In the service of consumer awareness, I have helped clients with event promotions ranging from setting up rub-down booths for aching feet at half marathons to participating in the closing off of Times Square for New Year’s Eve and the engagement of major talent to entertain the revelers. I was particularly amused, however, when Henry Poole & Co, the tailor shop that founded London’s Savile Row (back in 1846), alerted me to the closure of the Row for its one-day transformation into a pasture eighty meters long, populated by sixty squishy sheep and twenty-five anything-but-squishy male models, each of the latter in a bespoke outfit by one of the twenty-five participating tailors. For Savile Row Sheep Day (yes, big promotions need big names) on October 5 of this year, Henry Poole showed, on one of those big men, a made-for-the occasion three-piece suit made of a blue-gray 11-12 ounce Prince of Wales wool and cashmere blend. The sheep came as they were.
That is not the first time Savile Row has been disrupted for a special promotional event. As documented in the film Let It Be, on January 30, 1969, The Beatles gave their last public performance from the headquarters of their company at 3 Savile Row, creating a commotion that brought in the police and became part of the history of popular music.
Getting the famously phlegmatic London bobbies stirred up for the benefit of posterity was likely integral to the thinking behind The Beatles’ rooftop concert, but when fashion companies do big promotions—whether to let Shaun the Sheep and friends graze on a city street or to rent historic venues for fashion shows—they do not want legal troubles. Along with all the usual contractual complexities with vendors, models, transportation providers, venues and more, for big promotions, there typically are municipal permits, special insurance problems (Just what is the premium for coverage against damage by rampaging ruminants?), and often import/export and duty considerations, to name only a few of the additional legal concerns.
Big events are often borne of creativity at marketing and public relations companies and departments; but it is a good idea to bring in the lawyers well before a fashion company commits to move forward with such an event. Marketers are both inventive and parental, quickly falling in love with their creations, with the result that legal considerations can be put off to the last minute. That is why promotional lawyers are used to providing services in a rush. Under those conditions, even their best efforts may not be enough to prevent an exciting opportunity from becoming an expensive mistake due to missed deadlines for permits, hurried and failed attempts at gaining necessary consents and much more (and much worse). The simple rule of thumb is this: when you think big in a promotion, think legal. Before the big idea is a go, go to the lawyers and ask if it is possible and what it likely will cost to make it happen.
As for those sheep on Savile Row: someone did it all just right that day in October. The promotion went off as planned, the cops stayed away, everyone had a good time, and Henry Poole and the rest of the Row’s tailors got their message across, which was, “Gentlemen: wear wool and look smart.” We have to assume that, somewhere in London that night, an advertising and promotions lawyer slept soundly. He or she certainly deserved to.
Credit: Alan Behr
Photo Credit: Henry Poole & Co
The bankruptcy and attempted reorganization of American Apparel demonstrate not just that fashion is a risky business but also that, in bad times as well as good, it brings into play some unique considerations. First among those is that fashion businesses tend to arise from the unique vision of one or a very few individuals. That is true as well for tech startups, but except for a few software geniuses (such as Mark Zuckerberg), entrepreneurial masters (such as Bill Gates) and brilliant marketers (such as Steve Jobs), once a tech business gets going, skilled replacements are relatively easy to find.
That is not the case when the founder and guiding light of a fashion business is also its chief designer. As even well-established brands have demonstrated, bringing in a new designer who understands a brand’s signature looks and who can add his or her own vision while somehow keeping all that fresh (and keeping loyal customers purchasing) is not an easy feat.
The situation at American Apparel was ironically even more complicated because much of the trouble started when its founder, Dov Charney, was forcibly removed. More of a businessman than the creator of a signature style (American Apparel was all about ever-cool basics made in the USA), he dominated the company. He made a failed effort to return; and while everyone involved focused attention on that, the business lost its vision and too many of its customers, and then slid into receivership. That might have happened anyway, but the disruptions caused by the long-running Charney episode may well have been the tipping point.
It all serves as a reminder that, in fashion, getting a clear and effective legal structure into place as early as possible, with understandable methods and procedures for personnel transitions and successions, could potentially be a business-saver. True, Ralph Lauren, that grand warrior for American gentlemanly style, simply and graciously stepped aside as CEO of his company, letting the business keep running, apparently seamlessly, from there. But legal planning is not about expecting the best; it is, unfortunately, about hoping for the best while planning for the worst. And when it comes to fashion and the people in fashion, that is nearly always a prudent way to go.
Credit: Alan Behr
In most cases, a new store tenant will require work to be done to make the premises suitable for its purposes. As a rule, a landlord will insist that no work can be done without prior approval. That puts the prospective tenant on the horns of a dilemma while negotiating a lease: if an architect is hired to design the plans while negotiations on the lease are ongoing and the lease is not ultimately signed, time and money invested in the premises will be lost. If the plans are not prepared, however, the opening of the store may be delayed as the landlord goes through the approval process, or worse, the landlord forces the tenant to change the plans. The result: the tenant may not get the store it wants on the date the tenant needs it.
Whether or not to advance the money for plans is always an individual consideration, depending on the relationship with the landlord and the time pressure to open the store.
Even if the tenant prepares the plans and the landlord approves, there is still the issue of getting the approval of the local authorities. Estimating the time that it will take to get approvals is crucial in calculating when the store will open. Without that information, planning for seasonal inventory can be thrown off, with potentially serious business consequences. Ideally, a tenant would have a contingency in every lease for cancellation if the plans are not approved by the authorities. However, it can be difficult to get landlords to agree to that in good measure because of an inability to predict what plans the prospective tenant will submit and what the official reaction to them will be.
However, if the plans are already completed and approved, the municipal authority will likely have someone who would be willing to meet with the tenant’s architect to give an indication of whether there will be problems and to provide an estimate of how long the approval process might take. In some cases, the government representative would also be able to alert the tenant as to any existing problems in the building, especially if the landlord has not been cooperative. It is, therefore, often a good idea to pay a visit to the local building department once plans are completed and approved.
Credit: Steven J. Rabinowitz
Steve is counsel in Phillips Nizer’s Real Estate Law practice.
I was struck by the news that Target’s limited edition Lily Pulitzer collection sold out within hours, after Target took its website off-line in the face of extraordinary demand when the collection went on sale. It is surprising that a sophisticated retailer and a well-known fashion brand did not expect either the demand or that it would manifest itself in a stampede to Target’s website. Can it be that fashion brands and retailers do not appreciate the fundamental shift in consumer behavior of which this is merely the latest manifestation?
As the mother of a daughter who is what the media has taken to calling a millennial, I have had a highly personal view of the change in what was once a fundamental consumer activity: shopping. For me, shopping, which includes searching for luxury brands at bargain prices, is a treasured leisure time activity. It was an activity I used to share with my daughter. The siren call of the mall in Florida, California or wherever else I might be where there was a mall was an essential not-to-be-missed feature of any vacation. And in Manhattan, which has no malls, a stroll on Fifth Avenue or Madison Avenue was a wonderful activity on a nice day.
That stopped when my daughter became a teenager. The one and only shopping trip we have taken in the last 5 years was to find a gown for the prom. That’s not to say that my daughter is not obsessed with fashion or is not an inveterate shopper. She spends more time shopping than I ever did. But the only stores she visits in person are Sephora, to play with cosmetics, the Apple store, to play with gadgets, and thrift shops and vintage stores to find that perfect ugly Christmas sweater or 60’s bargain accessory.
Instead, she shops on-line at all hours of the day and night, particularly when she is procrastinating to avoid writing papers or completing other school assignments. She shops on her iphone, on her iPad and on her Macbook. She orders everything she is interested in on-line, preferring to try things on in the comfort of her own room, returning what doesn’t work and keeping what does.
For her, on-line shopping is also a highly social and communal activity. She sends links of potential purchases to friends and solicits their opinions. She takes selfies of herself in garments to poll her friends on what she should keep. She follows the brands she likes on social media so that she knows what’s coming and when the sales start.
None of this is new. It has been going on now for years. It is the reason why malls are dying and why some teen retailers have struggled while others have thrived. It has dramatic implications for fashion brands and retailers and important implications for lawyers who serve them. We all must master the internet, social media and the changes in distribution channels that these portend. So bear in mind all: this is the generation that killed the compact disc and record stores and is well on its way to killing iTunes, even though it consumes more music from all over the world than we ever did. It is killing the book store and books (college texts can be rented, ordered on-line and sometimes consumed electronically), although it actually reads more than we do. You’d better get with the “what I want, when I want it, without getting dressed” generation or you’ll soon be a relic of the past. And message to Target and other retailers: if you frustrate your customers and they see your goods as something unattainably dangled out of their reach, you’ve lost them as customers. Millennials do not take frustration well, and the web offers lots of alternatives that are more accommodating. Like Top Shop!
Credit: Helene M. Freeman
Over the years, retailers have liberalized their returns policies. I have been offered thirty days, ninety days, sometimes one hundred eighty days in which to receive forgiveness if I should change my mind. I have even been quietly assured that, if I sign up as a preferred customer, the returns privilege is open-ended, which I suppose means that you can bring back your bar mitzvah suit after you wear it a second time for your retirement party (as long as you have the receipt). Even if formal policy says no to a return, it may simply be ignored if you are polite about it and willing to accept a store credit as a compromise.
In part to soften customer concerns about the risks of buying online, retailers have made buying from the Internet into a shop at home service, making returns as easy as putting the product back into the box, sticking on a return label and sending it back from whence it came—sometimes at no additional cost. (Shoe purchases seem to be particularly blessed in that way.)
When the goods come from a boots-on-the-ground shopping experience, customers are increasingly becoming their own shop at home services, scooping up whatever looks promising (sometimes in alternative sizes and colors) and making final purchase decisions in the privacy of their own bedrooms. The result of all this back and forth is that is that, depending on the category, returns can equal as much as forty percent of a retailer’s sales—perhaps even more in seasonal spikes.
When an item is marked “final sale,” however, the retailer is saying: “I’ve had enough of all that; I really want this one to move; here it is at a very good price I would never otherwise accept; now take it and don’t ever let me see it again.” We can all understand why a no-returns policy makes sense for underwear. But consider this as well: every luxury retailer has stories about evening gowns returned the day after a well-publicized big event, fragrant with perfume. For the same reason, it is understandable why a jeweler would make returns difficult or even impossible—to avoid, that is, turning into a free lending library for expensive necklaces and bracelets.
So by all means, take advantage of final sale offers. (By definition, it is your last chance to buy the item anyway.) But keep in mind that there is no turning back when you do. Your moment as your own style consultant has come: if you buy it, you own it, so make sure you like it at point of sale.
A special, final and heartfelt warning: if you are a guy with a wife or girlfriend who examines what you wear as if your reputation and hers depended on it (How, you may ask, would I know of such a guy?), you had better bring her along, just to be sure. If she first sees it when you bring it home and on the spot offers an opinion along the lines of, “What were you thinking? Take that thing back!” it is no time for your response to start with, “Uh…”
Credit: Alan Behr
Some retailers have embraced the strategy of opening a large number of small stores rather than focusing on a few flagships. Advantages include minimizing the chance of significant economic loss in any given location and increased exposure on a national level.
One drawback to this strategy is that, with the greater number of leases to be negotiated, there is an attendant possibility of large legal fees. The retailer could, with justification, believe that, since the rent is small for each location, the legal fees should be similarly modest.
However, the retail tenant’s counsel cannot be any less vigilant in negotiating these store leases. That is because certain types of liabilities can be very costly, no matter the size of the store or the amount of the rent. Those liabilities generally arise from problems with the physical condition of the store.
Landlords come in all sizes and shapes, and often different negotiation strategies are called for depending on who is on the other side of the table. But there is one thing all landlords have in common: they want the tenant to accept the premises “as is” and be responsible for all physical problems within the demised premises. “You have inspected it,” they will say, “or if you haven’t done so, you should do so at once.” But by the very nature of the small store strategy, the tenant is opening in locations where it is unfamiliar with local laws and may not wish to undertake the expense of hiring local architects and expediters to inspect and report on real or potential problems at each location.
Typically, the tenant retailer knows it will have to do work to prepare the store for its occupancy, but the tenant will likely also be unwilling to accept responsibility for any major construction needed to prepare the space for its occupancy. One would imagine that landlords would feel the same way, but often that is not the case. Even if we leave aside landlords who wrongly seek to conceal defective or environmentally unsafe conditions and look at honest landlords, we find that it is not uncommon for them to worry about their buildings being consistently up to code. Even if the building was in full legal compliance at the time of original construction, laws change, and repairs and replacements over time may not be in compliance with the updated code. The big fear is that, when a retail tenant applies to have its plans approved for its leased space, the building department will return with a laundry list of upgrades that are essential to bring the entire building up to code.
Retail tenants must anticipate and respect that fear, and savvy tenant counsel should be able to handle the concerns of the landlords with sensitivity (and often creativity) to help the landlords overcome their fears. The solutions that arise in these situations, when parties cooperate and reasonable compromises are made, can be mutually beneficial. But one thing is certain: the goal of counsel for the retail tenant is to do what is reasonably necessary to help keep costs both predictable and under control.
Credit: Steven J. Rabinowitz
Steve is counsel in Phillips Nizer’s Real Estate Law practice.