Future Planning and Seasonal Product Drops

Hello and welcome to the mododern Retail podcast where we discuss the ways retail is changing and modernizing I am senior Reporter, Gabby Barco and happy july fourth We are on a brief summer hiatus for the next two weeks and with the holiday this year focused on America's two hundred and fiftieth anniversary We wanted to re aair an episode featuring PF Candle Company, which produces its candles in Los Angeles. My co host, Melissa Daniels and I talk to founders Kristin Pumphrey and Thomas Newberger about the advantages and the challenges of making products here in the USA At the time the Made in America debate was heavily tied to importing tariffs But interest in domestically made products is still high, which makes the conversation a worthwhile revisit One of the biggest stories in retail this year is the Trump administration's rollout of higher tariffs on imports from other countries. And this is defining so much of retail brands operation these days. While the changes are purported to support domestic manufacturing, even brands that are made in America are not immune from the effects of tariff policy That's because so many components might come from other countries. Spray pumps, glass jars, other packaging materials just aren't made here. And there's a whole other kind of trickle down effects in the supply chain. Today to talk about all this, we have Kristen Pumpphrey and Thomas Neewberger from PF Candleco. Hi, Thomas, Hi, Kristen Yeah, thank you for having us Thanks for having us And we're here still with my co host, Gabby Barco. Gabby, how are you doing today I'm good. I'm excited to talk about candles. I mean, what better topic? Yes, many people may know PF candleco from their signature amber jars. and their candles are made right here in southern California. But what we've learned at modern Rail from our reporting and research on companies being affected by tariffs is that even companies who make their products here are not immune from tariffs So let's get into a little background for those who aren't associated with PF candle C yet. But you why did you decide to make your candles here? How did you become a business that manufactures candles in the US GF really grew out of just an Etsy shop and craft fair. so I definitely consider us a manufacturer now, but in the beginning, we were just makers and I started it on my kitchen stove topop. Tom came on board about five years after I started it and just started to help me scale it. and that's when we really turned into a manufacturer. Why we keep it here, I would say, is we can control the cost and having an accessibly priced like nice candle is really, really important to us. That's a huge component, but also the quality is really important too. We watch that quality so closely and we know that we can stand behind our product. We're not just sort of selling a brand, we're selling the whole product Yeah, well let's just dive in, I think. For the past seven months, things have been crazy for a lot of brands, obviously for those importing from China specifically, they've been really hard hit, but today we're going to be talking about, you know how you've specifically felt it, at least in relation to one specific product that you were trying to launch, right? Do you want to tell us a little bit about the mini candles and some of the troubles you ran through? Yeah, I mean, the last seven months have been nothing but chaos. It's really hard to plan anything, but we do have a very specific story about how that chaos affected us. I think Chris and I needated this new product last Oh, maybe I think we werere doing comp shopping, shopping around. It's holiday season. And she was like, oh, you know what our customers would really like? They would like something really giftable, a combo pack where you can buy this thing and you can give it to someone. Our development teams are ideating it Last year, we came up with our suppliers and everything And then liberation. I actually it may have been before Liberation Day. I think one of the first things Trump may have done was to increase tariffs on Battles I think it may have been like Steel So one of the candles were actually going to be made out of metal. They're tinn. So the price was going to double for us. so a product that we were aiming to sell for thirty dollars or so was going to end up being sixty dollars and when that was brought to Kristin, I don't know in like March, late March or so, she was like, oh no, no, no, no, that's not a price we want to sell for. That's so much more expensive than anything else we sell. It's not giftable. It makes it almost like Why wouldn't someone just buy a regular candle at that point? Why would they do that? So What we had to do at that point was the development team went back to the drawing board. They realized like, oh, we used to make these mini candles that we've been trying to discontinue for years. One of the reasons we don't is because We have a lot of supply of the glass drawer for it. So like So instead of doing a tin jar, whyy don't we do it in glass? So we have the material. So they made the switch to the glass And we were moving all smoothly. And then one day my AP team flagged that we were going to be ordering a bunch of packaging supplies from a vendor in China. and I was like, whoa Um, I think this may have been April. like so it was right after Liberation Day and I was like, how are were going to do this, aren't the effective tariffs like one hundred and twenty percent on this? They're like, no, no, no, it's fine. It's still cheaper than if we get a domestic. And I'm like,, You know, maybe it is, but I don't know because five days ago, th the pricing was different and then So we argued about it for a bit because I was like, you know I'd willing to pay more money just to make sure that we knew the product pricing was going to be, but I think what ended up happening was that there was a stay the U. S. administration and China had an agreement where they would lower comparison that above one hundred percent range to I think in the forty percent range and at that point really well This is cheaper and if we can get it not only on the boat, but to us before this ends, because that's how tariffs work is it's the effective tariff rate when it actually reaches the port, not when it leaves or before it leaves, but at that point in time, which Over the past like seven months, it's been eight different rates. So you really don't know what it's going to be at any time. So We ended up going forward with that and getting it shipped through at a okay rate. So There's a lot to unpack there, and I feel like it kind of does exemplify how there's so much that has been in flux where even if you think you have in front of you a plan on what you're going to do, something could change that all the next day. So do you go ahead with that plan? Do you wait and see what happens? J just a lot of uncertainty anythingthing that you sort of learned through that process. know, it sounds like you and your team had a lot of dialogue about this. know, justust wondering if there's anything you can kind of share for folks who maybe are also running brands or just sort of interested in these kind of discussions. L how do you orient yourselves in these discussions where there is so much uncertainty That's hard because because because I think with this in particular We knew we could make it work with another vessel that we had loaded on on a ship as the effective tariffs were over the hundred percent. we were just gambling. We didn't know what to do at that point. We just gambled like, hey, it's rolled a dice. what is it going to be one price or another? So intellectually not mot sure how to plan for that. Bank maybe this may be the intention of all this, but if you can find a domestic supper that's competitive, you know your pricing will stay the same, whereas otherwise it's complete. Chaos and you're just you can buy a bunch at once and try and get it in. I know I know that's what a lot of large companies are doing if you can afford to buy a half a year's worth of inventory, which is really hard you'd have to have access to a lot of capital to do that, Th then maybe you can you have an idea of what it's going to be right then and there. but A damn like u Let's just say someone had done that during their initial Liberation day tariffs, the reciprocal tariffs And then A month later, they were reduced by like over half and maybe they had overpaid because they weren't sure how it wass going to be. The uncertainty has been the hardest part as being a small independently owned business because if you can't predict, you don't know how to run it. But beyond just component prices going up and sort of having to redirect where things are coming from, one of the biggest things that I know will never get back is that bandwidth that we spent I'm like, I never w want to talk about tariffs again.' rightight now I'll talk about tariffs, but I feel like it consumed so much of our energy and our actual time where it really took time away from our production planning process and getting prepped for the rest of the year. So now we're here in July and we're really trying to play catch up on just getting ready for the holiday season ' that's our big candle time. So that's sort of been the challenge and just not looking back, just really thinking Thinking of yourself like you're going down a river or your're river rafting and some of the rocks may have moved, there might have been a big landslide, but you essentially have to just figure out how to navigate it and not get so stuck on the frustration, right? becausecause that can really hold you in place. Yeah, I would add to that and this is, I don't know, a good advice to give to someone, but I think the idea of not focusing too much on it because so much of it is unknowable and chaotic that it's really hard to make any intellectual plans on. I know I know we've had conversations with our team here where they're like focused on they're like, well, it's gone up fifty percent over the day and I'm like, yeah, but then like in a week. It's going to go down on fifty percent. We don't know. And so we're spending a lot of time on this uncontrollable aspect of it going up and down when we could be focusing on the things we can't control here. Thomas, you mentioned sourcing and I feel like you really get in the weeds here. So maybe this is a good time to transition to talk about what you do source domestically. and I think you were sort of hinting at the fact that it could be an advantage in some cases. But yeah, do you want to talk about some of the other components and why the stability at the very least domestically helps with planning? Because I know as we speak, all of this is happening with the backdrop trying to plan for the fall and the holidays, which is I call it candle Super Bowl season. But yeah, I mean, I guess yeah, if you can give us some color on that, that would be great I think In terms of our materials and things, we We sourced here from the US, I think as a matter of necessity. We started very small Kristen was making, I don't know, were you making like ten candles at a time? There This made no sense for her to go and source from like a major supplier over in China and get ten thousand jars over over here. Like that just didn't make any sense. likeike a higher price over here was fine because the MOQs, the minimum order quantities made sense. for us at that time. So We have a mix and as we've grown, we've diversified where we get things. So The wax is domestically sourced from here in the U.S. It's soybeans grown in the Midwest and they hydrogenated it in Louisville. We actually visited the factory. It's really cool The wicks are made domestically, though the cotton is probably sourced from wherever they can get cotton from at the time It's primarily our vessels and packaging that we get imported from abroad, but that isn't always the case. It's kind of just circumstance when we need something and what we need depends what we'll end up getting for. So let's just say our classic straight sided amber nine ounce ammber jar that we use if we were to get it domestically sourced s There's a couple companies who run ammber like that color. they'll run it like once a year and they'll do that one style. And so if we were going to buy like a year supply of that jar and store it in a warehouse somewhere We could source from domestically all the time, but We try to keep our cost out of inventory our money out of inventory So we're always sourcing from whoever we can get it from at the time. So it moves all around. China or Taiwan tend to make amber year round, so we can always kind of just move it around. so it' Really the packaging just when we can get it at what price is competitive and good. I was so surprised to understand how much packaging is actually done now in China and internationally. We didn't really run into this issue until we released our luxury line, the high fi line last year that it comes in boxes because our standard jars, they're not sold in boxes The gift box industry is really overseas now. and there's also little components like incense sticks. They just do not make incense sticks in the US. So it's not even a matter of, oh, couldn't you find a US supplier? It's just not made here. So that's one of those little things you don't necessarily think about, but so many of our other components are sourced here or're working with middle men here in the U. S. So that that's been an interesting That's definitely been interesting to see is the Middlemen has been interesting too because some of them are sourcing internationally, but they're based here. and occasionally you can get locked in pricing with them I imagine having that kind of locked in pricing really helps with your budgeting then because you don't have that necessarily like unknown extra cost because the tariff kicked in for this particular type of cardboard that I used for this packaging that I know I'm gonna to be wanting to order in Q three. If you can lock that in through there, great I was going to say, so you can sometimes find, I know this probably less for complete goods, but for materials like a component of something you're making. can generally find a person Cool, they'll go out and they'll buy like a year supply of it for you lock in a price. warehouse that supply and then sell to for a different price. So what they're doing is they're buying a year a year supply of, let's just say jars They're getting an amazing price because they're buying I half a million jars or something And they import it in, they keep it in a warehouse and then they double the price for you, which ends up being good for you, but it does lock in the price for a good amount of time That's something we do to keep our prices similar And this kind of makes me think about what we were sort of chatting about a little earlier too, and that's that even if something is already in the US, it still might be affected by these other just discussions because I imagine those folks who have all those jars to sell might be in a pretty good place if there's other brands that want glass jars and don't want to buy them overseas right now. that there's a sort of a supply and demand effect that happens with the goods, even if they are not affected by tariffs directly That's absolutely true. We have pretty good relationships with most of our vendor partners. So that's sort of the key leverage there is knowing your partners and knowing that they're going to save something for you. But I remember being a small business. There was this one winter where I was Just producing candles as fast as I could and selling them as fast as I could. This must have been like twenty fourteen, twenty fifteen. And I'd be on the phone all the time. Can you get me more jars? And I had develop that's when I started developing those personal relationships with the account rep because I'd actually get on the horn in this day and age, you know, and I'd say, look I just need like two hundred and forty dollars. That's all I need. I got you. I'm going to go out to the warehouse and earmark them for you. And that's when that relationship can really make a difference. Yeah, that's actually a good time to maybe start talking about your domestic assembly or actual production operation. You are made in California where you guys are based. So why don't you just tell us a little bit about, you know once you do source everything What kind of I guess advantages you do have, you know, to kind of just it's not all doom and gloom. There are some upsides, of course to this. I know made in America quote unquote has become this sort of hot button topic recently, but It sounds like you're trying to lean into it a little bit more Yeah, Maiden California in particular has always been such a core ethos of what PF stands for. It really aligns with our values. It speaks to the design that we have. We use the inspiration of California Sense within our fragrances. It speaks to, you, when it invokes this image of environmentalism and outdoor lifestyle. So we've really used that at our branding always And what we noticed is that People have been searching and we've been seeing keywords in particular for wholesale of made in the USA candles. And for me, I think it really comes from a place of the certainty aspect because they want to know that they can get a candle. They know how much it's going to cost when it lands for their shop and they're going to be able to resell it. So we started to see that tick up on wholesale and also Amazon. So we integrated keywords of not only made in California but made in the USA and started putting that on all of our pages. And it was this moment of Okay made in the USA. here we go. How's it going to go? But I definitely think in particular on Amazon it's helped people find us because you find a lot of sort of the drop shhip style knockoff candles on there and that's been a benefit Yeah, I mean, speaking of that, I actually wanted to ask you about, you know How does your unique supply chain and the fact that you do own a lot of the production, you literally oversee it firsthand, Has there been any other impact to let's say like an account, like a retail partner where you can supply them because maybe you're one of the brands that do have a product on hand right now We did send emails out to our major accounts because major accounts, basically in the past couple years have really been looking for cost reductions. and we've seen a lot of them go more the white label route. This is sort of like large retailers, nationwide retailers And we just sent them emails and just said, hey, if you need a quick turn on candles, rather than buying this amount of your supply, we're still here and we're ready for you. And I think Tom can speak to some of the potential upside I don't think like retailers want to get rid of their like just in time supply chains that they have. like And I know that They've had to buy like like I said earlier, maybe a half a year supply of inventory so that they can resell it. They' had of capital that would require for a large retail like target or something to buy, like I don't know. I was thinking about it. like in the trillions of dollars to buy a year supply of inventory. just don't there's no way that a store like that has access that amount of money to buy that amount of inventory So at some point They're going to need to return to the ability to just get inventory as they need it because it allows their business to run more smoothly. so One of the advantages we have is we have a stable price We're here. peopleeople know our price. Our turnarounds are pretty good. We've always worked really hard to make sure that our operations were pretty solid that we can fulfill orders for people within weeks or days, even depending on what it is because we keep inventory in hand We try to project out a certain amount of time so we can turn around pretty quick. So we're hoping that as a company who may have transition internationally because consumers have become cost sensitive that they may do the same thing and come domestically as we have because that way they know what the prices are, that it's stable, that they don't have to figure out, the, hey, I'm going to bring this product and it's going to become a hit, but then all of a sudden it's going to be five times more expensive because all of a sudden the price changed on me without. Any ability to control that So we're thinking that maybe with the larger accounts that we become more competitive with the lower price items that's our hope. One of our big accounts, urban outfitters, we've worked with them for over a decade now and they were one of the accounts that really helped put PF on the map We had an incredible relationship with them where they carried our classic line for years. But obviously, trends change and they're bringing in new things and bringing in white label stuff. But they've actually reached out to us to manufacture some of their white label stuff. And it's a special project that it'll be launching this fall, but that account has really been reinvigorated. And I definitely, although they haven't said it directly, assume that tariffs might be partially sort of I guess, in our case, to think, where they're like, oh, we know the supplier can turn it around this amount of time, you know? There's definitely that Yeah. And I think another upside is though we're not ine exppensive candle. We're definitely not on like the par of the most expensive luxury candles or things like that. So People who may be buying those candles and those prices may increase because some of the luxury candles are made in France. And I know that's part of the tariffs that may go up in August or so they may be looking at us as an alternative to keep the prices stable because you know, we do care a lot about quality, We do make a good candle, but we've always wanted to make sure we do it at a accessible price, which is one of the reasons why we do control all of our own manufacturing Yeah, from a marketing standpoint, we've really, really leaned into the craftsmanship aspect to the quality aspect to sort of send a message out to those luxury consumers that might be their wallets are probably hurting too. Like the economy's been really tough for everybody. So there's potential that they may then sort of start buying PF to watch their wall a bit. And that's also why we released the high fi line is that we understood with the luxury candle market in particular being this white space that we didn't have yet. We don't have a ton of luxury candle customers where really just for people to burn every day was just Pretty cool. We understood there was still room to grow Yeah. and one of the commitments that we've had and internally, we knew was The winning, u message here is that we don't plan on increasing our prices because even if we do see increases, it's going to be on a component, which means it's only a small amount of the price would be increased. Our goal is to figure out how to lower prices lower our cost other places so that we can keep our prices The same because I know as a consumer myself, when I hear brands being like, oh, we're raising our prices tomorrow double in anticipation of the tariffs. I'm like, well You know, yourself is already expensive. Why are you doubling the price? I don't know if I can afford that. So I'm being selfish and thinking about what I'd want to say he's thinking about bking tires. Yeah I'm thinking about bikes in particular because a lot of bikes are made and Taiwan and China and a lot of the brands just get them imported and already really expensive. so if they're going double the price, they're unaffordable. Yeah, I think speaking of the customers, yeah, this idea that you want to stay a stable staple, u you know, for them as a candle brand Maybe you can tell us a little bit about what has been some of the reaction from customers recently. I know you have the made in California. moniker across a lot of your branding, but it sounds like maybe you're testing some made in America marketing or at least language, even though I think Kristen, I think you were a little bit wary about it or thought maybe it could be used as a dog whistle in this political climate. Yeah, its so it's so silly that made in America sometimes makes people's hackles go up because they think it's some sort of dog whistle, like you're trying to say your values. I'm like, you know We are made in America. We support American jobs. and we, especially here in Los Angeles We really pride ourselves that we have a strong minimum wage when you come into our company. You know, ourur base wage is twenty three dollars an hour and we offer fully subsized health carere. So that's like we're trying to build good jobs and potential careers for people. and I think there's I just said there's nothing to be scared of of saying it's what we're doing. And if people want to kind of put their own interpretation on it That's up to them, but there's no bald eagle coming down like we did it, although we did. we definitely we had a laugh as we put made in America on there. I understand their version that some people may have been made made in America because certain type of brands leaned into it, but I feel like the where we came from and where we built our c company from it was all about being local. And if you're supporting local, you're supporting America ' that is what's local. So they mean the same thing. at the end of the day. If you're someone who's supporting local jobs, who's supporting local businesses, you're supporting American made. I mean, it's all the same. It's a little silly, it's become a bit of a charge statement. Yeah. haveave you I'm wondering if you've seen in your data just, you know, in the e commerce whether it has whet, you know, your customers have been searching for it. Has anything changed on that end where you can you actually are seeing the insights there? That's such a good question. I don't think that I followed up to see I know that our web traffic has stayed really strong and consistent, and we definitely put those changes into place a couple months ago. So I think they would be correlated. And the bigger place that we put that as well was putting it on fair, the wholesale marketplace that we work with to ensure people that they understand To me, I think what it's shorthand for is that you know the price you're going to pay and you know when you're going to get it. There's no uncertainty there I've seen a couple results that have increased with the Mid in America through Google seearch console. I've seen that people have been like candle company America or madeain America candles. So we've seen that that is what people are searching for. So it kind of gave us a away way to be like, hey, if this is what we're already searching for, let's make sure that we add it to our our website and all of our copies so that is popping up because if they're looking for it, we're here. You know what did happen is When the Canadian tariffs happened, we lost two or three really, really good accounts almost immediately. and that was tough A few of them have come back by now, but We're u That was tough to see because we definitely like that's such a good partnership with our Canadian stockists. So I do wonder. I have a friend who owns a kennle company in Canada and I sort of wonder for her like what that's been like. Yeah, she might almost be seeing the reverse effects of that as those Canadian stockers don't want to deal with the extra costs they would have to pay from importing an American made product. There's so many good insights in this conversation but I like that we've been talking a little bit about the consumer and the way this all plays in the macro because even though it is a really hard time for a lot of people and they is a lot of economic uncertainty. For savvy business owners, there's also still a ton of opportunity. And this is something since y' all have been around for a while, you've sort of been able to figure out, okay, who is our customer and where is the growth there? You know sounds like one area that you've really been able to lean into is mail candle shoppers U you know, when you do when you're thinking about your marketing for the rest of the year here in twenty twenty five, you know, how is the male customer playing a role Being a unisex candle brand has sort of been a secret. It's our secret sauce, right? Back when I started PF and Tom was just my grumpy craft fair boyfriend, I was sort of designing products that were unisex. and now like now candles are so accepted and they're so mainstream. There's so many unisex candles, But back when I started, I feel like it was It was much more of like a gendered thing, even the sense felt like I think perfume back then, you'd say, this is a masculine scent. This is a feminine scent. I think that so much has changed in the way we approach gender within fragrance now. But being a unisex scandal company was a huge market differentiator. To this day, we see that mail customer segment growing. There' are about thirty percent of our customers Um They're super loyal and we just continue to try and represent like thinking about the type of scense that we develop, the way the packaging looks. And I think that our approach of having it be super sort of utilitarian, but high quality, that messaging really resonates with our mail customers Yeah, maybe it's a good time to just get a little bit of a preview of what you have going on going into fall, including opening up your own store. It's exciting. Yeah, we opened the store in New York last November and We sort of looked at our data of where our customers lived in order to figure out where we should open that store. Since we opened it, we've only seen that New York customer base and that Brooklyn customer base increase both online and in store. So I think that we really hit the right demographic. like we feel like we've really landed where our customers actually are and they can just pop in and just grab a quick candle But as you said, it's Candle Super Bowl time. This is when people are really starting to think they need the vibes. And our main thing is like, we're not doing surgery here. we're just providing like a great experience with candles and providing a moment of relaxation and just providing a chill time as people start to go inside, When the weather cools down, I mean, here and out from in LA, it's going to be a couple months, but even so people just trick themselves by saying, I'm putting my candles on. It's candle time. So we just basically have a really stalked release calendar. We worked on having really, really fun sort of almost whimsical things for the rest of the year that just give that moment of levity. Yeah, we have our pumpkin candle is in full effect in production right now, which may be a little too early because we're about to hit the hottest days of the year here in Los Angeles coming up soon. I mean, it's so lo cool. It's very tough. It's n to out And then we're pouring. It's going be a hundred degrees here soon once we hit into August and it's going to smell like a Starbucks in the middle of October, which is not normally what you're normally looking for in a C ofa warehouse, but So we have that You know, this didn't start just this year. I think the past six years have been one of those things where it's really hard to plan out really far in advand. So in terms of business operations We're just kind of making it up as we go half the time. I have this saying that I stole the other day, which is that we're doing nothing but planning, buthing nothing's going to plan because we're just going to improvise and go kind of like a jazz musician. that we're ready for whatever it comes, but we're just going to have to turn as it goes I do think like seasonality, I mean, that you guys were getting at this, but I think the seasonality bleeding together and like even just Back Friday no longer really being limited to November. we have like this ongoing promotional calendar now that I think customers expect. and I'm sure from looking at their carts, you guys can track it too. This is part of what Chrism was saying with the pack schedule is that we know consumers expect something all the time. For us, it's really hard to give away a bunch of margin with discounts all the time. So we're trying to be creative by doing like fun things, new product releases keep them engaged. I was really inspired by you see food companies do this. You also see streetware brands do this, where they do the limited drops. and I was very, very inspired by that. We make a consumable product. So we make a product that people are going to come back and buy again. A lot of people are on a monthly rotation schedule, if not every other month. So releasing something every other month or every six weeks is the cadence that we can hit Someone might want to come and get their usual, but they also might want to try the new thing. And we find customers generally will rotate or pick up the new thing and just try it out Well, thank you both so much for coming in and sharing the behind the scenes of what really has been a challenging year for small businesses. But you know all of the insights today just remind me how resilient small business owners can be and the importance of creativity and willpower and innovation. So thank you so much, both for your time today. It's great to have you Thank you so much for having us. Thank you so much Thanks for listening to this episode of the modern Rail podcast, a show by Digitay Media If you haven't already, please subscribe and head to Apple Podcast to leave us a review and a rating If you want more from mododern Retail, you can find us at modernreetail. co. You can find me, senior reporter Melissa Daniels on LinkedIn and Blue Sky. and you can also subscribe to our LinkedIn newsletter at the Modern Retail prorofile We'll see you next week