite kind of post to make, but I’d have a handful of people ask a question that I feel a need to address.
Will you be offering discounts like a lot of stores are?
No, I won’t, and I really can’t. Stores are offering deep discounts, often on brand new items that would normally be full price through May, to move inventory they have on hand and can’t return. Big companies are scrambling to liquidate right now. Things in the industry are very, very dire right now. The extremity of this can’t be overstated. Right now, the Fall/Winter 2020 season is very likely to be cancelled altogether. That is not just talk or an exaggeration. The fashion shows are cancelled, designers can’t get things produced, and if they could, who is spending money on luxury goods? And fast fashion won’t make it up when the stores are closed and not many people are buying clothing that has a very small profit margins per piece.
I get some industry publications, and have been following this for the last few weeks, and let’s just say it’s not a matter of of any companies will fold, but rather which ones and when. Neiman Marcus is in chapter 11 bankruptcy talks. Nordstrom just has a very wide retail layoff with much of corporate furloughed without pay and the entire board going without pay until September. When retailers struggle, they can’t order products and return or cancel shipments. Those supplies in turn have to cancel their own purchases or cancel then with manufacturers, who in turn have to cancel orders with suppliers of various materials, and those suppliers stop making supplies. This disrupts the whole supply chain, resulting in retailers having to discount stuff to bring in cash.
This also means that getting materials is going to get substantially harder. I can’t get fabric from my European suppliers right now. Retailers and wholesalers in the US can only rely on the stock they have on hand, with no real idea of if they can get more anytime soon. This means I have to rely on my stash, and let’s say it’s substantial. I’ve had a lot of people tease me and call me crazy and say I’m OCD (I do legitimately have OCD-tendencies, but that’s not what they’re talking about) and obsessed and need mental help (this will be the topic of another post probably later this week) for my tendency to hoard fabrics and notions and various other supplies. But I was a tech worker in Silicon Valley at the start of the last recession. I went through a period of not being able to get supplies I needed (Aria Couture was concurrent with working in tech), and having to turn down desperately-needed commissions. After that, I began to hoard, just in case, and right now, that’s coming in handy. I can still make many, MANY things, but the catch is I can’t rely on getting more, and when I can, there’s no telling how much the prices will go up. So what I have is what I have. When it’s gone, there’s no telling when I’ll be able to get more.*
This leads in to a question I have personally received, but that I’ve seen asked all over the internet.
Why can’t that company just pay people? They’re a couple hundred million. They’ve got the money.
Because they can’t pay people in cartons of clothes. What a company is worth has nothing to do with how much cash they have on hand. Worth refers to the value of assets, and that includes cash, but also includes their inventory and other items, whether intellectual or physical. The very name of a company carried value. Their domain name carries value. Their unsold inventory carries value (and that value decreases as time goes on). A clothing company with a value of $100mil might have $10mil in cash, which really doesn’t go as far as it seems it will when you consider the cost of salaries and all the overhead from rent on locations to the electric bills on down to the supplies to clean the floors, with $90mil in clothing that they sell to make the money to continue paying people. If the economy shuts down, like it is now, their ability to sell is diminished severely, and they can’t move those products. No products moving means that that cash isn’t going to last long if they continue trying to pay everyone their full salaries, on top of having to continue paying rent on the retail and office locations, and then they’ll have stale inventory if they can even get back up and running. And no, retailers can’t just open back up. They need money to be able to pay salaries when they do, and they need that money before they start. Spend all their cash on hand at the beginning of a recession, and there’ll be none to pay people if they can remain in a position to re-open. It’s important that they re-open (yes, it’s important for people to have money now as well) so that they can recreate jobs because people need money they as well.
In other words, there’s a whole lot more to it than just writing out paychecks and calling it a day, especially when so much of the value is in something other than liquid cash.
If you see companies deeply discounting things, it’s because they’re trying to offload inventory while they can since some liquid cash is better than none, and they’ll likely use some to pay people a while, but also bank some in hopes of reopening later. The unfortunate reality is that a lot of them won’t.
Where do I personally stand in all of this?
I’m fortunate. As of right now, I can skate by. I don’t have revolving expenses, haven’t hired anyone, have a stash I can fall back upon. But when this recession is over, how people spend money will inevitably change with a probably emphasis, at least for a while, on sustainable fashion and less on the frivolities I provide. I’m not planning to go anywhere for the foreseeable future. I’ll be staying put. I acknowledge my privilege that I can do this, but I’m also working on something new that, due to the intellectual nature of it and not wanting a novel idea to be stolen by a larger company that does manage to stick around, I will not be able to get into it very much. I started on patterns for Sarah and Jareth, which will be put aside for the time being. Hardly seems worthwhile when getting the fabrics for them is so iffy to nearly impossible. But this new idea I have will, hopefully, actually lead to something that will create jobs for others while not competing with the typical Aria Couture fare.
For some fun, I’m also going to finally go through some of the many thousands of photos from one of my trips to the V&A and start on some analyses, as well as posting photos from the Marvel costume exhibit, and a few other things. Just because the world is stressed like hell doesn’t mean we can’t try to find some things to enjoy and unwind. I’m also going to start posting more in-progress pics, just completely random shots, just for a little distraction from stress. I need a bit of relief, and suspect many of you may need it as well.
If there are any questions or concerns or anything, please feel free to contact me.
*Also, I am in the very fortunate position of my husband being with a company that pays enough that his income is what pays our regular bills, and he is in a position that is now vital to the company (there are four people, with him in charge, who were providing support to 525 people, and now there are 475, and they’re now all remote–good luck hiring someone new and trining that person in the ins and outs of the company, remotely, then telling that person to now do the tech and other support without having support….and he’s the only one involved with some security stuff and a few other important projects…basically if he goes, it’s because the company’s folding, and they’re providing some vital server stuff to companies like Walmart, so they’re good). So I’m in a better position than many. There are seamstresses right now deeply discounting their services due to being the ones to support their families. If I were to discount, I could easily compete and likely take away those commissions, and I don’t feel right doing that when I’m okay right now, and so many others aren’t. A lot of them probably won’t be able to do this much longer, and I want to give them the space to do what they need to do to get by without me trying to fish in the same pond right now. So I’d rather back up and give them space to try to meet their needs first.