Brixton CEO Raph Peck: ‘Liquidity is king right now’

“Brixton is, in some ways, smaller than most of the challenges I’ve taken on in my career, but it’s much more complex,” Peck said on the latest episode of the Glossy Podcast. “It has a much narrower consumer focus, an underdeveloped direct-to-consumer channel — both in physical retail and in e-commerce — and a diverse product set, with headwear being nearly half of our revenue.” 

Along with further developing Brixton’s existing sales channels and product categories, Peck saw the opportunity to expand the brand to new markets.

“Such a large percentage of our overall sales come from California,” he said. “So we [want to] take a company that’s built a tremendous following regionally, and see if we can grow it in the United States and then, ultimately, globally.”

Of course, Covid and its lingering business effects have proven a disruption to most businesses’ plans. Peck shared how the pandemic has impacted his growth targets for Brixton, plus why profitability and lengthened dwell times are among his current goals. 

Below are additional highlights of the podcast, lightly edited for clarity. 

Running the business at the height of the pandemic 

“There’s no playbook for how to manage a company through a pandemic. There’s no playbook for what happens when 75-80% of your sales just go away. What do you do? How do you survive? Can you survive? Where’s the revenue coming from? So, overall, there was a genuine shock, if I’m going to be very honest with you. And then there was sort of a settling of the foundation and a little bit of belief that we can do this, with some light at the end of the tunnel. We took a real focus, like everybody else, on our e-commerce channel, in order to try to generate real revenue and real interest. … Our next focal point came in looking at our wholesale partners that were really struggling and saying, ‘How are there ways that we can help them?’ Because we felt the responsibility to help them get through it, as well. And whether that was extending our terms to them or [approving] higher levels of discount, that was something that was really important to us. And then the third piece overall was just understanding: What are the categories that are most impacted by Covid? And, naturally, we found two really interesting, sort of, tidbits that helped us to survive. One was that we very quickly started building masks and other safety equipment. And that was a godsend for us for the first 12 months, because we had lots of excess fabric and we needed to find something to do with it. So we were innovative. And we did that very, very well. We also donated a lot of that equipment ….to fire departments and police departments to become a larger part of the community, which we found was quite fulfilling and important for our brand. And the second thing we found out was that, as people moved to digital and more and more people were working from home, they actually wanted to cover their heads because they didn’t want to always have to get their hair ready for meetings. So hats actually did pretty well during the pandemic. Look, it wasn’t a fantastic blowout year for us, by any stretch of the imagination. But it was a year in which we found a way to survive; we got smaller and leaner, and we had to get more agile. And to be honest, the largest issue of the pandemic for us was really what happened afterward, which was managing a very, very broken supply chain.”

The new importance of liquidity

“The company is owned by Altamont Capital out of San Francisco. They’ve been an absolutely terrific partner for us. When we’ve grown, they’ve injected liquidity into the organization to continue to make sure that we are in a good place. … Liquidity is king right now. In a challenged environment, you’re often operating at a sub-optimum level … because you’re prioritizing liquidity, and sometimes your margins aren’t where you need them to be. If you look at all the apparel brands that are currently reporting [earnings], even the ones that are doing well have had to take a step back in margins, relative to where the consumer is and what their excess inventory levels look like. So, we’re always out there looking for the right liquidity partners and making sure that we’re well-planned for the future, and that there’s going to be stability over the long run. It’s a volatile time right now, and you just sort of have to hold on. And hopefully, this downtrend is going to be for the next four to six months, and we’ll be coming out of that in a good way. One thing I will say is that I don’t think apparel is a laggard in the overall economic train. In many respects, we feel the consumer softness much, much before other industries. We started to see it in February or March of this year. And so, hopefully, by the end of the year, we’ll be through some of these challenges — certainly through the excess inventory challenge. And we’ll make sure that, from an ownership perspective, we can keep our balance sheets in good shape.”

On keeping people in-store

“People often say that the Holy Grail of retail is experience, but it’s a little bit cliche, right? I mean, you can’t put a movie on and expect [customers] to sit down and watch it. So we’re constantly trying to find ways to solve something called dwell time. How do they not make a U-turn in your store? You want them to spend time, whether they’re looking at brand photographs or asking about the brand story or trying on hats or getting into the changing room. So this is the million-dollar solve, and we’ve got 100,000 miles to go on solving for dwell time. The hat shopping experience takes time. It’s a high-service, high-touch [experience]. People tend to find something on the wall, then they put it on, they look at themselves in the mirror. They assume that if it doesn’t fit, you don’t have the hat for them, because they assume that all hats are one-size-fits-all, though, of course, they’re not, in most environments. So, we are always looking for stories to tell in the store to get people to increase their dwell time, to stay in our stores. We’re pouring them a beer or a glass of champagne on weekends, or they’re coming to our workshops and having something fully customized as part of a one-off event, or we’re offering one-off recycled headwear in our stores where they’re the only person that will ever have this hat and we did something so special to it. We tailor hats for people in our stores: We engrave them, we can change out your hatband, we can burn the hat, we can wax the hat, we can waterproof it, stiffen it, … I mean, the whole experience is there. And we want you to stay and enjoy our store, and learn more about our brand while you’re waiting for this incredible one-off hat.”