How have you navigated Church’s through the COVID-19 crisis?
The company’s first priority has been the safety of others. We have gone to great lengths to understanding the situation around the world, acting on advice given by experts and local authorities in different countries. Where there has been no clear direction, we have taken the appropriate measures to give priority to the continued safety of our employees and customers.
We then looked at our overall business model and have taken the steps required to ensure we endure this crisis and come out the other end stronger and more robust. These steps have included cost savings and cash management measures, taking advantage of the various government support schemes, inventory reduction and management, omni-channel and customer service improvements, growing and developing the digitalisation of the business, analysing staffing requirements and key business processes.
With COVID-19 pandemic being an ongoing and evolving risk, with sales significantly down over the last 6 months, safety and survival are very much ongoing priority and focus for the company. However, we have used this time constructively to focus on our future strategy, concentrating on key areas including product development, marketing, sales strategy and customer service.
How have the first few months of reopening been for your business?
During June, our key stores across the UK began to re-open; this was the last main market to do so across our global portfolio of stores. Our Europe stores reported an 80-90% decrease on the previous year, but this has slowly improved to minus 25-60% decrease during the months June and July. These figures are less encouraging in the UK, especially in the London market, which has suffered. With fewer people working or living in London and with no tourists, sales have suffered tremendously. In most cities around the world, where our stores heavily rely on tourism, sales have been particularly difficult. This is in contrast to the Asian market - where traffic numbers now mirror last year, and in some markets, the stores have reported an increase on last year.
Our customer database has become very important, especially the relationships we have with our loyal Church’s customers. The satisfaction they experience in buying a pair of timeless shoes that last a very long time has been one of our great assets. It is this fact, which has ensured the company’s survival for the last 150 years. It has weathered many a crisis before and with the support of our loyal customers and dedicated staff, it will survive this crisis too.
What are the challenges? Are there any positives to come out of the crisis?
The challenges are to manage the company, maintain the structure and handle the fixed costs during a period when sales are significantly down, and not knowing if normality is 6, 12 or 18 months away.
Whilst we make a luxury product, our margins are relatively low, so managing the mix is quite complex.
The crisis has allowed the company to accelerate on some important projects including sustainability, developing our archive, making improvements to the production process and accelerate the digitalisation of the company; across E-commerce, marketing, omni-channel, customer service, collection presentations, wholesale, and of course internal communication through video meetings. All of these improvements will provide the business with long-term benefits beyond this current crisis period.
How can government and or local councils help with aiding retail recovery?
The critical areas of our business whereby the government or local councils could help are:
Continuing with the furlough and rates assistance beyond October, to a level which reflects the decrease in the revenue of businesses. Continue to encourage people to return to work in offices, go shopping and eating out, providing clear safety guidelines to help businesses, but to also protect employees and consumers. The easing of parking restriction to encourage the public to travel into cities. An extension of VAT assistance to retail; to encourage banks to provide relief and assistance; flexibility with landlords, and in turn landlords to provide relief to the retail sector, which should reflect the decrease in sales. This would go some way to help counteract the significant decrease in sales that we are facing.
In addition to the issues that the retail sector is facing due to the COVID-19 pandemic, we also need clarity from the UK government on the implications for business post Brexit. Our direct concerns as a company are the effects on duties for leather, the revision to documentation and the effect on VAT. The government must clarify the above, allowing businesses the time they will need to plan and implement new systems and changes in processes.
