In the midst of a crisis, fashion brands that can pivot faster to meet changing customer needs and market fluctuations will emerge stronger.
During a recent Sourcing Journal webinar, the CEO of sustainable apparel label Tentree shared how his company has positioned itself to better handle the current market uncertainties. The brand, which made a direct-to-consumer push and launched a new product category during the pandemic, offers a case study in how technology can power adaptability.
“Flat is the new up,” said Derrick Emsley, CEO of Tentree. “It’s prudent right now to be operating from a place of being as conservative as you can. What’s going to allow companies to come out of this stronger is by having a strong balance sheet, not being over inventoried and really being able to take advantage of the opportunities that are frankly going to come out of this.”
When Tentree originally launched its fashion business, it was entirely direct to consumer. After quickly realizing the need for more third-party support for cashflow and to amplify its message, the brand entered into wholesale relationships, which at one time accounted for about 75 percent of its sales.
In the past three years, Tentree has been building up its direct-to-consumer business. Going into 2020, the brand expected about 50 percent of its sales to come through its e-commerce platform. As part of its DTC move, the brand worked to get to know its customers better, building out the psychographic profile and values of its supporters through focus groups with existing and potential buyers.
“There’s a lot that’s been said about this whole transition that’s taking place to direct to consumer. And I think what often gets lost is that people focus on the direct side of that equation, rather than the consumer side of the equation,” said Emsley. “And for us, that was actually a really big learning.”
Once Covid-19 hit, this digital focus paid off for the brand. When wholesalers canceled orders, Tentree was able to reallocate merchandise to its e-commerce channels. The brand used its e-commerce stack to quickly shoot product, get it uploaded and market it to shoppers. During the store shutdowns, Tentree saw a 130 percent year-over-year bump in online sales, allowing it to offset the lost revenue from brick-and-mortar placements.
Emsley attributes Tentree’s ability to adapt quickly to these retail closures to its “channel agnostic” approach to retail. Being able to shift product also helped the brand avoid steep discounting.
“Historically we’re a sustainable brand. Our view has always been to not create too much product, do heavy discounting, build a promotional business model,” said Emsley. “We want to build a full-price business model where we’re doing our best to have supply meet demand, and plant as many trees as we can along the way.”
This focus on preventing surplus inventory has also extended to Tentree’s product planning. Rather than trying to build a wide assortment, the label has instead streamlined to focus on the styles that it feels most strongly can perform well in the market once retail rebounds.
“Ultimately, our big focus as a business has just been fewer, better things. If we can as a business focus on just providing the right product at the right time, rather than chasing all the product opportunities that are out there—and it really comes down to understanding our customer—then we’re going to be a lot more successful,” said Emsley.
Underpinning Tentree’s Covid decision making was collaborative technology. Emsley explained that via its ERP system, the company was able to build out models of how the crisis could impact its business to determine its precise financial position and map out expectations of different retail channels, allowing it to more strategically plan out promotional activity. Additionally, a PLM enabled the company to collaborate with factories and have better visibility into its inventory.
“The implementation of an ERP really forces a company to examine every business process that they do,” said Craig Harris, industry principal–apparel, fashion and accessories at Oracle NetSuite. “And in that combination, the technology reinforces those business processes, but it also means that your key stakeholders become intimately aware of the nuts and bolts of how your company operates. By having that knowledge and having a platform it gets executed against, it queues up your ability to change.”
In a pandemic-minded move, the brand took fabric overstock caused by canceled orders and turned it into face masks. As part of its community mind-set, Tentree sent sample masks to its ambassadors to test out. After gaining and taking note of their feedback, the label sold out of its masks in just 24 hours, and the waitlist is in the thousands.
Aside from providing centralized data for more informed decision making, an ERP also has the power to help prove a brand’s sustainability credentials, by tracing a garment’s journey from source to end consumer. For instance, knowing which exact farm cotton came from can help to validate its organic status.
“Unless you have the plumbing of an ERP built to be able to support that information, you can’t really prove out your own authenticity,” said Harris. “So it’s those components or the processes behind the scenes that allow us to link that information, and then ultimately report on it and do analysis.”
- Tentree’s takeaways from its journey to offer sustainable products
- What Tentree has done to slash lead times
- How the brand is approaching nearshoring
- What Tentree learned from its own ERP implementation
- Why sustainability credentials often fall behind quality and price considerations for consumers
- How Tentree builds its consumer-facing sustainability messaging
Click here to watch the webinar now.