How DTC Brand Lunya Is Weathering The COVID-19 Storm

At the onset of the COVID-19 crisis, DTC sleepwear brand Lunya had to furlough staffers, shut down retail stores and lay off part-time workers to break even through the downturn.

“It was painful pivoting,” said Lunya’s Founder and CEO, Ashley Merrill.

But there were bright spots. Lunya’s business is more than 80% ecommerce. The company hadn’t gotten far into a planned push to brick-and-mortar. And its product is still relevant, as people seek quality items to lounge in at home.

After a few weeks of turmoil, Lunya’s business began to stabilize. The company is slowly starting to bring employees back as business picks up and the government stimulus package comes through.

As things calmed down, Lunya launched the “Nominate a Nurse” a campaign, where social media users nominate friends and family working on the front lines to receive a free Lunya product. The brand got over a thousand responses within the first week of the campaign.

“We wanted to figure out a way to positively contribute,” Merrill said.

AdExchanger caught up with Merrill about the campaign and how Lunya, like many DTC brands, is fighting to survive the pandemic.

AdExchanger: When did you realize this was going to be bad?

ASHLEY MERRILL: In January and February, our partners in China were closing factories. But I don’t think we immediately thought this would be our reality.

When it came here, initially it was presented as an issue for older, high-risk people. We kept our retail stores open. They’re not highly populated, so we felt okay about that. As time went on, we transitioned to work from home and closed our stores. That’s when things really shifted.

How was your business impacted?

We saw a big change in revenue. We hadn’t planned to run a business without brick-and-mortar. There was a massive hit to consumer confidence, even in ecommerce, in the first few weeks.

We had to rapidly adjust our top line figures to still maintain break even. We had to furlough a bunch of our team, lay off our part-time retail labor and renegotiate leases and service agreements.

How did you communicate these decisions to your staff?

We did the best we could to be as transparent as possible. While no one wants to be in that position, they understood if we can’t get Lunya through, we all lose.

As a leader, these are painful moments. I was weighing, if I can’t get the company through this, then I can’t offer anybody any jobs. That helped me make very painful decisions.

What’s demand like for luxury sleepwear?

At the end of March, we were going up and down with the stock market. Right now, we’re seeing a pretty steady demand. Having a quality product still matters. If you’re going to be inside, you’re going to get good use out of something. People are still looking for quality even in this market. So we’re doing okay, but I’m not overly confident.

How are you factoring uncertainty into your decisions?

Pretty heavily. We’ve minimized our marketing and product drop plan. We’ve focused on fewer initiatives to be cognizant of the fact that we have less people. We’ve completely changed how we work and what we’re working on in a couple of weeks.

Normally we have a number of marketing initiatives. We’re big on community, so a lot of our initiatives correlate to events. All of that is gone. We had to cut [editorial] partnerships. But we’ve also shifted from things we've planned into things we didn’t plan.

Why did you decide to launch a campaign right now, given your current business situation?

We wanted to help. These frontline workers are working crazy hours, getting depleted and getting a lot of exposure [to the virus]. Let’s support them in their off hours by making sure they can make the best of that time and recover.

How did you produce the campaign remotely? 

My creative team made a fill-in-the-blank for our [Instagram] story that said, “Which nurse are you going to nominate?" [People would] send us a blurb, tag us and we would reshare it.

It was really fun, easy and very lo-fi. The involvement ask was not high. And it blew up. We had so many, we couldn’t share them all. We’d pick a handful every two days and give away product.

Now that demand has stabilized, how are you managing your product pipeline?

We’re an anomaly in retail in that we haven’t canceled orders. We’re not heavily wholesale. We’re still producing new products. We’re reordering tried and true products. But we’re assuming we’re going to be down overall for the year.

We had product delays for about three weeks in China, but a lot of our factories came back online. But Peru is closed. They were supposed to open up this week, and that got extended two weeks. I get a decent amount of product out of Peru, and that remains in jeopardy.

What does your marketing plan look like going forward?

To some extent, I look at it the same way I’ve always looked at it. It’s money in, money out. As long as the ratio stays healthy, we’re willing to spend. Branding has been diminished the most. But spend is always moving for us on performance channels.

Will this crisis change the way DTC brands think about expanding into retail?

It certainly will for me.

I was driving 50% to 70% of traffic to my brick-and-mortar locations from digital. When you look at numbers like that, the value of your location is less important. The cost was way out of whack with the value certain landlords were providing. They need to recognize that. That’s going to be key for us wanting to pursue brick-and-mortar.

This interview has been edited and condensed.

 

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