How small luxury retail businesses throughout the world are handling the pandemic — and their hopes for what comes next
- Business Insider spoke to five small luxury retail businesses — located in Italy, Bangladesh, China, Switzerland, and the US — to see how they are coping amid the coronavirus pandemic.
- The cofounders of Boy Smells, a candle company located in California, have resorted to hand pouring over 300 candles a day from their home in Los Angeles.
- Meanwhile, Gabo Guzzo, an Italian handbag company sold in retailers such as Bergdorf Goodman and Harrods, has pivoted its distribution strategy to solely e-commerce.
- Retail has been one of the hardest-hit sectors throughout the outbreak. It's unknown how long it will take the industry to rebound to pre-COVID levels, and many of the companies Business Insider spoke to said they're taking it one day at a time.
- Visit Business Insider's homepage for more stories.
Retail has been one of the hardest-hit sectors amid the pandemic, and stores across the world have been forced to shut down. Large retailers have canceled orders from supply manufacturers; factories had to close, and workers were sent home; nations shut their borders, preventing the import and export of materials. Luxury is expected to see a billion-dollar hit in sales, and experts think it will be at least a year before either sector begins seeing a return to normalcy again.
Business Insider spoke to five small luxury businesses, located in Italy, Bangladesh, China, Switzerland, and the United States, to find out how they're handling a decline in sales, unsteady markets, the mental health of their employees, and what their hopes are for a post-coronavirus world.
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Matthew Herman and David Kien, cofounders of the candle company Boy Smells, have resorted to pouring 300 to 400 candles a day from their home in Los Angeles.
Boy Smells is sold in over 300 locations worldwide, but as brick-and-mortar companies began closing in mid-March, the company told Business Insider that nearly all of their orders were canceled — and the supply chains it used to rely on also began to shut down.
Quickly, the brand pivoted to e-commerce, and cofounders Matthew Herman and David Kien went back to pouring their own candles — something they hadn't done since the company first launched in 2016. One big issue the company has now been dealing with is trying to find ingredients for candles, as some necessary products are not able to be exported from the countries they used to source from.
"We're faced with more out-of-orders and out-of-stocks, and shortages, and being able to sell," Herman told Business Insider. "Right now, we've had to limit wholesale almost next to nothing, just so we can serve our direct-to-consumer customers … Our wholesale managers have been put into customer service roles, and we have shifted our wholesale shipping staff to help with the direct-to-consumer teams."
On a positive note, Boy Smells says that its social media following has grown tremendously during this time, and that their direct-to-consumer pivot has been successful — it now makes up 50-75% of their business.
"People are sheltering-in-place and they want to invest in their home experience," Herman told Business Insider. "I think the small luxuries are what people are investing in. And it's about making the most and making the space that you're in, the best it can be."
Herman said the company is aware of the looming recession, and says that after the pandemic, he hopes the company won't be as reliant on wholesale.
"Every week there is a new supply chain issue," Herman said. "We've been hustling since the day we opened the business, and we've been growing exponentially every year. So it just kind of feels like a new hustle, just a new set of challenges to overcome."
Swiss watch company H. Moser & Cie quickly mass ordered parts it needed to produce watches when suppliers and manufacturers began closing throughout Europe.
H. Moser & Cie quickly changed the way it was running, as the pandemic began to strike Europe. The company put a remote work policy in place and reduced its production capacity.
The company also accelerated the launch of its e-commerce platform, ShopNow, available on its website. H. Moser & Cie is setting up an online interactive boutique for customers and retailers to discover products and learn more about the craft of watchmaking. The company has also stocked up on parts needed to produce its watches, as many factories remain closed throughout Europe.
To ensure the ability to pay employees close to their full salaries, the company filed for economic support from its local government, hoping to reduce its capacity while still maintaining the salaries of its employees. Edouard Meylan, CEO of H. Moser & Cie, said that the company wanted to "be ready [rather] than sorry."
"One of the support systems being provided by the state is that you can reduce your capacity to your need," Meylan told Business Insider. "My employees will only work 50% and I will only pay them 50%. The state will then pay 80% of the missing salary to the employee."
In this case, Meylan said his employees are effectively receiving 90% of their salary, while only working 50% of the time.
Meylan said he told his employees that "health is more important than anything" and to stay "creative" because the company will "need ideas … to rethink our business model."
Amid the outbreak, the company had just released its Nature Watch, to help raise awareness around sustainability in the watch and jewelry industries. The watch is made from actual living plants and has to be watered twice a day. The company also released its Swiss Alp Watch, aiming to redefine the traditional watch for a modern audience.
Meylan said these recent watch launches have helped the company stay afloat during this turbulent time, as most of them were pre-sold and can still be delivered.
"We have reallocated capacity to the products that we are sure to sell," Meylan said. "This gives us a 3-month visibility. After that, it is a blur and a bit scary, to be honest."
Lidia May, a luxe handbag company in Bangladesh, has always had a work-from-home model. But now, the company is dealing with reduced production capacity and manufacturing, as the virus causes a hit on its sales.
Lidia May, a luxury handbag company founded by May Yang and Rasheed Khan in 2015, has always had a work-from-home model, as a way to train and work with underprivileged women who might not have the resources or the time to come into a physical office. The company started with the mission to help serve the local communities in Bangladesh, and has since become a place where women come to acquire artisanal skills.
But amid the pandemic, the company has had to shift a few of its practices. All of the bags are handmade, and Khan says that production has had to stop, because it becomes a health risk for the workers to come together to build them. The company says it's still paying the salaries of all of its employees and is also providing food for the workers who need it.
"Their mental health and emotional health is something that we've really been thinking about all the time," Khan said. "We've managed to have a routine. People working from home are still in touch with each other and with us every day … we're trying to work on the community service to our own team and stakeholders, keeping them busy, keeping them feeling valued."
As the wholesale world comes to a standstill, Yang says the company's sales have been deeply impacted.
The company was not reliant on brick-and-mortar stores, and its products were primarily sold online; still, it is feeling the ripple effects of consumers becoming more cautious with their spending.
Khan says the company is not focused on sales at the moment, realizing that now might not be the best time to push sales on people who are dealing with the economic ramifications of the pandemic. Instead, the company is focusing on being "good community members" and is seeking to have a "reassuring voice" to its consumers.
"You look at our Instagram, it's almost like a personal relationship with [our customers]," Khan said. "We are providing a lot — locally, not just on social media — to help people with understanding the situation they're in, and making sense of it."
After the pandemic, Yang and Khan say they hope the luxury retail industry pivots to become more sustainable. Both say they want companies, and specifically large conglomerates, to start becoming more appreciative of their employees. Yang feels that some companies have become so big, the wellbeing of their workers comes as a second thought.
"We would like to see that brands are better stewards of the environment, of their customers, of their collaborators," Khan said. "And we would like to see consumers being more thoughtful in their consumption."
Italian handbag company Gabo Guzzo was preparing to launch its new collection in Bergdorf Goodman. But now, its design studio and production workshops have shuttered, and the brand is adapting to the online retail market.
Gabo Guzzo opened his eponymous business in 2017 and since then, has partnered with select luxury multibrand retailers such as Bergdorf Goodman, Harrods, and Lane Crawford to sell unique handbags that Guzzo says focus more on "art" rather than "production."
But since the pandemic hit, his company has pivoted to online retail, because brick-and-mortar stores have temporarily closed. On top of that, his design studio in London, and many of his production workshops in Italy, remain closed.
"The online world offers some helpful tools for remote working and passive escapes, but they can't replace a creative brainstorming session in the pulsating energy of the studio, or a design development discussion with the artisans," he said.
Perhaps fittingly, he points out that his latest collection was inspired by the idea of "metamorphosis," as well as a short story by the Chinese philosopher Chuang Tzu.
"'When he awoke, he did not know if he was a man who had dreamt he was a butterfly or a butterfly who was dreaming he was a man,'" Guzzo loosely quoted the 3rd-century story, Zhuangzi's Butterfly Dream. "The unbelievable reality of the pandemic adds a few more layers of meaning to the work."
Guzzo says that since the pandemic has hit, his days have "changed suddenly" and he has been adapting to running his business from home.
After the pandemic, Guzzo hopes that luxury pivots to become more sustainable. He said there needs to be a balance of natural, as well as social and psycho-physical needs. Consumers, he said, must also rethink their consumption habits.
"Greed is not sustainable," he said. "I hope there will be widespread consensus towards value, durability and time over quantity, product obsolescence, and speed."
Like most, he is unsure of how long the pandemic will continue to wreak havoc on retail, but says he has been inspired by the "resourcefulness, resilience, and generosity" which has come from it.
"While mankind ... fears what's next, nature has started to breathe again," he said. "Let's think and work together to learn from this and not waste the opportunity to become better humans."
Shanghai-based consulting company SuperOrdinary saw a rebound in sales after the outbreak settled in China, but now it’s worried about the US markets.
Julian Reis is the cofounder and CEO of SuperOrdinary, a Shanghai-based beauty and wellness consulting company that works to help international beauty brands break into the Chinese markets. Some of his most notable clients include Sephora staples Drunk Elephant and Supergoop.
Reis tells Business Insider that his business has improved as more people pivot to the digital marketplace, and that his company's digitally-focused distribution channel helped protect it as brick-and-mortar stores began to close around the world.
"[Sales for] skincare and self-care products have increased from February to March," he said. "The markets have kind of stabilized since then. We did see some plateauing [of sales] in April … people are still a little cautious about their spending."
Reis said the employees based in Shanghai have returned to the office, though everyone is still wearing masks, and that the markets in China have started to stabilize and slowly rebound. He also said that throughout China's outbreak, his company saw an initial increase in sales, followed by a quick decline, and then a sharp sales increase of 50% after the outbreak began to settle.
Reis believes that now is the time for brands to develop a "robust" communication strategy, and worries that the pandemic's hit on the American retail market might force multi-brand stores to close in the future.
Now, the company has started to focus its attention on the impact the pandemic is having on the US markets. Reis said his company has modified its marketing strategies to become more "relevant" as people started to spend more time at home.
"We're trying to really put ourselves in the consumer's shoes and ask what should we really be selling them and how do we market to them at the end of the day," he said. "We had to become a lot more sympathetic and empathetic with what everyone is going through."
Reis has been paying attention as over 30 million Americans file for unemployment, and US brick-and-mortar stores close, file for bankruptcy, or attempt to pivot their strategies to the digital space.
He said the retail and unemployment situation was not as dire in China as it is in the US, and that this is the time for companies to rethink their strategies and distribution models.
"Until there is a vaccine, there is going to be ongoing instability, not just in America but globally," Reis said. "America is [one of] the most creative and entrepreneurial places in the world, so I think a lot of [new] businesses, products, and categories are going to come out of [the pandemic]."
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