Tuesday, 28 April 2009

Landlords work with retailers to save costs

Fashionista can report that six prominent landlords led by Land Securities and more than 25 retailers led by TopShop have devised a "10 point plan" to reduce service charges at shopping centres and retail parks across the UK. The plan as reported by Property Week is based on a trial service charge reduction which ran last autumn in four major shopping centres. The results revealed cost cuttings of up to 20 %. Andrew Varley, Next's property director, supports the initiative and has emphasised the importance of transparency for retailers and asked for landlords to assess why certain costs are so high.

Acting as a checklist for landlords, the "10 point plan" provides a framework on which to review costs and helps evaluate current practice. The retail entrepreneurs involved are also seeking to ensure insurance charges are more transparent. The "10 point plan" focuses on the following cost-efficiency issues:

1. Engagement with retailers
2. Hours of operation
3. Cleaning and environment
4. Waste management
5. Security
6. Administration, procurement and purchasing of services
7. Plant and fabric maintenance
8. Utilities and energy management
9. Customer service
10. Marketing

Fashionista would hope that landlords will be encouraged to shop around for competitive insurance quotes and where reductions for bulk purchases on insurance or any service charge costs are given that these savings are passed on to retailers.

N.B. A further example of landlords and retailers working together to get through the current recession is illustrated by JJB Sport's recent CVA deal, back by its landlords as reported in Drapers. Under the agreed deal, JJB's major landlords Hammerson, Land Securities and British Land will be paid out of a pot of £10million, set aside by JJB Sports, as part of arrangements to end the 140 leases early and move to monthly rental payments in respect of the remaining 250 leases.

Saturday, 25 April 2009

"Aura of luxury" as Dior squeezes Copad in corset clash

Fashionista is pleased to say that, with her hourglass figure and svelte lines, she has never yet required the use of a corset. If she did have such a need, she is sure she'd add the upmarket Christian Dior product to her "must-try" list -- but where would she go to buy it? Her choice may now be a little more limited, following the European Court of Justice's ruling this week that Dior can -- at least in theory -- use its trade mark rights to stop the resale of fashion goods by pile-them-high-and-sell-them-cheap retailers who acquire them from legitimate distributors.

The case in question is Case C‑59/08 Copad SA v Christian Dior couture SA and others, and it all happened like this: Dior licensed SIL to sell "luxury corset goods" under its CHRISTIAN DIOR mark. The licence prevented SIL selling the products to discount stores without prior written consent. When business got tough, SIL asked if it could sell the corsets outside Dior's selective distribution network; Dior said "non!". However, SIL still sold the goods anyway to Copad discount stores. Dior sued and the top French court sought a ruling on three preliminary issues.

According to the ruling, (i) Dior could sue SIL for trade mark infringement for being in breach of a licence that bans, on grounds of the trade mark’s prestige, sales to discount stores, so long as -- on the facts -- that contravention "damages the allure and prestigious image which bestows on those goods an aura of luxury"; (ii) it was plain that, if SIL breached a "don't sell to the cheapo stores" obligation, no-one could say that the sale of those goods by SIL or indeed by Copad was with Dior's consent; (iii) even if Dior had let SIL sell the corsets to Copad, Dior could still
oppose their resale if it could prove that, on the facts, such resale would damage the reputation of the trade mark.

Fashionista sees this as a victory for fashion houses that run selective distribution schemes to stop their upmarket goods going on sale in the wrong sort of places. But this is not the end of the story. For one thing, it's still necessary to show that the resale will damage the brand's aura of luxury -- and the courts in Europe have yet to tell us what this means. Secondly the European Commission, which loves pro-competitive markets, sided with Copad in this case and might yet move to curb brand enforcement in similar cases through legislation.

Friday, 24 April 2009

The champagne will keep flowing for LVMH

Fashionista likes nothing better than to sip on cold champagne whilst leafing through the fashion glossies or dressing up for a night on the town, and so is puzzled by sceptics who question the benefits to owning both "luxury fashion" and "fine spirits and wine" brands.

Such scepticism has been raised this week amidst rumours that LVMH - owner of various luxury fashion brands (including Louis Vuitton, Donna Karan, Celine and Fendi) and the Moet Hennesy business (with a portfolio of premium brands including Dom Perignon, Moet Chandon, Veuve Clicquot, Hennesy and Belvedere vodka) - may sell its Moet Hennesy business to Diageo. LVMH has so far quashed such rumours which, if true, would place Daigeo as the world's largest drinks brand ahead of French rival Pernod Ricard.

Rumour has it that Diageo - which already owns a 34% share of Moet Hennesy - is preparing a £10.6 billion bid to take over the Moet Hennesy business. Despite LVMH's confirmation that a deal is not on the cards, Diageo seems keen to press ahead, planning a £5 billion share sale to help fund any purchase offer.

Fashionista asks, with LVMH reporting an overal increase in turnover (despite, admittedly, a big drop in its wines and spirits division), what merit is there to selling a portfolio of such well known brands in the current climate when cash flow does not appear to be an immediate problem? Although this would provide LVMH with a considerable pot from which it could look to purchase another luxury fashion brand, tailoring the company's industry focus, Fashionista questions the commercial sense of such a move - and it seems as though LVMH has asked itself the same question. After all, when times are good (and Fashionista is hopeful that they will be again), surely the premium champagne will once again flow? But for now: when gambling with a weak economy, isn't it better to spread bet rather than put all chips on one industry? After all, when times are tough, people are less likely to shop and more likely to drown their sorrows - although perhaps not with Dom Perignon...

Thursday, 23 April 2009

Credit Insurance Top-up Scheme - Darling Disappoints

Further to her posting on 21 April, Fashionista notes that somewhat unsurprisingly the Chancellor's plan to assist suppliers experiencing difficulty obtaining credit insurance has not met the industry's demands.

Under plans announced yesterday, the Government will provide up to £5 billion of extra insurance to top-up cover from insurers in order to help businesses that have been affected by the reduction in availability of trade credit insurance. However, the scheme is restricted to companies experiencing a partial withdrawal of cover between 1 April and 31 December 2009. It does not assist businesses which have had their credit cover withdrawn completely and businesses will only be able to obtain top-up cover for six months. The British Retail Consortium expressed its disappointment saying, "This measure will not address many of the difficulties that have arisen as a result of the restriction in credit, downturn in trading and loss of capacity in the insurance market throughout 2008 and the early part of this year".

Whilst Fashionista accepts that the Government would not want to support fundamentally bad businesses or take unacceptably high risks in providing top-up insurance cover, the scheme does not seem to take any account of the fact that retail businesses have been affected by the downturn in the credit insurance market for many months now and the cut off point of 1 April will not alleviate the concerns of the majority of affected businesses. The Chancellor's plan appears to have fallen well short of the retail industry's demands.

Budget 2009 - The Retail Summary

Fashionista has called upon her knowledgeable tax contacts to help explain the impact of the budget on the retail sector. The attached scorecard looks at what measures the Chancellor has taken in the Budget to assist retailers.

This has been prepared by reference to the BRC's Budget Submission dated March 2009 to see if the Government did in fact take on board any of the steps proposed by the BRC. For a summary of the budget in general, Fashionista has included another useful link.
(Picture: www.copyright-free-pictures.org.uk)

Fashionista finds it very useful to have friends in the right places to help explain these things to her!

Tuesday, 21 April 2009

Will Darling Bring Relief?

Fashionista keenly awaits this week's Budget amid reports that Alistair Darling will unveil details of a government scheme to underpin vital supply-chain credit insurance.

The Financial Times reports that the scheme will target medium-risk businesses and is expected to offer guarantees for companies that have seen cover reduced but not withdrawn. Many retail businesses have been affected by the gradual withdrawal of credit insurance and/or increase in the cost of insurance as the recession has deepened. Indeed, in a recent survey by the British Retail Consortium half of large retailers and over 40% of small and medium sized retailers said the reduction or withdrawal of trade credit insurance had undermined their ability to trade.

Drapers, which joined forces with the British Clothing Industry Association (BCIA) to lobby the government over the issue of credit insurance, has reported that suppliers are furious that credit insurers such as Euler Hermes and Atradius, to which they have paid premiums for several years, have slashed cover available to the sector, which has left them fighting to survive or with massively depleted order books. Quoted in Drapers, Michael Wolff (managing director of high street supplier, Fielding Group) summed up the situation saying "If retailers can't get supply, they go bust, which leaves the high street with empty shops, and suppliers go bust, which leads to job losses. The government must do something to keep money moving around".

It is clear to Fashionista that something needs to be done to break this worrying cycle. However, amid reports that the government scheme may fall short of the £5 billion cap the industry hopes for, it seems likely that lobbying will continue for sometime to come.

Monday, 20 April 2009

Manhattan in May, will AA have to pay?

Manhattan in May is a great place to be. Central Park is in full bloom as spring turns to summer while Fashionista and her friends test out their wardrobes in the warming sun. But it's not such a fun time and place for humourist and film director Woody Allen, since that's when he confronts his nemesis American Apparel in court.

The Guardian reports that Allen has launched a $10m lawsuit against American Apparel which, he says, has used his images in an advertising campaign without his permission. Allen, who does not endorse products in the US, has branded the clothing firm's campaigns "sleazy", "adolescent" and "infantile" and that the use of his image, by falsely implying endorsement of American Apparel's "low-end" products, has damaged his reputation.

Above: the advertisement at the heart of the dispute

American Apparel's lawyers see no problem. They say Allen has no reputation to ruin, having had an affair with his stepdaughter Soon-Yi Previn. As part of its case American Apparel is demanding documents relating to any advertising endorsements that were cancelled or withdrawn following the revelation of Allen's affair with Soon-Yi, whom he married in 1997. Is this legitimate? Not according to Allen's lawyers, who say this request is "vexatious, oppressive, harassing" -- and irrelevant.

While American Apparel has apologised for any offence it may have caused, the company does not propose to be parted from the $10 million claimed by Allen. Aficionados of damages assessments may be pondering over whether $10 million is that far wide of the mark. The trouble is, in cases such as this the courts like to be guided by things like how much celebrity's current endorsement value is. Where no endorsements are given, this convenient rule of thumb is unavailable. Fashionista, who will be watching this saga with interest, wonders how much AA would have had to pay Woody Allen to get his consent?...

Friday, 17 April 2009

Designer fashion at High Street prices

Fashionista is looking forward to the summer in the knowledge that she will be able to add some desirable designer pieces to her summer wardrobe without the designer price tags - and given the continuing credit crunch this has to be a good thing.
Next week Fashionista is poised to visit H&M to snap up items from the latest collaboration between the high street cut price giant and Matthew Williamson and has now pencilled in 7 May in her diary too as a key shopping day. Why? Because that is when, courtesy of Marks & Spencer, Fashionista will be able to spruce up her summer wardrobe with a few more choice designer items at bargain prices. Zandra Rhodes is the latest designer to join forces with a high street store to produce a capsule collection for exclusive sale by the high street store.
These collaborations must, Fashionista thinks, be a successful formular for all involved. The designers benefit from publicity for their brands and additional revenue (to be welcomed at any time but especially now), the stores get increased footfall and takings and the kudos of being associated with a designer and Fashionista and her friends feel less guilty about supplementing their wardrobes with designer pieces. But one of the key features of a successful collaboration of this type is that the capsule collection is time limited and this enhances its exclusivity. This also means that realistically a designer cannot do repeated collaborations with different stores. The alternative may be to have a long term association with one store, but that is likely to have more downsides than upsides for the designers - in particular for their brands.
So, a one off short term collaboration may well be the best way to go and this means both designer and high street store have to use care when choosing who they work with. But for now Fashionista says "roll on May!" and wonders which designer will appear in the High Street next . . . . .

Lipstick index is no more

The term "lipstick index" was apparently coined by Leonard Lauder in the weeks following the 9/11 attacks in New York to explain the growth in sales of lipsticks despite the grim news on every television screen. He explained "When things get tough, women buy lipstick," he said at the time. "

The Telegraph reported at the weekend that the lipstick index has been replaced by the "fond du teint index". TNS Worldpanel, a market research firm, has reported growing sales of foundation in Britain - up 25.3 % over the year to February while lipstick sales fell 5.7 %. A similar phenomena has been reported in the US, where according to Kline & Company, lipstick sales fell 5.8% per cent during 2008, while liquid foundation sales grew by 2.5%.

Fashionista wonders whether this recent phenomena comes down to the British need to "put on a brave face" during these troubled economic times..?

Thursday, 16 April 2009

London lettings up

Fashionista can report that London is showing resilience with a fall in the number of vacant shops in the centre of the capital. Figures released by Colliers Cre surveyors have shown that the number of vacant units in central London fell by a quarter in six months to stand at 6% at the end of January. Although this is in comparison to the vacancy position in the rest of the UK where the number of empty shops stands at 14.2%.

Tuesday, 14 April 2009

High end vs High St.

The Telegraph yesterday published statistics from TNS FashionTrak, the market research company, showing that M&S lost 12 basis points of market share in February, taking its market share down from 10.78% to 10.66%.

An M&S spokesman shrugged off the report saying that market share figures "bounce up and down" on a monthly basis, due to the high levels of promotional activity on the high street at the moment. "If you look at any quarter, we could be up or down in womenswear, up or down in menswear. Therefore, on aggregate, we tend to look at it over a 12-month period". However, other commentators noted that by comparison, high street rivals Next and Debenhams held onto their respective shares well over the 24 weeks to March 1, with Next growing by 13 basis points, and Debenhams by eight basis points.
While there's no doubt that trading conditions on the high street continue to be tough, Fashionista asks whether the same is true of the designer end of the market? While overall sales may be down, a certain level of confidence seems to remain in the market, at least as far as is necessary to invest in new store openings or refurbishments. The Telegraph's Natasha Cowan has counted at least 10 boutique designer stores that are either opening or refurbishing in London this Spring. These include:
  • the long awaited Marc by Marc Jacobs London store which opened last week in Mayfair's South Audley Street;
  • Bringing a little bit of Paris to London, Lanvin's new store on Mount Street opens on 26th April stretching over five floors;
  • Missoni's first ever London store, which opened its doors on Sloane Street at Christmas, but has its launch party this week;
  • Michael Kors opens on Bond Street in a few weeks' time and
  • Burberry has just opened its first children'swear store in Westbourne Park.

To cheer herself up and remove herself from all the depressing credit crunch talk, Fashionista likes nothing better than a spot of retail therapy, so will be checking out some of the new openings this weekend!

Thursday, 9 April 2009

Reorganising your business is the new black

Fashionista has been following with interest the recent press coverage on Philip Green's plans to merge the Arcadia and Bhs businesses and, more recently, Speciality Retail Group's restructuring plans to combine some of its functions with BMB Group. Particularly in the current economic climate, it follows that businesses look for ways of reducing their costs by reorganising certain functions of their business. Typically this can be achieved by consolidation of some kind in order to reduce administrative costs or combining the financial performance of businesses previously conducted through separate subsidiaries.

Fashionista is aware that it is tempting to take a less formal approach when documenting intra group transactions, it is important for corporate governance reasons that a thorough approach is taken to any reorganisation and that the transaction is documented properly, particularly if the reorganisation is likely to come under scrutiny by third parties in the future.
There are also a number of particular company law issues which need to be addressed. So while reorganisations are an excellent way for businesses to potentially cut costs and save money, as any fashion savvy person knows, it is crucial to have the right advisors on board to ensure you do it in right style.
By Amanda

Tuesday, 7 April 2009

Hobbs goes postal with new sub-brand

Word has reached Fashionista that womenswear retailer Hobbs is set to launch its new NW3 sub-brand this autumn with a view to attracting a younger and mother-and-daughter clientele. Her fashionable friends need no reminder that "NW3" is the old postal district for lovely, leafy, highly cultured Hampstead (the highest spot in north London) where Hobbs' first store opened. with 22 shops and an online presence, NW3 comes out with 90 pieces, rising to 120 pieces.

NW3 has not been officially used as a postal district since 1974, when the 15-year roll-out of United Kingdom postcodes was completed (how slowly things happened in the days before computers), so some Hobbs mums might recall its use but their daughters probably wouldn't.

The big issue troubling Fashionista is whether postal districts are registrable as trade marks. Hobbs (now of rather less fashionable NW1) has applied for registration of a series of two marks and its application has since been advertised. The company may have been advised to go for 'HOBBS NW3' and 'hobbs nw3' just in case NW3 by itself is regarded as descriptive (of goods coming from NW3), deceptive (for goods coming from elsewhere) or just plain lacking in distinctiveness. Either way, what's the betting that within no time the brand, if successful, will be shortened to 'NW3' to distinguish from Hobbs' non-NW3 range. This too has legal repercussions: a mark that is not used in the form in which it's registered might be vulnerable to revocation for non-use, but the constant use of 'NW3' by itself might earn it enough distinctiveness to be registrable in its own right. Strange things, trade marks!

Thursday, 2 April 2009

H&M is Europe's No.1 brand

Despite recently reporting a fall in profits, H&M has topped Interbrand's list of Top 25 European Retail Brands 2009 as Europe's most valuable retail brand. In a list dominated by supermarkets, the Swedish fashion giant topped the leader board, with Spanish rival Zara in 5th place, M&S in 6th place, and Mango further down the list but nevertheless featuring at number 17 on the list.

Interbrand suggest that H&M's popularity could be due, in part, to the designer collaborations the company enters into. The current capsule collection comes from Comme des Garçons. Previous very successful collections have been designed by Stella McCartney and Karl Lagerfeld, and next month will see the launch of Matthew Williamson's collection for H&M which, for the first time, will be available in all H&M stores - proving the popularity of the designer collaborations with the high street favourite.

Fashionista agrees that such collaborations are likely to greatly enhance a high street fashion brand's value and marketability, distinguishing it from other high street brands (of which there are so many). Such collaborations serve as a badge of distinction. After all, the "big name" designers have invested a great deal to establish their reputation in a tough industry and they will not want their name and brand associated with any retailer. Equally, the high street retailer is a fantastic advertising and marketing vehicle - exposing the designer and his or her brand to a far wider consumer group than normal, simply by being available on scale which is considerably larger than a select few boutiques, and generally at more affordable prices. Fashionista suspects that such collaborations may even act as feeder ranges - securing new customers for the designer's own collections as fashion-savvy young high street customers look to more adult ranges in the years to come.

Wednesday, 1 April 2009

The beauty is in the small print

Fashionista has been lucky enough to receive the following offering from her friend Mark Sebba of Net-a-Porter:

"Fashionista at Net-a-Porter has been an avid fan of Fashionista-at-Law since she started blogging and has been both amused and interested by her take on the current retail and fashion scene. At least Fashionista at Net-a-Porter doesn’t have to worry about those High Street real estate problems; of late she has been more pre-occupied by the imminent launch of her “sister” website, http://www.theoutnet.com/. In addition to scouring the best known fashion designers’ factories for some spectacularly exciting bargains to offer Fashionistas-at-Large, she has been troubling her pretty little head with the small print.

Hidden inside those Terms and Conditions, only a click away on every website, lurk a multitude of traps for unwary e-tailers. Although most people probably never read the T's and C's, every e-tailer has a horror story about someone – usually it turns out to be a lawyer – who has picked over them in detail and then challenges the e-tailer on the most arcane of points. So Fashionista at Net-a-Porter, as well as respecting Trade Descriptions, Sale of Goods legislation and Consumer Protection From Unfair Trading Regulations 2008 like any traditional bricks and mortar retailer, also has to pay careful attention to the Distance Selling Regulations and the Electronic Commerce Regulations. And that’s only for selling in the UK.

Many of Fashionista at Net-a-Porter’s customers live outside the UK: in the European Union – where another set of rules is fast developing for cross border e-commerce and Data Protection; and in the United States, where Fashionista at Net-a-Porter operates a separate distribution centre and a different website. So she needs to write another set of Terms and Conditions for her US business, but this set needs to conform to the laws of 51 different states, as well as to, among other things, the FTC Guidance document "Dot Com Disclosures Information About Online Advertising". Meeting these varied requirements calls for some juggling and of course much consultation with Fashionista-at-Law and her American cousin. How would we manage without the lawyers?"

If any of our other readers would like to share their thoughts or concerns, please email fashionista@olswang.com

Good news for Business Rates

As reported in the Telegraph this morning, Fashionista is delighted that the government has agreed to stagger increases in business rates on properties over the course of the next two years.

A 5% increase was due to be enforced on 1 April 2009, however due to effective lobbying this will now be introduced as a 2% rise. The remaining 3% will be recouped over the next two years.

Fashionista predicts that there will be a flurry of rate payers contacting their local council's to request revised payment plans to assist with managing the increased costs. Any cost saving are welcomed in the current climate.