The Ink Kitchen caught up with Jeremy Lott the President of SanMar:
With the industry and SanMar no doubt in a crisis mode during this health and economic catastrophe, I’m sure you are more than a busy guy. Thanks for taking a few minutes for Ink Kitchen readers.
Rick: At what point did you realize the potential scale of the crisis?
Jeremy: I think being in Seattle we had an earlier sense than most of the country but it wasn’t really till the night the NBA cancelled a game and the players walked off the court that I really had a sense of what was coming.
Rick: What were the first things you had to do when the first tsunami of business closings happened?
Jeremy: At first we just did what we had to do. When the ship could sink you have all hands on deck and you have to take care of business. You initially fight for survival and then later you can look around and make more plans.
We immediately on the business end lowered our expenses anywhere we could and retained any liquidity we could. Even more importantly we wanted everyone to be as safe as possible and we moved a significant amount of our workforce home. We also enacted all kinds of distancing and cleanliness protocols and we determined how to most safely operate our distribution centers. That was just a first step, and part of an on-going process that sometimes evolves from one day to the next.
Rick: I’ve personally been impressed with the reaction of your staff. I’m sure this was all a punch to the gut and yet they seem positive, helpful, and genuinely reaching out to customers like me. Much of that is the fact you have always hired the best people, but how hard was it to get them to have a game plan and get them working under trying circumstances?
Jeremy: First off, I know it is somewhat of a cliche, but I genuinely think that we are so fortunate to have a great team, we really do. I think the key right now with them is that we are communicating a lot. We are being transparent about the challenges and the opportunities. Everyone understands what we are up against and, while there is much that is out of our control, everyone is doing everything in their power to best position us to come through this.
Rick: As a company in the middle between manufacturers and your customers, it must be tough to come together in both directions. Most of us know what it is like on the decorator end of things. How is it going with your vendors?
Jeremy: Our vendors are really key to our success. Many apparel brands are cancelling orders and will put millions of workers in developing countries out of work. We are taking a different approach. We are communicating a lot with our vendors. They understand that we need to work together to get through this. We are pushing out orders when possible, spreading them to more months, getting dating if available but we haven’t cancelled a single PO and we are very proud of that.
Rick: I know you don’t have a crystal ball but how do you see this crisis playing out?
Jeremy: This is a tough call because as you correctly say, nobody has a crystal ball. I have broken it down to four possible scenarios. Here they are from best to worst case:
1. Optimistic. The spread of the virus and the cases of Covid 19 drop and the medical system can handle the cases we have. Things are not back to business as usual but in this scenario, the Fall looks pretty normal.
2. Base. The spread of the virus begins to die down perhaps, and the treatments and medical capacity improves, but a recession follows. In this case sporting events, music events, trade shows and such things are mostly canceled.
3. Pessimistic: The virus doesn’t diminish in hot weather. We continue to struggle with transmission. We might not have to remain shut in place but life is quite different with high unemployment numbers and the economy goes into a deep recession.
4. Apocalyptic: COVID-19 transmission rates continue to rise, treatments don’t improve, and testing doesn’t get better. In this case shelter at home orders have to continue. Perhaps there are shifts to where we have the high concentrations of the disease, but it remains fairly widespread. In this case, some business is open but the economy is in a holding pattern at best. If we only have essential businesses opening, there would still be mass unemployment.
Rick: So how with all this uncertainty and all these different ways things could play out, how do you make a plan of action for SanMar?
Jeremy: I would describe myself as a “cautious optimist.” My gut tells me we are headed for what I described as the “base” scenario, not back to normal but not terrible. Of course the optimistic scenario is what everyone wants. You might think that is easy, but it also as always occurs in business you have to plan for success in order to take advantage of it and to be able to serve your customers. We have plans in place so if normal comes back soon we can take care of our customers.
I can tell you that at the moment we are planning inventory for the Base and we are buying to that, but we’ve managed our expenses in a way that we have a plan for the Pessimistic. In addition, we’re managing liquidity so that in the most dire case, the Apocalyptic, we can survive.
Rick: Have you seen anyone out there who has a good perspective on what we are facing?
Jeremy: I am reading a lot, listening to podcast from people I trust but the honest truth is that there is no crystal ball here. It is why we have multiple scenarios but it is also why I like this quote from Clemson football coach Dabo Swinney:
“This is America, man. We’ve stormed the beaches of Normandy. We’ve driven a car on Mars. We’ve walked on the moon. We have the smartest people in the world. We’re going to rise up and we’re going to kick this thing right in the teeth and get back to our lives.”
My college senior is mourning the loss of her senior year while her great grandfather at her age was getting ready to go fight in the Pacific. I just think it is okay to remember that our country has been through so much and I know we will get through this. It doesn’t mean it will not be without significant economic cost and even more importantly without a cost to people’s lives, but I think it’s good to have faith.
Rick: Do you have any advice for the decorators out there?
Opportunity does exist right now. It may not be your regular customers or your regular type of business but if there ever was a time to be creative, this is the time.
Rick: With all the stress of leading SanMar, how are you taking care of yourself personally to keep your spirits up and to keep a level head?
Jeremy: Honestly that has been really hard. With six kids at home doing some variation of online school I have probably neglected myself a little too much. I am trying to get outside when I can even for a brief walk and I know that helps!
Rick: There you have it, some very sensible thoughts from a thoughtful leader, Jeremy Lott, President of SanMar. The only question I perhaps should have asked is whether he might consider a run for office. We could use a few more levelheaded folks in charge of things.