Confessions of a founder coaxed into retail for DEI: ‘We were set up for failure’

Today’s confessions subject is a brand founder caught in the crossfire. Our subject is the CEO and founder of her company, which she started 15 years ago. It was bootstrapped and focused primarily on direct-to-consumer sales until 2020, when mounting attention shifted her company’s trajectory. 

While the details of her brand have been removed to protect her privacy, she speaks candidly about opportunity, inclusion, support and her hope for the future of retail.

You were already a brand founder with a successful line for a decade when the Black Lives Matter movement began. Walk me through how your brand was impacted.

“There was a snowball effect from that moment in time in 2020, where everybody just wanted to do something to help. There was an increase in investors putting money into Black-founded businesses and we raised our first million in outside capital from angels and venture capitalists. And along with that, retailers started to take the 15 Percent Pledge. 

There were also a lot more people posting about Black-owned businesses, so that was really boosting our reach and our visibility. I think it was in June 2020 where we saw a 60-70% increase in revenue and traffic on our website just from people organically posting about the business. We weren’t even running ads at that time.” 

Wow! That’s a lot of organic growth. 

“It made a big difference. We make inclusive products andI just happened to be a Black founder, but we have something for everyone. I was one of those brands that everybody could post about and find something for themselves, so we saw a lot of momentum. Just because the business is Black-owned doesn’t mean that it’s only for Black people. I think that’s often a misconception about products, in general.” 

So the brand is growing pre-2020, then it gets a nice little organic boost. What happens next?

“We had our heads down focusing on DTC, but we were also getting interest from large retailers. I initially told them all ‘no’. Retail just wasn’t a part of our plan, but retailers were aggressively reaching out to us, saying, ‘We realize we need more diversity in our store and more inclusive products in our store, and we really think [your brand] would be a great fit for this particular category’.” 

What kind of stores were reaching out? 

“It was the majority of big department stores and a little bit from medium size to smaller boutiques — a little bit of everything, but mainly the bigger stores.” 

How would it make you feel when a retailer would reach out to you to help fill their diversity goals? 

“I dreamt of being in these stores from day one of thinking of starting this business. These were stores that I grew up shopping in and thought, ‘If only one day I could be visible in these stores, to be recognized by these stores’. So it was exciting and a dream, for sure.”

Do you feel like you were pressured to go into these big retailers? It must have been a very challenging decision.

“Not necessarily pressured, but our perspective was like, ‘Wow! We have an opportunity. When will this level of enthusiasm [for Black-owned businesses] ever come back from these big department store retailers that are approaching us?’ We felt like it was kind of a once-in-a-lifetime opportunity.”

So you pick your retailers and launch. How was the rollout?

“Very bumpy. We launched online first, and all we had to do was ship the inventory and provide the images, but there were always some hiccups that would happen. The SKUs weren’t laid out right or the imagery would show the wrong product or color for the wrong item on the retailer’s e-commerce site. It was concerning, because you want to put your best foot forward. And if we’re gonna tell all of our customers to go shop at this retailer, we just want to make sure that they’re having a good experience.”

So what happened when physical stores reopened and you finally entered brick-and-mortar?

“Stores that were closed in the pandemic began to reopen and we decided to do a test. We were very excited, and so we started showing up to the stores in our local areas to see what the display looked like, and it wasn’t there. We went back the following weeks, and it still wasn’t there. Eventually, we spoke to a store manager and she said, ‘Oh, you know what? That’s been sitting in the back for about two or three weeks now, but I didn’t know what it was. … I actually don’t even have space for it!’ 

So, again, there was this lack of communication. If the buyer is thinking there are no sales after weeks, it hurts the business because it hurts our metrics, and there wasn’t a lot of effort to resolve that.” 

That’s so crazy. Who do you think dropped the ball?

“The buyer at this particular store, who was very excited about our brand and a driving force into why we actually decided to go into retail, had left the company. She was so enthusiastic and wanted to do everything she could to advocate for this. She believed we could build a multi-million dollar business together. She told us all the things. But she left and the new buyer had no interest in our brand. If you think about the timeline, 2020 was such an intense time where everybody’s like, ‘We’ve got to do something!’ But then, once we started getting into 2021, the enthusiasm was dying down.”

Was this happening everywhere or just this one store? 

“Things shifted in all of the stores. Around 2021, we started to see a lot of buyer turnover and change. Within a short period of time, we saw every single one of our buyers be replaced. People just weren’t enthusiastic about inclusion in the way that it was before. In the last three years, we’ve had around three sets of new buyers for each of the stores. It’s like starting over a relationship every time.”

Talk to me about the financial side of things. Were you at least getting paid on time? 

“No. For our first purchase order, we had agreed to a certain type of packaging with one retailer, and it was accepted by our buyer, but then, when it got to the actual warehouse, it was held up for weeks because our agreement wasn’t communicated to the warehouse. It was eventually reconciled, but it took several months. That was also a very challenging time in the business because we were really counting on that money to pay for our expenses.”

What about the other retailers? Were they paying on time?

“We negotiated pretty hard on our payment terms, and we got some fairly favorable ones, but still no one paid us on time. Not one retailer paid us on time based on the terms that we agreed to, and I really don’t know how to solve for that. We had very candid conversations, but it still didn’t work out in our favor.

Did you still end up making money with these retail partnerships? 

“We definitely lost money doing business with some of the retailers. Not all of them, but some of the retailers. Because we weren’t paid on time, I had to take additional loans to pay my expenses while I was waiting to get paid, so there’s interest on those loans. That’s part one.

Part two is that there were chargebacks. There are a lot of hidden costs around doing business with these retailers, and the disclosures are very vague. ‘This could happen, but as long as you do these things, then they probably won’t happen,’ is what they’d tell us. But then, for whatever reason, even if you feel like you did do all the steps, you still incur chargebacks.”

When did you notice a shift in how retailers were managing their DEI or 15 Percent Pledge initiatives?

“In the beginning, they had all taken the 15 Percent Pledge, and that had been publicly spoken about. When we launched in those retailers, there would be a big press release about the work that they were doing with inclusive brands, but the following season, all of that had stopped. Myself and other Black founders started to feel like we were being a bit tokenized. Every February, there would be some marketing initiative, which got smaller and smaller every year, and that’s the only time there would be that highlight.

Now, with so many DEI programs and affirmative action being striped away, it feels like we’re going backward. The challenge with the retailers is that no one’s blatantly saying to us, ‘We’re afraid,’ or, ‘We’re not buying,’ or, ‘We’re not focusing on these initiatives anymore.’ They’re not saying those things to us; they’re just not showing the same effort that they were doing before, when there was less fear or legal backlash and all of that.”

Looking back, were you thinking that you were brought into these retailers for the wrong reasons?

“Yes, and no. The buyers that brought us into the stores were so enthusiastic about the fact that customers want inclusive products, so I was excited that we were finally on the same page; I was excited that they were excited to be a part of that. Once the transition happened from those buyers to the newer groups of people, there was no enthusiasm. I’m not even going to say less. There was no enthusiasm at all for those initiatives.”

Does it feel like these retailers brought you in with the best intentions then forgot about you?

“Yeah, that’s how it feels for some of the stores. But then for some of the stores, it feels like we were set up for failure. I don’t want to think that negatively, but it’s like they’d say, ‘OK, we’ll give you this P.O., and good luck out there!’

The support that I was hoping to get based on the initial conversations I was having with the earlier buyers was that there would be marketing opportunities. But the only marketing opportunities available to us were to buy into the marketing — to pay for marketing to these retailers. There has to be thoughtfulness in the strategy. Mine is a product that hasn’t existed in department store retail. The consumer that’s looking for this isn’t necessarily going to these stores to find it, because it’s never existed for her. She needs to be introduced to the brand.”

What are your thoughts on the 15 Percent Pledge now?

“I think the 15 Percent Pledge is awesome. I love what they’re doing. I love that it was created and the origin of it. I love that they’re doing grant programs. I think all of that’s awesome. I do wish there could be more strategy behind it, in terms of marketing the brands [once they’re in store], but who’s to say this is their job versus someone else’s? Because if the businesses aren’t successful because they don’t have full support of the full retail ecosystem, and the business fails because it still is getting a fraction of what its counterparts are getting, then that’s still not helping in the end.” 

When it comes to retail, what is your hope for the future of your brand?

“I’m still very hopeful that we’ll find the right partners. I hope we find those enthusiastic buyers that want to go full force with us.”

Your line is still in some of the retailers we spoke about today. Is your plan to exit or stay?

“We are considering that decision now. We haven’t formally pulled out, but we’ve just not prioritized either the opportunities or the business with them. Yeah, that’s all I’ll say about that for now.” 

Editor’s Note: For our Confessions series, we provide anonymity to fashion and beauty industry insiders to allow them to openly share their perspectives and give readers genuine insight. The author of a Confessions story is aware of the identity of the speaker and has validated their title and position.