As the coronavirus approaches what could be its apex in the United States, brands are contending with a cooling off of consumer confidence—or an outright lack of interest from shoppers more worried about health than anything else.
While this moment is a painful one for those whose sales have stalled, it should also be an opportunity for them to take stock of their supply chains and address the issues that have likely plagued them for many seasons.
That’s according to Lawrence Lenihan, chairman and co-founder of Resonance. The company’s full-stack model for designing and producing apparel is designed to eliminate excess, cutting out overproduction and its side effects, like deep discounting and the landfilling of unsold product.
The company’s on-demand factories in the Dominican Republic received special dispensation over the weekend from the country’s government to reopen for the production of PPE—specifically, the in-demand and largely out-of-stock face masks needed by first responders on the front lines of the coronavirus crisis.
Resonance will be ramping up its production to full capacity in the coming days, aiming to produce about 20,000 to 25,000 masks each week for emergency relief staff in both the Dominican Republic and the U.S.—specifically, New York City, the epicenter of the stateside crisis.
About 180 sewers have returned to work already, and the company says it’s on track to produce about 5,000 masks this week alone.
“This is how we engineered our infrastructure,” Lenihan said. While he never envisioned something quite like the current situation, the company was built for resiliency in a volatile world, he said.
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As Resonance workers report for duty, they’re spreading out more across the expansive factory floor, Lenihan said. Everyone has been issues protective masks, gloves and eye protection, and when their temperatures are checked each morning at the entrance to the facility.
Lenihan is attempting to have a doctor stationed on site going forward.
Brand partner JCRT is manufacturing masks at the facility, and is selling about five five-packs per minute on its e-commerce site. The products are being sold at cost, he said, and for each mask sold, one is donated to a first responder. JCRT sold 6,000 masks in a single day in the form of 1,200 five-packs, triggering the same volume of product donations to the front lines.
The Resonance system was built for this kind of adaptability, Lenihan explained, and the ability to respond to an ever-changing world. “I’m not sure you could ever imagine six to 12 months into the future,” he said. “Imagine on January 1 of this year, trying to tell people what you’d be thinking today.”
It’s an impossibility, he claimed, to have predicted the situation in which brands find themselves currently. For that reason, they must be prepared to meet the unexpected readily moving forward.
The ability to pivot quicker to producing the products that are needed, versus dealing with a surplus of inventory that’s lost its luster due to unforeseen circumstances, will prove to be the difference between the brands that survive and those that don’t, he said.
“Our approach is to create what’s sustainable and valuable,” he said. “Make only what your customers demand,” which would likely result in 30 percent fewer items each year for most brands.
“I’ve heard people talking about putting sustainability on hold, and this is actually the time sustainability should be at the forefront,” Lenihan said. To save the industry, brands need to finally start being responsible—and stop making too much.
In illustrating the way that Resonance system has benefitted its brand partners, Lenihan noted that after a few order cancellations from wholesalers, the company offered a no-strings attached option to cancel to all of its partners while the pandemic persists.
“If we had been in a traditional system, that stuff would have already been made, and it would have already been on a boat somewhere,” Lenihan added.
Wholesalers would be saddled with goods they’d paid for—though they might be stuck in a port or languishing in a warehouse. Either way, those products wouldn’t be selling, and would likely be subject to deep, margin-killing discounts or landfilling.
Resonance integrates the whole value chain of a business, Lenihan said, to better predict a brand’s product needs and help them order what they can sell. Then, its factories produce to those specifications.
“In our architecture, product doesn’t exist until it’s needed,” he said. Once retail shows signs of recovery, “we’ll be ready for market immediately,” he added.
Lenihan sees the Resonance system as a no-brainer for companies hoping to survive the crisis, and thrive in the world that’s waiting on the other side.
“Every industry needs to exist like this,” he said. “The virus is now bringing everything that would have played out over the next few years into sharp focus over the next three months.”
While the retail sector is ripe for change, Lenihan said companies don’t usually make moves until calamity strikes. That moment may be here.
“Every single brand that you know of is standing on the precipice of bankruptcy,” he said. “If you’re a Levi’s and you can hold some iconic story in hand, and you’re well run, you can weather this,” he said.
But if you’re not an iconic label with reserves of cash and consumer goodwill, he said, “everything you have learned [about the industry] is likely working against you.”
Those outdated ways of working include long product lead times, a tenuous dependence on wholesale, and even outdated e-commerce strategies.
“I don’t know if you can cut it demographically—the larger brands have really big issues, and the biggest one is cultural,” Lenihan said. By contrast, smaller brands might not have the resources to enact supply chain overhauls.
Ultimately, Lenihan said, he hopes his company can be a part of the solution—but it will take time to augment its capacity so it can take on more business.
Resonance was in the midst of launching its first sewing factory in New York when the pandemic struck, he said. Lenihan envisions a network of factories dotting the globe, bringing manufacturing closer to the consumers it serves.
As different regions inevitably experience different traumas, stresses and even holidays, production could be moved to other markets to pick up the slack.
“We should have the resiliency to get back up and running, and we should have factories all over the world,” he said.