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Annual chronicle by our CEO

Daniel Djurdjevic

Tuesday, 12 Januari 2021

2020 has been a challenging and very different year in many aspects. In this chronicle, I’ll summarise my thoughts from a business perspective focusing on how this year has been affecting Chimi’s business.

 

I remember having a stopover in Istanbul in late February. All flights from/to Italy and Iran were canceled because of the outbreak of the Coronavirus. My family and I managed to get home, safe, and sound. The next days, we were reading about the Coronavirus 24/7 and how the situation in Europe was getting worse. I had no idea, that this “bat virus” would turn into a global pandemic and a following financial crisis.

All our key markets (except Sweden) have been locked down and traveling has been extremely limited this year.

Many e-commerce businesses have seen positive trends since people’s behavior has changed drastically as an effect of the pandemic. Fitness, skincare, health care, home & garden decoration, e-pharmacies, and many other segments have been booming during 2020. But travel, luxury, and vacation accessories haven’t. This should be a result of the financial crisis that came with the Covid pandemic and the strict travel regulations that followed.

 

Chimi is a small start-up and the majority of our funds are mainly invested in building a top team and marketing. Our products are not something that you need when you’re in lockdown and not allowed to travel. Not to mention that our domestic market, Sweden, is sunny about 1-2 months per year. The rest of the time is mostly dominated by clouds, rain, and sometimes if you’re lucky – snow.

This year was different in all ways. My management and I realized that the pandemic would affect our business considerably early in March and therefore we early decided to take action to stabilize the situation and thereby ensure continued existence.

 

The following decisions were taken;

  1. Decrease in production volume
  2. Pause the massive scale-up of the Chimi team
  3. Pause all marketing activities that aren’t driving direct ROI
  4. Put all team members on status; “furloughed”
  5. Close down Chimi’s airport pop-up
  6. Reduce opening hours in-store
  7. Revise sales target

Many of the decisions were tough to make and I’m sure that all parties weren’t super happy with the outcome of the actions that we took. But it was necessary and came to be our rescue.

 

Even though these actions were taken, we can see that our top line is growing as a result of hard work and teamwork. I am very proud and grateful for our loyal team, we have shown that the “wheat is separated from the chaff” during tough times. I’m very excited for next year with this talented group of people surrounding me. We have accomplished a lot uphill, so I’m excited to see how the post-pandemic period can affect our business!

 

I am sharing some of this year’s financial indications below;

  • E-com growing 100% (Y2D)
  • Retail growing 75% (Y2D)
  • Wholesale growing 10% (Y2D)
  • Revenue growing 50% (Y2D)
  • Profitability increasing from -4% (FY 2019) to 3% (Y2D)

E-com is mainly growing at new markets and our international key markets are all growing with +400%.

We can see that the brand attracts new customers globally, even though Chimi isn’t a “need to have” during an international lockdown with very limited traveling opportunities.

The social media strategy is still working, but Facebook and Google keep decreasing organic reach to pave the way for digital ads (instead of UGC, influencer marketing, and else), as old school retailers go online and the digital competitions get bigger.

 

Our retail channel is growing as an effect of the opening of our flagship store at Kungsgatan 6, Stockholm. We believe that retail is far from dead, but it is redefined.

 

Wholesale (B2B) is the channel that has been suffering most. Because stores have been closed and people haven’t been able to shop in brick and mortar stores as before. Wholesale is going from old school retail to e-tail mainly, this isn’t only affecting our B2B, but e-com too. The online competition increases day by day and I think it is important to keep building the brand and communicating its values so that our fans know what they follow and why.

 

Our revenue is growing thanks to our amazing teamwork, as mentioned above. This has generated an even stronger brand awareness with lower CPA-levels mainly in Sweden and the Nordics.

Profitability is growing with higher contribution margins driven by an increased D2C-ratio.

My insights from this year follow;

 

  • Be agile. Trends, circumstances, and behaviors tend to change fast. Slow moves might kill your business, so keep your eyes and ears open and act fast.
  • Your brand will be everything as the digital landscape gets more and more saturated. You need to break through the silence daily and your brand will be the only thing you’ve got left when Black Friday, your latest campaign or mid-season sale passes by.
  • D2C is the new black. Obviously, but creating a strong D2C-experience will allow you to be agile, taking full control of your brand, increasing retention and thereby LTV, improving your gross margins, profitability, etc.
  • Support your D2C-chain with strategic B2B-partners (if it fits your business model), but don’t depend on them.

 

From a personal perspective, I had to see my father hospitalized for 5 weeks. He got Covid-19 during autumn (the second wave in Sweden), which hit him badly. He got to wear the respirator but wasn’t anesthetized as the majority are, this is very rare and above all good (a big number of the death toll are anesthetized wearing a respirator). His doctor claimed that my father was the most positive and cooperating inpatient he had treated during this entire pandemic and that this helped both himself and the doctors massively during his hospitalization.

 

So this is something I’m taking with me for the future. A strong and positive mindset and the will to cooperate often takes us longer than we can imagine.

 

I wish you all health (sounds like a cliché, but it feels more important now than ever) and a happy 2021!

 

 

 

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