Despite a slow and worrying start – 5 weeks without any income payments – 24/7 Distribution saw a boom in sales during the lockdown period, with Q1 and Q2 being up. A gap in production and an impending end to tax breaks for customers has resulted in an uncertain Q3. However, General Manager Nils Gebbers has a positive outlook for the future of skateboarding. By SOURCE Editor, Harry Mitchell Thompson.
We’ve heard reports that skate sales have been able to maintain some sort of momentum over the lockdown period. Please give us your fact-based insight here.
We had already planned for a heavily increased SS20 but even that planning was seen to be reserved. Completes were expected to show great growth, but the sales response for decks, trucks and wheels were overwhelming.
How are you strategizing to ensure you’re in the best place for recovery?
Currently we are making all efforts to ensure supply. We have a pretty transparent cost structure and have never taken any earnings out of the company, which has allowed us to be more flexible with payment targets and incentives (e.g. free shipping) during the crisis. A lot of shops think placing pre-booking on hardware is unnecessary, but the current situation shows, it ain’t. We went through 3 months worth of inventory in only three weeks. You don’t have to max out your orders like in shoe or apparel business, but securing better terms for at least a third of your demand makes a huge difference in your balance sheet (considering a 10% pre-book discount) and a huge difference in planning for my purchasing team.
Just how has your business been affected by the lockdown – supply, manufacturing, sales and staffing?
We have seen some production/supply issues based on the Chinese lockdown and the shelter in place issues on the US West Coast. We were lucky enough to have shipped 96% of our orders way before Chinese New Year, but the 6 to 8 week gap in production is something that is hard to catch up with moving forward.
I sent my crew to work from home pretty much a week before shit hit the fan, so everything was going pretty well. I was really amazed how my team picked up the challenges of working from home, while home schooling kids so I have nothing but positive things to say there. It is safe to say, that 24/7 as a company will benefit for a long time from those experiences, allowing more individual freedom for our employees’ future going forward.
Our 3rd party logistic switched to a multi shift system, with cleaning breaks, to disinfect all scanners and desks. All in all, it slowed down the shipping process by 25-30%, but safety comes first, even though knowing that the demand to ship way more was available – it was a hard time.
Last but very not least, I am out of words for how our customers picked up the fight against this unforeseeable pandemic. Small shops organising pickup/delivery services, insta-shops while maintaining their support for skateboarding, literally overnight, probably one of the most impressive things I’ve ever witnessed.
How much do you expect business to be hit in Q1, Q2 and Q3?
Q1 is way up, Q2 shows very positive tendencies to be up as well. Q3 is very much up in the air and I think Fall will hold the moment of truth for a lot of our customers. A lot of them got a tax break till Fall, but that money is not a gift, tax is still due, and its timing will come in the worst way possible. Fall, when skate sales will be slow is when most of those VATs will become due.
Which categories have performed well?
Safe to say that all hardgoods categories were killing it, including parts and protection.
How have you been working with retailers taking delivery of SS20 orders?
With tight communication. Since we had a wide spectrum of implemented restrictions across our sales territory it is hard to answer that in short. (Netherlands didn’t really close their shops, while Belgium and Austria had a pretty drastic lockdown with Germany being somewhere in between.) I think my sales team did a great job, finding individual solutions for each and every one of their accounts.
Can you talk us through the financial ways you’re supporting retailers – payment terms, leniency, stock buy-backs, inventory levels etc. And also marketing – social, assets etc.
I think we didn’t have a single payment coming in for 5 weeks, which was pretty scary. We didn’t have any buy-backs, we had more of a “demand is there but we need to net 50” situation. We tried to give as many of our accounts brand shout-outs through the global insta channels, etc. as we could, but apart from that, we tried to keep things normal as much as we could.
Has your marketing department done anything special for your customers over the lockdown?
We continued our team (150+ riders) and brand marketing, supported magazines, shops when they got creative and did raffles, etc..
Any positive thoughts/analogies for skateboarding’s way out of lockdown and recovery?
Even if only 20% of the new kids that got completes during lockdown stay true to skateboarding, we have won a lot of new and raw talent. That will help skateboarding to progress and hopefully a lot of those new kids will learn quickly that Amazon, Decathlon and their likes do not build local parks or teach you how to kickflip, adjust your trucks or grip your board.
Skateboarding will get through this and together our industry will get through this. Skateboarding has always been strong when the economy’s down. Music, from punk to rap, is at a peak while the economy’s down. With Coronavirus, the most fucked up President in years and the obvious injustice in our society/industry, we can all be rest assured that we’ll listen to some great tunes and see some of the best skateboarding we’ve ever seen.
What does the ‘New Normal’ look like for your customers?
Dealing with a lot of bullshit and then ending up doing what skateboarders do, fall, adapt, adjust and get out on top of things.