As the coronavirus crisis continues to unfold, we are reaching out to retailers and brands to see how they are handling the situation and how they are planning for the future.
Today, Josh Hansen of Hansen’s in Encinitas, Calif., filled us in on how his family’s store is weathering the storm.
Hansen’s is one of the most successful shops in the industry.
What is your main focus right now?
Josh Hansen: We have kept our entire staff on the payroll and will make this our main priority going forward.
We do own our building and this makes all the difference and that is why we feel so strongly about keeping all of our full-time employees on the payroll. The Hansen family is committed to this and we hope we can manage without making any major changes.
We have a few employees coming to the shop to do essential business activities including filling online orders.
Our other big priority which we are still working on is the Payroll Protection Program (PPP) through the SBA.
What bank are you working with? How was the process?
Josh Hansen: We have two banking relationships, one with Union Bank and one with C3 Bank, which is the new bank in downtown Encinitas. We are working with C3 because we have a better relationship with them and they have been amazing. The team over there is working really hard to get us this loan. We have not gotten it yet, but we hope to get funded sometime next week.
Have you been able to pay vendors?
Josh Hansen: We continue to pay our vendors but have slowed our payment cadence. All of our partners have been so helpful and we appreciate all the support.
We have taken on a rationing strategy for our cash as best we can.
How have sales been impacted? What do you think will happen when the lockdown ends?
Josh Hansen: March sales ended down about 65%. We obviously know that we will be closed in April.
It’s just a guess, but we feel like best case is we are able to open on May 1, base case (middle estimate) is May 15, and the worst case would be June 1.
May sales base case (middle estimate) would be around 50% of last year. We think there will still be strict enforcement on social distancing.
June and July we are planning on 65% and 70% of normal sales volume and then we go up from there over the rest of the year. These are just guesses, but plan for the worst and hope for the best. No one really knows, but we will find out sooner than later.
What do you think will happen with all the inventory in the market? How would you like to see that unfold with regard to future seasons?
Josh Hansen: We have been hearing some ideas around skipping or scaling back future seasons’ product selection to help keep the channels cleaner of product. We think this is a great idea and totally support this.
It’s a simple case of supply and demand. We have had no demand for almost three weeks and very little demand the 10 days before that. We think there will be a pretty large promotional period to flush product and for companies to raise cash and create cash flow. This is necessary in the short run, but if this goes on for a long period of time it will hurt margins and shopping behaviors that are already conditioned to not pay full retail.
We were just starting to make progress on MAP pricing and having more pricing integrity and that is all going away for the time being. The more product we keep out of channels the quicker this process will come and go and we can get back to disciplined pricing strategies that actually create profits that all companies need to survive in the long run.
Have you been working on projects at the shop?
Josh Hansen: We are planning on building plastic barriers at a couple of our registers to help protect customers and our team once we open up.
We have also started to work on plans of projects we just never had time for, like a customer loyalty program.
We continue to clean the shop twice a week even during our closure.
How are you guys feeling overall?
Josh Hansen: We are staying optimistic that this crisis could be significantly mitigated with an antiviral, more testing, and already approved drugs. It has been a slow go, but the news seems to be a little better.”
Everything is fluid, and we hope the news continues to get better every day and that all of our thoughts can then change to a best-case scenarios or better.
We are also starting to talk about how we can help other local businesses once we get open. We are all in this together and it will take all of us working together to get out of this and to be in an even better place on the other side of this crazy situation.
