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image: Dams

New York’s Metropolitan Transportation Authority (“MTA”) rejected ads for sex toys manufactured by women’s sexual-health startup, Dame Products, and has landed itself in court on the wrong end of a first amendment lawsuit as a result. According to a complaint filed by the four-year-old brand filed in a New York federal court on Tuesday, by banning its ads from New York City subway cars, MTA exhibited “sexism” and “privileged male interests in its advertising choices,” thereby, running afoul of Dame’s rights to free speech and equal protection under the First and Fourteenth Amendments.

Dame asserts in its 40-page complaint that in May 2018, it created its pitch to the MTA, and in June, submitted ads to the MTA. Following three rounds of costly revisions on the part of Dame in response to the MTA’s “uneasy sense regarding the undertone of the ads,”  the MTA informed Dame that is would be unable to ads because “the proposed ads promote a sexually oriented business, which has long been prohibited by the MTA’s advertising standards. 

Despite “previously welcoming advertisements that celebrate human sexuality and openly discuss sexual health and function,” Dame asserts, “the MTA excluded [it] from this vibrant public discourse and denied Dame coveted advertising space.” 

In its complaint, Dame points to evidence that shows that the MTA has previously run sex-centric ads, including: (1) “a sign promoting a travel booking company proclaims: ‘Get Wet. (On the beach, not from the guy next to you),’ (2) an advertisement for ‘Kyng’-sized condoms, and (3) an image of a woman, midriff exposed and bra visible beneath her sheer shirt and an ad which touts female libido medication, reads: ‘Turned on. On your terms.’” 

One of Dame’s ads (left) & one of hims’ MTA-approved ads (right)

Nonetheless, the MTA refused to run Dame’s ads, which include photos of sex toys alongside transit-aligned slogans, such as “You come first,” “Some riders need extra help getting off,” and “Only 4 percent of female riders can get off trains that just stay in tunnels.” 

“Unable to justify this arbitrary and unlawful decision,” Dame asserts, “the MTA cited only a bogus interpretation of its own advertising regulations ginned up for the sole purpose of quashing Dame’s proposed images.” 

As such, Dame claims that “in 2019, the MTA’s Victorian view of female sexuality and the First Amendment cannot stand. The MTA’s censorship of Dame’s advertisements cannot stand. All New Yorkers—and all women—deserve better.” More than that, Dame asserts that by “intentionally treating [the company] differently than similarly situated businesses whose advertisements have been approved and displayed on MTA Property,” the MTA has failed to provide it with equal protection under the Fourteenth Amendment. 

Dame is seeking damages in the form of an injunction requiring the MTA to “approve and display Dame’s advertisements” and compensatory damages.

A spokesman for the MTA said in response to the suit that the agency is “constitutionally entitled to enforce reasonable restrictions on what ads appear” and that the current guidelines are “in no way gender-based or viewpoint discriminatory.” The rep notes that while MTA’s advertising guidelines allow for the advertising of FDA-approved medication, including when it is related to sexual health, “advertisements for sex toys or devices for any gender are not permitted.”

*The case is Dame Products v. Metropolitan Transit Association, et al, 1:19-cv-05649 (SDNY). 

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image: FarFetch

Farfetch is one of nearly 100 companies partnering with Facebook on an independent blockchain-based platform called the Libra Association and its own soon-to-launch cryptocurrency called Libra. Beginning in the first half of 2020, the Libra Association will offer consumers the ability to deal in “secure, scalable, and reliable” cross-border payments, Facebook announced by way of a whitepaper on Tuesday. The Switzerland-based non-profit is, per CNBC, expected to “leverage Facebook’s more than 2.7 billion monthly users to bring cryptocurrencies into the mainstream.” 

Aside from Libra’s “mission to enable a simple global currency and financial infrastructure that empowers billions of people,” which CNBC’s Salvador Rodriguez says could “be beneficial to users in third-world and developing countries as well as loved ones who currently rely on services like Western Union to send remittances,” the platform could have some interesting implications for the fashion industry, particularly when it comes to the burgeoning resale market. 

FarFetch CEO José Neves said in a statement on Wednesday that such blockchain endeavors “will benefit the luxury industry by improving [intellectual property] protection, and transparency in the product lifecycle,” particularly in terms of luxury resale, a market that is currently valued at more than $25 billion but also plagued with concerns – and litigations – centering on the infiltration of counterfeit goods. 

As Vogue Business’s Maghan McDowell noted, Neves “anticipates that consumers’ expectations for visibility on a product’s origins and authenticity will only increase as the market for pre-owned luxury grows,” and that such a blockchain-based platform can help 

“Blockchain is still in its relative infancy, but we think it holds a lot of promise with regards to how it could assist the luxury fashion industry scale solutions to these consumer expectations,” he said. And the FarFetch chief states that brands are eager for innovation in this realm: “Every time we speak to the brands, there's this desire to really make progress on how to trace the life cycle of a product, and even fight counterfeits — not just the luxury companies, but brands like Nike and Adidas.”

The FarFetch, Facebook tie-up comes just a month after LVMH Moët Hennessy Louis Vuitton announced that it is launching AURA, a platform that it says “aims to serve the entire luxury industry with powerful product tracking and tracing services, based on Ethereum blockchain technology and utilizing Microsoft’s [cloud computing service] Azure.” In short: the blockchain-based service will make it possible for consumers to access the product history and proof of authenticity of luxury goods — from raw materials to the point of sale, all the way to second-hand markets.  

The luxury goods giant – which owns brands like Louis Vuitton, Dior, Celine, Loewe, and Givenchy, among others – said it will not keep the technology all to itself. In a statement last month, a rep for LVMH said that “several brands from the Group, such as Louis Vuitton and Christian Dior, are currently involved, and advanced discussions are underway to onboard additional brands from the LVMH Group, and other luxury groups globally,” without naming names. 

Early this month, Gregory Boutte, the digital officer for Gucci’s parent company, revealed that “Kering might be open to joining a blockchain technology platform that LVMH is developing to help track supplies chains and authenticate products in an industry that often has to grapple with counterfeit goods.”

As for whether a Facebook-centric blockchain is the answer, at least some experts are skeptical, given what Rodriguez calls “Facebook’s checkered past with privacy and trust, which will inherently be an obstacle for the company to overcome.”

“Facebook has already garnered a reputation for questionable privacy practices,” said Jake Yocom-Piatt, co-founder and project lead of Decred, a digital currency, told CNBC. “A trackable cryptocurrency from a ‘free’ network with a history of selling consumer data could just as easily track financial decision-making and sell it to third parties.”

Facebook has, of course, said it will use data about payments made with Libra for targeted advertising purposes.

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image: adidas

Adidas lost the latest round in a years-long fight over its 3-stripe trademark. In a decision issued on Wednesday, the European Union General Court upheld the European Intellectual Property Office (“EUIPO”)’s Second Board of Appeal’s decision that the German sportswear giant’s mark – which consists of “3 parallel equidistant stripes of identical width applied on the product in any direction” – lacks the necessary distinctiveness to be protected as a trademark, a blow in adidas’ global quest to secure and enforce rights in the famous 3-stripe design. 

In addition to primarily asserting that adidas’ 3-stripe mark is not a pattern mark, as adidas has asserted, but instead, an ordinary figurative mark, meaning that it has fixed proportions, the General Court held that the sportswear brand failed to show that its largely well-known mark had acquired the necessary "distinctive character" throughout all 28 countries of the EU in order to qualify for legal protection.

In order to be protected by trademark law, a trademark needs to be distinctive, i.e., “consumers should be able to recognise your sign for what it is: as an indication of origin [of the product upon which it appears],” according to the EUIPO. In short: a trademark – whether it be a brand name or logo – must serve to distinguish one company’s products from those of another. With that in mind, a company can prove distinctiveness (assuming the mark is not inherently distinctiveness and here it isn’t) by way of a combination of factors, including a showing of how broadly it advertises its trademark, sales success in connection with products bearing the specific trademark, and third party media outlets’ coverage of the trademark, among other things.

As the court aptly notes, “A mark can be registered [in the EU as a whole] only if it is proved that it has acquired distinctive character through use throughout the [entire] territory of the EU” and its 28 member state countries.

While the court states that a party need not show separate evidence of distinctiveness for each and every member state, as companies may “group several Member States together in the same distribution network and have treated those Member States, especially for marketing strategy purposes, as if they were one and the same national market,” the evidence submitted “must be capable of establishing such acquisition [by that mark of distinctive character through use] throughout [all of] the Member States of the EU.”  

The court asserts that in adidas’ case, “it is common ground that the mark at issue is inherently devoid of distinctive character throughout the whole of the EU,” in large part because the only evidence submitted by adidas “that is relevant is the five market surveys … which were completed in only five Member States and therefore cover [only] a part of the EU.”  

As such, the court sided with the EUIPO and Shoe Branding Europe BVBA, the latter of which first sought a declaration of invalidity of the mark in late 2014, while the two parties were already in the midst of an adidas-initiated litigation over Shoe Branding’s use of a “confusingly similar” 2-stripe mark on footwear of its own.  

While the General court clearly ruled in favor of the EUIPO and Shoe Branding, this case might not be over, should adidas appeal to the higher Court of Justice of the European Union.

*The case is adidas AG v. European Union Intellectual Property Office (EUIPO) and Shoe Branding Europe BVBA, T‑307/17.

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image via Adam Katz Sinding

Forget being a regular billionaire – Bernard Arnault is now a centibillionaire, a position currently held by just three people in the world. As of Tuesday Arnault – who is the chairman of the chairman of luxury goods conglomerate LVMH Moët Hennessy Louis Vuitton – joins the likes of Jeff Bezos and Bill Gates in what Bloomberg calls “the world’s most exclusive wealth club,” with a fortune of at least $100 billion. 

70-year old Arnault nabbed the title on Tuesday after LVMH’s stock, which trades on the Amsterdam-headquartered Euronext exchange, climbed 2.9% to a record 368.80 euros a share, increasing his net worth to almost $32 billion so far this year, the biggest total jump on Bloomberg’s 500-member  Billionaires Index.

The LVMH chairman, whose conglomerate owns Louis Vuitton, Dior, Givenchy, Celine, Loewe, and Marc Jacobs, among 70 or so other fashion and non-fashion luxury brands, has been inching up the upper echelon of Forbes’ “World’s Richest” list over the past year, in particular. He first ousted Spanish billionaire Amancio Ortega – the force behind retail conglomerate Inditex and its roster of Zara, Zara Home, Massimo Dutti, Bershka, Oysho, Pull and Bear, Stradivarius and Uterqüe – from the number 4 spot on the world’s richest list, as well as for the titles of the wealthiest figure in Europe and the wealthiest figure in fashion.

More recently, Arnault advanced again. This time surpassing 88-year old American business magnate Warren Buffett in April thanks to an LVMH stock surge after the group released its first quarter earnings report. That landed him in the top three, following behind Amazon’s Bezos and Microsoft-founder Gates.

“Arnault’s fortune of $100.4 billion now equals more than 3 percent of France’s economy, underscoring the wealth gap in his native country, where protesters have agitated this year for more benefits paid for by the rich,” Bloomberg noted on Tuesday. So far in 2016, LVMH’s shares have grown by 43 percent, making it the “third-best performer on the French CAC 40,” a market capitalization weighted index that reflects the performance of the 40 largest and most actively traded shares listed on Euronext Paris.

The growth achieved by LVMH, as well as rival conglomerate Kering – which owns Gucci, Balenciaga, Saint Laurent, and Bottega Veneta, and whose stock recorded an increase of more than 33 percent, the largest increase of the year on the CAC 40, as of May 2018 – has been “reshaping the French [CAC 40] benchmark, long the realm of energy, infrastructure, financial and telecommunications stocks,” Bloomberg reported last year. 

2018 marked a milestone for LVMH, when it took the top spot on the CAC 40 from Total, the multinational integrated oil and gas company and one of the seven "Supermajor" oil companies in the world, at least in part because of “several complicated years for oil prices, which has been a direct factor in Total's performance," Andrea Tueni, an analyst at Saxo Bank, told AFP at the time. 

While analysts such as Tueni characterized the spot swap “a small event on the CAC 40,” fashion industry insiders called it a significant endorsement of the financial health of luxury brands, particularly in light of lingering doubts as to the strength of spending in China, whose consumers account for one-third of the world’s luxury spending. 

As of the time of publication, LVMH maintained its spot atop the CAC 40 list, followed by L’Oreal and Total. 

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image: Uniqlo

Move over Alexander Wang, Uniqlo has a handful of new collaborators, which are expected to be the biggest that it has enlisted to date. The Japanese clothing chain announced this week that it is partnering with Korean pop mega-stars BTS for a limited-edition collection os unisex t-shirts centering on the band’s BT21 designs, i.e., animated versions of the seven members of BTS – designed by the members of BTS. As of June 21, the collection will hit select Uniqlo stores and the retailer’s e-commerce site, undoubtedly to extreme demand.

While Tadashi Yanai-owned Uniqlo has experienced success with collaborations to date, including with current partner Alexander Wang, as well as with past collaborators, such as Jil Sander, Tomas Maier, Carine Roitfeld, KAWS, J.W. Anderson, and Christophe Lemaire, this one is likely to be a chart-topper due to the sheer popularity of and marketing power commanded by BTS.  

Following in the footsteps of K-pop stars, such as G-Dragon and CL, BTS – which got its start in 2013 and consists of members V, J-Hope, RM, Jin, Jimin, Jungkook, and Suga – has found immense fame not just in their native Korea but in the West, as well, making it one of the most popular and successful musical acts worldwide.

Its 2018 album Love Yourself: Tear, for instance, debuted at number one on the U.S. Billboard 200 chart, making it “the first Korean album to top the U.S. albums chart” … ever, and has since landed the title of “the highest-charting album by an Asian musical act in the U.S. ever.” Still yet, in April, BTS became the first Asian band to surpass 5 billion streams on Spotify, while also being named on Time Magazine’s 100’s most influential list for 2019, and nabbing the title of being the first-ever Korean pop band to perform on Saturday Night Live, and ahead of sold out shows in their global Love Yourself: Speak Yourself tour.  

image: Uniqlo x BTS

Aside from the obvious benefits that come with partnering with BTS, in particular, given the band’s long list of accomplishments, the fashion industry’s occupants generally have been eager to position themselves with East Asian influencers and super-stars as a way to more directly cater to some of the largest luxury goods market in the world, whether that be China, Japan, or even Korea, where consumers are demanding that advertising be catered more specifically to them and not merely an extension of brands’ Western-focused efforts.

“With the digital era, if we want to access locals very quickly, we need to talk to them with people who are appealing to them,” Julie Coine-Ollivier, president of LVMH Fragrance Brands Japan, told Nikkei, which noted that while luxury brands are "supervising marketing from their Western headquarters to carefully control their image ... local approaches are taking on greater importance in order to stand out and attract new followers in the vast online marketplace." 

This has seen fashion’s top brands looking East not only for revenue growth but more specifically, for the proper ammunition to appeal to this powerful region, which has included enlisting more localized celebrities and influencers.  With that in mind, brands like Chanel and Fendi regularly tapped K-Pop stars to appear in their campaigns, particularly during the tenure of the late creative figurehead Karl Lagerfeld. Meanwhile, brands ranging from Burberry to Tommy Hilfiger have been luring some of the music genre’s biggest stars to the front rows of their runway shows in hopes of attracting the attention of luxury-hungry young consumers. 

Fashion's continued obsession with these young talents – both for their music and their celebrated sense of style -  sheds light on even bigger takeaway: Korea is increasingly the home of influence that fashion brands simply cannot afford to ignore. 

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image: Wallet

Where is value and desire created online? What is the importance of physical retail space in era dominated by e-commerce? And what is the future of retail? These are a few of the questions that Wallet, the budding Oslo-based critical commentary publication launched in 2018 by editor Elise By Olsen, aims to answer it its fifth issue. Olsen gave TFL a sneak peek at what a handful of retail industry insiders – from SSENSE founder Rami Atallah to Arun Gupta, the CEO of streetwear/menswear resale site Grailed – had to say about money, business and politics in the fashion industry.   

How has fashion retail evolved to encompass changing consumer behavior and financial technologies?

In the pursuit of profit, the fashion market has shown extreme innovation skills, from the development of the department store in the late 19th century, to the rise (and fall) of mall culture, the return of the boutique and concept store, and more recently, the pop-up shop. Meanwhile, older models of consumption – the high street chains, for example – continue to change and develop fashion markets around the world. Rapidly changing shopping patterns in a time of globalization have made the fashion retail game increasingly difficult, financially and ethically. 

Even digital retail space, once the frontier of fashion consumption, is now entering its second or third generation as players develop new unique strategies – editorial, technological, social – to entice customers. In this new wave of online retail, we are intrigued by the increasing importance of the editorial and the social, values that have long been crucial in fashion market spaces, but have been somewhat neglected in the contexts of the internet. The digital user experience has especially shaped the way we shop – with seamless transactions, fast shipping, mass inventory and re-sale culture. 

What is the enduring appeal and importance of physical space in a time of totalizing digitality? 

Like Rami Atallah, founder of SSENSE, said when I interviewed him, “A website is a must-have, but having a store, in this day and age, is a bit of a luxury.” I think “the store” of today is treated more as an exclusive site for fashion experience; a performative space for fashion practice, not too dissimilar from a gallery or a museum. Stores are being used to stage and create experiences and emotions between the clothing and the audience – such as with books, music, cinema, clothes and fashion, art, food, and graphics. 

Every store is trying to undo the look and feel of the store to instead provide ‘experiences’; they want people to stay there because they need to buy and while buying meeting different experiences: the store needs to be an archive or a library, or an art gallery, people need to be able to play, listen to music, dance, interact in the space. But at the end of the day, these spaces do embody transactional elements, and are dedicated to fashion consumerism; buying and selling fashion with completely normative economic and institutional behaviors, though perhaps in disguise.

Where is value and desire created online?

This issue also takes a closer look at the symbiotic relationship between creativity and commerce – how the creative spaces inform and reciprocate the commercial spaces, and vice versa. One of the most distinguishing features of many online retail spaces today is this privileging of editorial content on e-commerce platforms – a strategy that many stores and brands follow today. The content is usually a mix of general cultural reportage and content with a commercial hook, creating this value and desire, [thereby], directing readers to buy products.  

As Grailed CEO Arun Gupta said in our interview, “In the same way we’re talking about physical and online being synergized, I think the marketplace and the editorial are also very synergized.” 

What responsibility do retailers have beyond making shareholders happy and making money? 

Vittorio Radice, CEO of La Rinascente, a major department store in Milan, talked about the responsibility of being a leader: “If you own a big piece of real estate in the center of a major city, you have a huge responsibility to keep that city center alive. If you don’t do a good job, it’s not only you suffering, but the entire city will feel the pain … Keeping these anchor stores alive and healthy is mandatory for a city to progress … We are in the city center! Most of the time department stores are the best and biggest open building in town, and with that comes a huge responsibility of keeping the city alive.” 

Another responsibility is perhaps to make the customer feel more comfortable in these alienated luxury stores; some stores stress their democratic and accessible retail experiences, while others are relying on selectively curated content combined with steep prices that become a threshold for most people to enter. Hand-in-hand with this commitment to detail and appearance of high-fashion comes an unspoken requirement to buy something, which leads to ‘potential customers’ walking past shop windows without daring to actually enter. Heavy surveillance and security guards who can deny entry also scares people off. 

What’s the future of retail?

The future of retail – which includes the very diverse and different modes of what a fashion retail experience is and can be; spanning from luxury brand stores, independent boutiques, high street chain stores, shopping malls, online Big Cartel stores and “alternative” shops – seems to have a very synergized approach to the digital-physical complex. These stores approach their buying, curating and programming strategically and merge their creative and commercial, editorial and social values, in order to give the customer multiple choices of how to shop. The future of retail might also be technology-driven, like everything else; with big data, artificial intelligence, faster shipping and so on. 

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image: Topshop

Consumers in Britain buy more clothes per person than any other country in Europe – much of which is low cost, highly disposable fast fashion. Yet, the nation’s government is not ready to enact legislation aimed at getting the apparel industry to clean up its act. Members of Parliament shot down an 18 provision bill on Tuesday, which included a one pence tax on each garment sold to increase investments in better recycling for discarded clothing, a ban on the destruction of unsold stock, and an environmental targets for fashion retailers with revenues of more than $45 million, asserting that many measures of the proposed measures are already in place.

“Ministers have failed to recognize that urgent action must be taken to change the fast fashion business model,” which has exploded in popularity in the United Kingdom, as pioneered by retailers, such as Topshop, River Island, and Miss Selfridge, and more recently, super-fast producers like Boohoo and Missguided, Environmental Audit Committee (“EAC”) chairwoman Mary Creagh said in a statement. This model, which sees high fashion looks reproduced for a fraction of the price at a rapid speed, “produces clothes that cost the earth,” as well as those in its supply chain, some of whom are paid as little as $4.41 per hour, according to the EAC.

The decision by Parliament “is out of step with the public who are shocked by the fact that we are sending 300,000 tons of clothes a year to incineration or landfill,” she further asserted.

A representative for Parliament denies that it is refusing to accepting the committee's recommendations. "In our landmark Resources and Waste Strategy we will take forward measures including developing proposals and consulting on extended producer responsibility and higher product standards for textiles,” he stated. "This would make producers responsible for the full cost of managing and disposing of their products after they're no longer useful." 

Specifically in terms of the one cent tax on clothing, the government rep stated that they will consider it “alongside their plans for making firms in different sectors more responsible for their waste,” as reported by the BBC. However, “No decisions will be made on this until 2025.”

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image: 7 For All Mankind

The number of counterfeit jeans crossing the counters of department stores in the U.S. in the mid-2000’s was unprecedented. At the time, the denim market was in the midst of a seismic shift. Women had suddenly begun ditching their inexpensive jeans for premium denim from brands like 7 For All Mankind, Hudson Jeans, Joe’s, Rock and Republic, and True Religion, whose wares bore price tags well into the 3-digits.

You would be hard-pressed in 2005 to not find women ogling over the offerings of premium denim brands in Macy’s contemporary women's department, which stocked 15 different upscale denim brands and two to three styles per brand. At the heavily-attended fashion industry trade show MAGIC in Las Vegas in 2007, a similar story was playing out. The number of department-store and other buyers shopping for women's premium denim jumped 72 percent from 5 years prior. 

Discerning consumers scrambled to get their hands on just the right pairs of status-identifying denim, often with carefully embellished or stitched pockets, which served to identify their source, leading to a revenue heyday for brands and retailers, alike. 

It was against this background that the market became inundated without counterfeits. They ranged from shoddily produced Rock and Republic jeans with asymmetrical “R”s on the back pockets to convincing copies of 7 For All Mankind denim complete with the little burnt orange rectangles that adorned the right-side back pocket and a spot on the waistband right above. 

Those fake jeans inevitably made their way into department stores, and readily changed hands between cashier and buyer, but not in the way that one might expect. Instead of buying counterfeit jeans, consumers were the ones responsible for them. As part of a rising scheme known as returns fraud, consumers were buying authentic jeans and returning fakes, and putting the money they got back right into their bedazzled back pockets. 

The tactic was proving to be rampant, particularly when it came to premium jeans. 

Barbara Kolsun – who was serving as the general counsel for 7 For All Mankind between 2005 and 2007, when the brand was bringing in over $300 million in sales – says that she was being flooded with issues because the amount of fakes being returned to stores by consumers was truly “significant.” 

“I had to put a dead stop on crediting Nordstrom for the returns,” she says, referring to the retailer’s practice of charging brands – 7 For All Mankind in this case – for the cost associated with returns or unsold items. It got to the point, Kolsun says, “that I told them not to take back any unless they checked with us as to the authenticity of the product.” Far too many fakes were slipping through the cracks, and the brands were being forced to pay for them. 

Fast forward to 2018, and the problem of returns fraud has not only remained a reality for brands and retailers, it has been exacerbated. “The ease with which stolen goods can be sold online, the rise in gift card fraud schemes, the shortage of staff in [the brick-and-mortar] stores, and the demand for certain brand name items or specific products” has led to a new level of fraud, according to Appriss Retail, artificial intelligence-fueled retail performance improvement solutions provider.  

Last year in the U.S., retailers and brands saw more than $369 billion worth of products returned. Between $18 and $24 billion of those returns can be directly linked to fraudulent, per Appriss Retail.

The ever-increasing amount of fraud-based returns is also aided by the use of “fake receipts, and price tags, as well as cloned credit cards and gift cards,” and due to the fact that the sophistication of counterfeit goods has become unparalleled.  “We are now at the point where the fakes are almost identical to the real thing … where they are almost 99 percent identical,” Antonio Linares, the operator of Fake Education, a site dedicated to educating consumers about the differences between authentic and counterfeit sneakers and streetwear, told TFL.

In other words, even if brands are prepared to deal with the rampancy of returns fraud, the quality of many counterfeits is often stacked against them and their in-store associates. 

The cost of return fraud for brands and retailers when it comes to counterfeit luxury goods goes far beyond the cost of the individual item, itself. It “transcends the dollar losses because counterfeiting threatens the brand’s most important asset — its reputation for quality with consumers,” according to Paul Rosengard, president of Anatwine, a fashion-focused software company that facilitates vendor-direct shipments and real-time inventory optimization.

“Retailers selling high-end goods want to protect their brands and their reputations for trustworthiness,” but can be ill-equipped to determine the authenticity of what have become known as super-fakes, or high quality counterfeits. More than that, store associates “also want to ensure a seamless, positive customer experience, which means that they may frequently accept returns without asking too many questions,” assuming the customer and item can be found in their system, says Rosengard. 

Such an approach is proving dangerous, as returns fraud becomes easier to accomplish and also given that designer clothing and handbags are among the products most frequently at the center of return fraud scheme, according to Appriss. 

The company notes that jeans still rank pretty high on that list, too. 

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image: Gloria Vanderbilt

Gloria Vanderbilt was an “intrepid heiress, artist, designer, and romantic, who began her extraordinary life as the ‘poor little rich girl’ of the Great Depression,” thanks to her starring role in a salacious custody battle between her parents. Having survived family tragedy, multiple marriages, and a few divorces, the Associated Press reports, she died Monday at the age of 95. More than merely a designer known for her wildly popular – and still enduring – denim collection, Ms. Vanderbilt has been tied to the rise of design denim, a trend that got its roots back in the 1970s and ’80s, and for which she was a pioneer. 

The late designer did not set out to transform the world of denim. “I had a career doing [home design products] for a few years, traveling all over to different stores to introduce each collection,” Vanderbilt told People in 2016. She followed that up with “a dress-designing business,” which she said ultimately faced financial problems and “was going bust” when she decided to start over with the help of Murjani, the New York-based group now known for helping to build her brand, as well as Tommy Hilfiger’s.  

“I went from my own dress designing business to designing blouses for Murjani,” she told People. “There was a merchandising genius called Warren Hersch. We were talking one day and he said, ‘Murjani’s got all this denim fabric stored away in Hong Kong.’ So I said, ‘Why don’t we make jeans, a really great fit jean?’“ And that is exactly what Vanderbilt did. 

The result was nothing short of game-changing: dark denim skinny jeans complete with a small embroidered swan logo and a rectangle bearing her name rapidly became some of the most sought-after denim on the market. The jeans, with their stretchy fabric and slim fit, were deemed a novel addition to the market.

It didn’t hurt sales that the collection was introduced by way of a $1 million advertising campaign in 1978 – complete with city buses wrapped in branded imagery, billboards and television commercials. The expansive campaign “turned the Gloria Vanderbilt brand with its signature white swan label into a sensation,” according to the Associated Press. Ms. Vanderbilt, herself, appeared in many of those ads, something of a celebrity in her own right.

Her well-to-do, socialite status was certainly played up in the brand’s campaigns. One television commercial in 1980, which depicted a uber-glamourous Vanderbilt, declared, “They’re the jeans with the social status. Girls with private jets and fancy pets think they’re tops!” Other TV ads enlisted the likes of Geena Davis and Blondie frontwoman Debbie Harry for added star power, and it worked. 

Within two years, the brand was generating over $200 million in sales, and Vanderbilt set out to build a sprawling lifestyle brand, adding shoes, scarves, and homewares into the mix. In 1988, she joined the lucrative designer fragrance market with her signature scent, “Glorious.” 

By the late 1980s, Ms. Vanderbilt sold off the rights in her brand name and various licenses associated with it to the Gitano Group, one of the largest apparel merchandisers in the U.S., which subsequently sold it to a group of investors in 1993. More recently, the AP notes, Vanderbilt-brand "stretch jeans “have been licensed through Jones Apparel Group Inc., which acquired Gloria Vanderbilt Apparel Corp. in 2002 for $138 million.” 

At the time of her death, Ms. Vanderbilt had not been at the helm of her namesake brand for almost 30 years, and yet, her “famous-name designer jeans – dressed up or down, remain a wardrobe staple,” the WSJ asserts. Alongside Calvin Klein and Jordache, the Gloria Vanderbilt brand gave rise to countless upscale followers, who sought to replicate the seemingly newfound success of designer denim brands. More than that, she ultimately paved the way for the likes of 7 for all Mankind, Citizens of Humanity and Hudson Jeans, among others, which became household names by turning fashion-focused denim into premium offerings with the price tags to match, and still yet, countless newer names building big businesses by way denim.

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image: D&G

Is it a big deal that Dolce & Gabbana has announced that it will increase its sizing to include garments that will range up to size 54 in Italy, the approximate equivalent of a stateside size 18? You bet it is. The move by the Milan-based brand to extend its sizing – which went into force with its currently available pre-fall collection – “makes it one of the most inclusive designer brands for women,” according to The Independent’s Olivia Petter, a far cry from most high fashion brands, which Fashionista’s deputy editor Tyler McCall says “stop much closer to a size 10 [or] below that even.”  

More than merely aiming to fill a void in sizing, something that much of the fashion industry has routinely overlooked even at a time when consumers have the increased ability to influence brands (thanks, in large part, to the connectivity that comes with social media) and when are being called upon to cater to traditionally underserved consumer groups, Dolce & Gabbana’s size-specific endeavor communicates an additional message, one that speaks to how the controversial brand is aiming to make money. 

The boost in its sizing range is “a big step for a luxury brand,” veteran journalist Christina Binkley says. “It proves they’re really about selling clothing, rather than using clothing to sell fragrances and handbags.”  

In making an attempt to serve a wider pool of consumers by way of its actual apparel offerings, Dolce & Gabbana is setting itself aside from most of the industry’s well-known luxury brands, which rely heavily on their non-garment offerings. While most big brands tend to stage bi-annual (and maybe even quarterly) runway shows rife with striking garments that are often splashed all over Instagram and depicted in editorials and campaigns, they parlay that runway fashion attention and allure into sales of more commercialized garments (such as knitwear or logo-ed t-shirts), accessories and licensed goods, such as fragrances, eyewear, and jewelry

It is these high-margin products that represent the bulk of their revenues, with clothing serving a secondary, more marketing-centric purpose.  

Look no further than the world’s most valuable luxury brand Louis Vuitton, which, as Bloomberg reported, “knows fashion is a money pit and yet, keeps throwing money in it.” The publication’s Robert Williams and Carol Matlack asserted that “producing collections and staging ever-more glamorous shows tends to wipe out profit for [sales of the brand’s] pricey clothing.” More recently, Jean-Jacques Guiony, the CFO for Louis Vuitton’s parent company LVMH, confirmed that ready-to-wear “is not a major business altogether for Vuitton.” 

Instead, he says, it is “obviously a traffic generator for many stores,” which gives the brand the opportunity to sell its sweeping array of more accessible goods, whether that be its relatively recently-introduced fragrances or a coated canvas bag. 

An emphasis on ready-to-wear by Dolce & Gabbana – which was “widely reported to have notched up $1.5 billion in revenue in the year to March 2017,” per Reuters, making it one of the largest fashion brands in Italy – is also an interesting one at a time when banking too heavily on apparel has been deemed to be risky. As research and investment consultancy Exane BNP Paribas asserted in a 2017 report, as covered by Quartz, large-scale reliance on ready-to-wear can be a “structural weakness” for luxury brands because while it is a “brand-defining” category, it is “hardly a profitable one.” 

That is not to say, however, that the brand has all of its eggs in one basket. While it does not report or break down its revenues as a privately-held company, it has a fair share of entry-level offerings, from iPhone cases and $150 t-shirts to a fragrance portfolio by way of the Tokyo-based Shiseido Group. 

In reality, the more pressing question at play is whether the brand will be able to win back its coveted customer base in Asia. Dolce & Gabbana severely fell out of favor after invoking public outrage late last year (which has carried over into 2019) in connection with a controversial ad campaign depicting a Chinese model struggling to eat pizza with chopsticks, and a subsequent race-based scandal involving co-founder Stefano Gabbana.

The incidents have largely gone without much of an apology or rehabilitation campaign by the brand (and in fact, were directly met with threats of litigation), leaving the brand to risk forgoing the market responsible for one third of all luxury purchases in the world, and one that reportedly drives 30 percent of its own annual sales. 

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