When the pandemic struck earlier this year, retailers scrambled to shore up their supply chains amid mounting uncertainty.
And while most business took hits during the early months of the virus’ spread, some pivots proved positive—not just for brands’ bottom lines, but for their overall forward-looking strategies.
At an Axios webinar, “The Supply Chain of Social Good,” on Wednesday, retail execs weighed in on how they’ve addressed 2020’s challenges—and how their decisions will continue to impact their brands in a post-pandemic world.
Michael Rubin, founder and executive chairman of Fanatics, a global leader in licensed sports merchandise for major league and college teams, said that the rise of coronavirus threatened to have an outsized impact on the company due to the cancellation of the high-profile games and matches that keep the business humming.
“What actually happened was quite different,” Rubin said. As store shutdowns stymied brick-and-mortar retail, “people went to buy it online,” and the company’s comfortable staples—like sports jerseys, and sweats—began flying off the virtual shelves.
Confident that Fanatics would handily weather the storm, Rubin turned his attention to the shortage of PPE that plagued the country during the pandemic’s early days. “I found out that there was such a shortage of face masks and different things that the medical frontline workers needed,” he said—especially in New York, which quickly became the virus’ epicenter in the U.S.
Fanatics owns a factory in Pennsylvania that manufactures the official Major League Baseball jerseys for the Philadelphia Phillies and the New York Yankees, Rubin said, and he worked with league commissioner Rob Manfred to devise a plan to pause production on those products and divert resources into making masks. The shift took place within days of the sporting leagues’ suspension of their playing seasons, he added.
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Fanatics continued to produce protective gear—to the tune of more than one million masks and gowns—through June, when the country’s PPE shortage began to stabilize. The company distributed the items to frontline workers at different hospitals throughout the country at no cost.
The company also began raising money for charities like Feeding America, No Kid Hungry and World Central Kitchen to help those experiencing food insecurity due to the pandemic’s economic ramifications. Between April and May, world-class athletes and celebrities like Drake and Kevin Hart began donating to the cause, ultimately raising $60 million that was immediately distributed to the organizations.
When asked about how these efforts have served Fanatics, Rubin said he believes business leaders in the private sector have a responsibility to take action to support their communities.
“One of the things that I’ve learned is that every time that I think we’re going to go out and do something that’s going to make the world a better place, and that it’s going to cost the company money, there’s always a positive halo effect,” he said. “You get paid back by the culture in your company, by your shareholders, by your consumers.”
Meanwhile, premium women’s basics and accessories brand Cuyana similarly enacted its own pandemic pivot to save its supply chain.
“We operate a very lean supply chain that’s been built on very strong relationships with family owned factories around the world,” including premium leather tanneries in Italy and Argentina and Pima cotton growers and spinners in Peru, said Karla Gallardo, CEO of the Bay Area brand.
Building and maintaining these supplier relationships has been an ongoing effort since the brand’s inception, Gallardo said, and while the onset of the coronavirus saw consumer interest contract, Cuyana worked with its factories to adjust orders accordingly.
While order volumes undoubtedly saw reductions, Cuyana worked to rethink its assortment and make use of the materials it had ordered through new, pandemic-ready products. “We repurposed materials towards products that we knew were going to be more in-demand,” Gallardo said.
About 80 percent of Cuyana’s product offerings are year-round essentials, allowing it to make very accurate inventory need projections, based on historical data. “Most of the inventory we order is pretty risk-light,” she said. But the brand’s trend-forward product had to be “reimagined to fit the current environment.”
During a normal year, much of Cuyana’s business stems from its work-ready totes and handbags, which are designed as carry-alls to hold everything a woman on the go might need. But during 2020, with many shoppers sidelined from their normal daily lives, the brand had to rethink its handbag strategy. Cuyana launched a number of smaller crossbodies and belt bags, designed for “those micro-moments where we are going out of the home for a little bit at a time,” she said.
While the appetite for the brand’s large leather totes has indeed decreased, Cuyana has seen an uptick in interest in these smaller, more affordable styles. The brand’s mostly minimalistic apparel offerings have also seen a pleasantly surprising boost, she said, as many women have been working from home and looking to comfortable, yet Zoom-ready, staples.
“We moved some new styles to later parts of the year, or 2021” in an effort to preserve the designs Cuyana was most excited to release for a more promising debut, Gallardo added. “We treated each P.O. as a unique case, and worked with our suppliers together to figure out win-win situations in which no both of us could make it through.”
The label sought to balance ending the year in a “beneficial inventory position” with helping its partners—on whom Cuyana is dependent—weather the year without major layoffs. Preserving those relationships became a priority, Gallardo said, and while the company lost out on some short-term profits this year, it also gleaned some important learnings about the importance of a nimble product strategy.