Two years ago, Linos Mutepera was among hundreds of thousands of Zimbabweans who celebrated the toppling of long-time ruler Robert Mugabe with tears of joy.
Today, he looks back at that time with bitterness, his hope of a better life dashed on the rocks of poverty and joblessness.
“We were all there — the young, the old, the rich, the poor, blacks, whites and mixed race — waving the Zimbabwean flag, holding banners, hoisting placards, singing, dancing, praying together, holding each other’s arms and hugging,” he reminisced.
“We thought it was an end at last of an era that had been marked by poverty, joblessness, shortages, army and police brutality,” the 33-year-old unemployed engineering graduate told AFP.
Popular protests helped end the iron-fisted rule of Robert Mugabe, who steered Zimbabwe since its 1980 independencePhoto: AFP / MUJAHID SAFODIEN
“How wrong we were.”
Mutepera, sitting beside a friend hawking clothes at a Harare flea market, pointed bleakly to the promises made by Mugabe’s successor, Emmerson Mnangagwa, to rebuild Zimbabwe’s shattered economy.
“We were used,” he said. “I feel so let down, so betrayed. But at least I am wiser.”
Mugabe came to power in 1980, surfing on his reputation as the guerrilla leader who had steered colonial-era Rhodesia to independence, ending white-minority rule.
Mugabe’s successor Emmerson Mnangagwa won disputed elections with pledges to lure foreign investment and create jobsPhoto: AFP / Jekesai NJIKIZANA
By November 2018, the smell of corruption and cronyism that infected his regime prompted the military to take over — a coup code-named Operation Restore Legacy.
He was replaced as president by Mnangagwa, his former deputy, whom he had fired weeks earlier. The military supremo and face of the coup, General Constantino Chiwenga, became one of his deputies.
Inflation runs into triple digitsPhoto: AFP / Jekesai NJIKIZANA
The following July, Mnangagwa won disputed elections on pledges to lure foreign investment, create jobs and turn the country into a middle-income economy by 2030.
But Zimbabwe’s nightmares returned within months, as shoppers battled daily shortages of basics such as fuel, cooking oil, sugar and bread.
Unemployment today is over 90 percent while the size of the economy has more than halved since 2000, when Mugabe’s seizure of white-owned farms crippled Zimbabwean agriculture.
Inflation runs into triple digits, electricity is available for just six hours a day and in many urban areas, the taps are dry.
Disgruntled Zimbabwean civil servants march while carrying protest banners rejecting current salary paymentsPhoto: AFP / Jekesai NJIKIZANA
“Things have basically got worse,” Professor Tony Hawkins of the University of Zimbabwe’s School of Economics told AFP.
“People are getting poorer and thousands are losing jobs,” he said.
“The economy has got worse and politically, nothing has changed except that the military are much more visible and much more powerful.
“Basically, it’s back to square one, with a change of driver but the same bus or taxi.”
Alex Magaisa, a lecturer at the University of Kent in England, said Mnangagwa’s promise of a new dawn had become “nothing more than a mirage.”
A spokesman for the opposition Movement for Democratic Change (MDC), Daniel Molokele, said Zimbabweans had mistakenly believed Mugabe’s removal would end the country’s woes.
“The euphoria that we saw in 2017 was not for the ascendancy of Mnangagwa but for the fall of Mugabe — and people also thought it meant the fall of the entire system created by Mugabe,” he said.
“Two years later there is hopelessness, there is despondency, there is disappointment.
“People would rather go back to 2017 not because Mugabe was better but because people are much more poorer. There is more corruption with cartels running sections of the economy. It’s a classic case of jumping from the frying pan into a fire.”
Molokele suggested a dialogue involving Zimbabweans “from all walks of life… so that the people can determine the Zimbabwe they want.”
Public fury at the state of the economy was an important factor in Mugabe’s downfall.
That anger flared anew in January, when Mnangagwa more than doubled fuel prices, sparking protests that left at least 17 people dead and scores of injured.
Harare-based political analyst Alexander Rusero told AFP the November 2018 takeover had “never been for the good of the people.
“It’s all about the political elite in (the ruling) ZANU-PF (party) and the preservation of their wealth,” he said.
“The moment you have soldiers closing the barracks and joining politics, nothing good comes out of it.”
Welders working in the dark to beat power shortages in Harare, Zimbabwe (Pic: Problem Masau)
Distributed Power Africa (DPA), a subsidiary of mobile phone provider Econet Global, has over the last year begun installing solar panels and Tesla-supplied battery packs on 65 of its telecommunications towers across Zimbabwe.
The batteries replace the use of polluting diesel generators to provide backup power when grid electricity is cut, said Divyajeet Mahajan, DPA’s CEO.
The systems are drawing growing interest from businesses and industry in other sub-Saharan countries as well, from South Africa to Kenya, he said.
Mahajan called the switch to solar panels with battery power storage “a major development in improving energy security for critical users”.
But the switch has faced a range of obstacles, from the still substantial price tag to theft of the batteries.
Both South Africa and Zimbabwe have seen a growing rate of battery theft, said Kezito Makuni, Econet’s chief operating officer.
“For Tesla lithium-ion battery installations at our base station and sites, we have contracted our own technicians to install these batteries with the specific reason to avoid issues of theft of these batteries,” he said in a telephone interview.
In October, thieves stole 24 of the batteries from one Econet facility, though the men were arrested and the batteries recovered, Zimbabwe’s police service said.
Still, battery systems are increasingly seen as key to ensuring a reliable power supply in southern Africa, both as countries slowly adopt more solar power – available only during the day without storage systems – and as frequent droughts hit the hydropower production the region relies on, said Man’arai Ndovorwi, a renewable energy engineer with the Zimbabwe Energy Regulatory Authority.
COSTS – AND JOBS
So far, the systems are used mainly for industry as they remain too expensive for many households, said Washington Zhakata, the director of Zimbabwe’s Climate Change Management Department.
“Lithium-ion batteries can alleviate power shortages even at individual level, but the cost might be high,” he said. But commercial power providers also can use the systems to feed backup power into the main grid to serve homes, he said.
A battery system capable of running a telecom tower for up to 10 hours costs $13,000, Mahajan said.
To help companies afford the batteries, Mahajan’s company offers leasing options as well as selling the equipment, he said.
Shepherd Chawira, president of the Matabeleland chapter of the Confederation of Zimbabwe Industries, said many industries and businesses in the country have been forced to turn to diesel generators as the power supply becomes unreliable as a result of drought.
“Industry is faced with crippling levels of insufficient energy, coupled by unsustainable power tariffs and inflation. These factors lead to increased costs of doing business and this affects the output,” he said.
“It is also costly for industry to run for more than 10 hours on diesel, considering that fuel prices are also going up,” he said.
Chawira said companies without backup power have been forced to scale down operations or close shop, leading to job losses.
Zimbabwe’s government, which sees a switch to more renewable energy as a way to curb the problems, in July removed import duties on solar-power equipment and accessories.
Tendai Marowa, an energy management consultant who works with the government on climate change issues, said he was hopeful that as use of battery storage systems rises around the world, the costs of the equipment would fall.
“I think with time, because of commitments and investments going into that technology by private companies across the globe… we should have batteries that are more user friendly and they should also be affordable,” he said.
Zimbabwe’s monthly inflation rate more than doubled in October as food costs surged, bringing the nation closer to a new bout of hyperinflation.
Monthly inflation rate rose to 38.8% in October from 17.7%
Food prices surged by 48.4% as regional drought continues
Pensioners line up to withdraw their pensions from a bank in Harare.
Photographer: Cynthia R Matonhodze/Bloomberg
Zimbabwe’s monthly inflation rate more than doubled in October as food costs surged, bringing the nation closer to a new bout of hyperinflation.
Monthly inflation accelerated to 38.8% from 17.7% from in September, the Zimbabwe National Statistics Agency said in an emailed statement Friday. That’s the highest rate since June.
Key Insights
Food prices rose 48.4% in the month, compared with 19.6% in September, as the worst regional drought in almost 40 years hit supplies and left about half of Zimbabwe’s 14 million people without reliable access to enough to eat.
The drought continues and non-food inflation could also be pushed up further after the government unveiled it plans to boost spending in 2020 in an attempt to kick-start an economy that’s forecast to shrink this year.
Zimbabwe abandoned its own dollar ten years ago after hyperinflation rendered it valueless. The statistics office suspended the release of annual inflation data for six months from August, saying it wants to collect comparable data after the introduction of a new currency earlier this year. International Monetary Fund studies define hyperinflation as beginning when monthly price increases exceed 50%.
Zimbabwe’s official annual inflation rate was the second highest in the world, at 176%, when the statistics office suspended the data.
The California Consumer Privacy Act, the most significant privacy regulation ever enacted in the United States, takes effect in January 2020. Join us for a free webinar to learn more.
The California Consumer Privacy Act, the most significant privacy regulation ever enacted in the United States, takes effect in January 2020. Join us for a free webinar to learn more.
The diesel might be quite sour, but it’s also very cheap.
The blooming weed industry promised massive revenues, a nascent agrarian industry, a booming supply chain, and soaring local taxes. While it has delivered on all of those things in limited fashion, recent earnings calls from market leaders like Tilray ($NASDAQ:TLRY) have analysts and investors worried that we may be seeing an early floor — or at least normalization — of the industry’s ability to earn as prices settle and operational costs become reality.
Yesterday, Tilray reported a third-quarter net loss of almost $36 million, or 36 cents per share. That’s up from last year when it reported losses of $19 million, or 20 cents per share. That said, revenue rose to $51.1 million from $10.1 million.
But skyrocketing losses are the focus of investors today, and they appear to have a lot to do with sinking weed prices. Tilray reported that the average price per gram of weed it sold sunk from $6.21 to $3.25.
Tilray isn’t alone here: The price of weed across the industry has been dropping, including at Tilray competitor OCS — Ontario Cannabis Store ($PRIVATE:ONTARIOCANNABISSTORE) — where we have pricing data for the past few months.
At OCS, the price of 3.5- and 7.0-gram non-CBD products is showing a steady decline, mirroring that of Tilray and other companies in the space. Since August, the average price has dropped from $13 to $11.42.
While Tilray points to higher operational costs and the acquisition of Manitoba Harvest and Natura Naturals, declining prices will only continue to squeeze revenue and subsequent earnings.
The company has entered a bit of a hiring slowdown as it picks up the pieces as well – openings are down as much as 33% since last summer as the stock price inches to the $20 mark.
According to the Princeton Review’s 2020 law school rankings, which law school has the most “competitive” students?
Hint: The ranking is based upon student survey responses asking about the number of hours respondents study outside of class each day, the number of hours they think their fellow students study outside of class each day, and the degree of competitiveness among students at their school.
A lawyer friend of mine once told me that if he ever needed a litigator for himself, I’d be his first call because I’m not satisfied by winning or even my adversary losing. I’m not happy, he said, until I’ve made my adversary eat his own eyeballs and left him living in a lice-infested shack in the bad part of town, addicted to heroin to drown out the screaming in his head.
Of course, I don’t actually want to hurt my adversary. But, I do want to work with my colleagues to achieve the best possible outcome for our clients. So I took my friend’s point as a compliment, and I remembered this quote because it was good, colorful imagery.
As someone who has made it through the recent California fires, I’ve been reevaluating some parts of my life, as is the prerogative of all those who survive near-death experiences (or, in this case, a few days of power outage). I’ve realized a few things in that self-reflection. That life is far too short to not work hard. That you must set very high goals for yourself. But most importantly, I realized that at the end of the day, you just need to metaphorically rip peoples’ faces off.
DON’T WRITE BRIEFS THAT MAKE PEOPLE WANT TO CLAW THEIR EYEBALLS OUT
You should, at least, write like a human. Or, at a minimum, like your target audience is a human. The next time I see “hereto,” “therein,” or full-sentence case quotes full of alterations in a brief — or, God forbid, in an email — I may throw someone out a window.
I regularly wonder why so many lawyers think that the quality of legal prose increases the more stilted it becomes. Maybe I’m overthinking this and most lawyers are just terrible writers with no ear for language, but that’s too easy to be a satisfying answer. Is it risk aversion, laziness, or misplaced nostalgia? Is it absorbing too much terrible legal writing, creating a cruel circle? I have no idea. The question haunts me.
But whatever the reason, don’t be a perpetrator. If you’re doing it out of risk aversion, think through your life decisions a little more carefully. You’re introducing more risk into your life by writing bad briefs. You’re annoying your colleagues, bosses, judges, and clerks. They’re probably talking about how much they hate reading your briefs. So just stop.
BUT DON’T BE OBNOXIOUS
At the same time, of course, don’t try for writing gimmicks that you can’t execute. I had an adversary once open a summary judgment brief with a Macbeth quote — definitely don’t do that. Rhetorical questions also never work. Generally don’t try to be clever.
Know your audience and aim for the right register. Metaphors about eating eyeballs are appropriate for casual conversations between friends but are generally too strong for formal court filings.
Or put another way, know your limits. Just as a good litigator needs to know exactly how long they can go without sleep and perform certain tasks, they also need to know what rhetorical tricks they can pull off. You need to be very good to pull off jokes.
STRIKE A BALANCE
But avoiding jokes isn’t the same as being boring. The best tone is usually something like the New Yorker: Strong, carefully structured prose that draws the reader in without drawing attention to itself. While you want people to remember your brief, you want them to remember it because it makes the point so well that the conclusion seems the natural conclusion. If they see the artifice, the effect is lost.
So stop writing like a robot, and start making an effort.
Matthew W. Schmidthas represented and counseled clients at all stages of litigation and in numerous matters including insider trading, fiduciary duty, antitrust law, and civil RICO. He is a partner at the trial and investigations law firmBalestriere Farielloin New York, where he and his colleagues represent domestic and international clients in litigation, arbitration, appeals, and investigations. You can reach him by email at matthew.w.schmidt@balestrierefariello.com.
Let’s be completely honest: Even if you have a law degree from a top law school or have recently begun studying for the bar exam or even passed it, you may not have your entire career mapped out — and even if you do, you know what they say about best laid plans of mice and men. You may have a general idea of what you would like to do, but like many legal professionals, you may have a strong desire to make a career change after practicing for several years.
The good news is the escape hatch from Biglaw is always nearby. If you decide the high salaries and prestige are not enough to offset the burnout of 70+ hour weeks and 4 a.m. calls from the partner who never sleeps, there exist several options for you. Up until now, the most popular one has been to go in-house. The work is on average, less taxing — at least in terms of hours — and more flexible. One option that is becoming more and more popular is to work as a contract attorney so that you can have more flexible hours and more control over your life. The beauty of contract positions are that they leave your options open. After a few years, you may decide that you want to work full-time again and start working as a Compliance Officer at a Fortune 500 company. There are also cases where we place contact attorneys permanently at Biglaw firms when they express the desire to start working full time again. While Biglaw was once thought of as inflexible — you walked a narrow ledge for eight years until you either careened off into the unknown or made partner has become more and more flexible. The safety netting of contract work, fueled by law firm’s desire to staff efficiently, is serving as both a livelihood and a way station for attorneys in transit.
A contract attorney is an attorney who works on legal cases on an as-needed or temporary basis. The contract can be for a few days, weeks or even a few years. Contract attorneys practice law without a guaranteed employment term. That is, the project may end early or be extended. Typically, when the project is over, contract attorneys move on to the next project. Many individuals confuse contract attorneys with document review specialists who are legally trained professionals (JDs, attorneys, or paralegals) who examine documents to determine whether they are relevant for trial. Unlike contract attorneys, document review specialists typically review contracts, memos, emails, financial documents, spreadsheets, or other types of documents to determine whether the information is relevant to the pending case. In contrast, contract attorneys don’t just review documents all day long. Instead, they might assist with pretrial investigations, conduct in-depth legal research, and summarize their findings in a written brief or report, write contacts and memoranda, and complete high-level work that other associates and other partners would typically handle.
Contract attorneys are typically employed by law firms or staffing firms that have contracted with small and large law firms, and they typically complete a wide range of tasks, depending on the size of the firm. Contract attorneys typically make $150+ an hour for their legal expertise, and even a half-time contract attorney will make well over six figures. The amount they receive depends on many factors. For instance, contract attorneys who are licensed to practice in states with higher living costs, are experienced at handling complex legal issues, or can speak another language are paid much more. Either way, contract attorneys allow individuals to make a nice income while gaining valuable skills that can transfer to other opportunities.
If you’re considering working as a contract attorney or are on the fence about whether this would be a good temporary or permanent position for you, here are a few benefits to consider.
Benefit #1. You Receive a Steady Income and Can Build a Reputation in the Industry
Working as a contract attorney enables you to make steady money for the duration of the project. Depending on your location and specialized skills, you can make a nice supplemental or full-time income. When you work a contract project, you are paid weekly or biweekly, and you gain hands-on experience.
Benefit #2. You Get to Network While You Get Paid
As a contract attorney, you expand your network tremendously. When you take on a new project, you meet new people and this enables you to network with various types of attorneys and legal professionals. These valuable contacts can then help you secure other positions at other firms. Plus, making money builds confidence and keeps the student loan creditors at bay.
Benefit #3. Assignments Are Very Flexible
As a contract attorney, you have flexibility with the type of projects you take on and your work hours. That is, although some firms require you to commit to a set number of hours during the entire project, most employers are flexible as to when you complete these hours. Some firms may even give you the option to complete your hours within a 12-hour window. Or, they may allow you to work overtime (if you choose to do so). However, one of the benefits of working contract positions is that you typically leave your work at work and won’t be required to take it home with you (again, unless you choose to do so). Plus, most firms are flexible with your schedule and as long as you make up any missing time, you can also take time off for interviews, family emergencies, etc., without being penalized.
Benefit #4. Not Hard to Find Opportunities
There are numerous opportunities available for contract attorneys, specifically ones who are willing to travel to remote locations. Depending on your skills and interest,Bridgeline Solutions can place top attorneys in temporary or permanent contract attorney roles. We have locations in Atlanta, Chicago, Boston, Dallas, Los Angeles, New York, Hong Kong, and more. Having been in business for over 10 years, we have developed a sound reputation in the legal industry with our dedicated pool of legal professionals and work closely with firms to find the right candidates. The rate for contract attorneys is growing exponentially and researchers estimate that the employment outlook for contract attorneys will grow more than 10 percent over the next ten years, which is faster than the average for other occupations. To make the most of this surge in contract attorney opportunities, you should pair up with a reputable staffing firm, always do your best to represent the staffing and law firm throughout the duration of the project, understand the project requirements, complete all assignments, and notify your legal recruiter or supervisor if any issues arise.
Benefit #5. Learn About the Litigation Process
As a contract attorney, you get paid as you learn how to practice law. That is, contract assignments enable you to gain valuable experience while improving your research, writing, analytical, and litigation skills. You avoid a steep learning curve as you are ultimately thrown into a fast-paced environment and taught how to swim in the experienced legal pool. No more wading in the shallow end. Instead, you go deep. You learn how to use valuable eDiscovery software and improve your legal research and writing skills. You learn how to draft pretrial motions and code documents. In essence, you learn how to practice law.
Benefit #6. You Build a Name for Yourself and Open Up Better Opportunities
By working hard at your craft, you can demonstrate your competency as a highly intelligent and dedicated legal professional amongst your peers. This may lead to advancement opportunities and steady work at the firm. Or, at the very least, you can earn a fine reputation as a hardworking, intelligent, and dedicated contractor. This alone can prove to be invaluable during future job searches, as a strong legal reference goes a long way. Plus, the legal training you receive on contract projects is not taught in law school, and you will significantly improve your skills with every completed project that will make. This will make you much more marketable in the industry.
In conclusion, working as a contract attorney can help you secure your dream position or help you make steady income as you search. Not only will you learn valuable and transferrable skills, but you can build a valuable network. Because you aren’t tied to one firm or practice area, you can try out different areas of law until you find the one that strikes your fancy. Plus, you’ll gain practical legal knowledge and get paid for on-the-job legal training. Finally, you’ll keep the student loan and mortgage collection trolls away. Who knows? Working as a contract attorney may just be your dream legal job — or at least a step in the right direction. Good luck!
Bridgeline Solutions pioneered the legal staffing industry and established many of its best practices. From Am Law 200 firms, Fortune 500 companies and financial institutions to boutique law firms — organizations around the world partner with us as their go-to legal & compliance staffing partner. With offices in over a dozen cities across the United States and Asia, we find our attorneys temporary positions in every legal market.
Bonus season began in Biglaw over a week ago when Milbank gave the industry with a little kick in the pants with an early bonus announcement. Now Baker McKenzie has made their associates happy with a match to the industry standard with a change to the firm’s usual bonus payday. Because everyone loves a big bonus announcement, but getting the money earlier than expected makes it even sweeter.
The bonus scale is as follows:
Class of 2019 – $15,000 (pro-rated) Class of 2018 – $15,000 Class of 2017 – $25,000 Class of 2016 – $50,000 Class of 2015 – $65,000 Class of 2014 – $80,000 Class of 2013 – $90,000 Class of 2012 – $100,000 Class of 2011+ – $100,000
As noted in the full memo, bonuses will be paid by the firm on January 31st. Sure, some firms are paying bonuses in December, but considering the firm’s tradition of paying bonuses in March, this has come as a welcomed surprise, from a tipster:
People are happy the money is coming earlier this year — usually paid in mid-March.
Plus! The firm will pay above these market rates for “exceptional performance.”
Remember, we depend on your tips to stay on top of important bonus updates, so when your firm matches, please text us (646-820-8477) or email us (subject line: “[Firm Name] Matches”). Please include the memo if available. You can take a photo of the memo and send it via text or email if you don’t want to forward the original PDF or Word file.
And if you’d like to sign up for ATL’s Bonus Alerts (which is the alert list we also use for all salary announcements), please scroll down and enter your email address in the box below this post. If you previously signed up for the bonus alerts, you don’t need to do anything. You’ll receive an email notification within minutes of each bonus announcement that we publish. Thanks for your help!
Kathryn Rubino is a Senior Editor at Above the Law, and host of The Jabot podcast. AtL tipsters are the best, so please connect with her. Feel free to email her with any tips, questions, or comments and follow her on Twitter (@Kathryn1).
“What’s key for these brands is to be nimble, to be flexible and be able to fail fast.”
As news of Barneys’s bankruptcy and subsequent sale spread, the collective mourning for a bygone retail era was tinged with at least some delight over the promised sales and steals that would clear Barneys stores of its unsold inventory before its new owner, ABG Group, closed the retailer’s doors for good. But what does that mean for the brands that supplied that inventory?
Well, some of the most powerful fashion companies, like those owned by LVMH, won’t be included in the margin-slashing liquidation sales that apply to other products sold at Barneys; their goods are protected by contracts negotiated long before the Barneys bankruptcy rumors ever erupted.
Meanwhile, emerging designers and independent labels, locked into less favorable contracts with Barneys which tipped towards the benefit of the now-dead wholesaler, are left in the lurch as the liquidation operators decide how and when to discount fashion items, many of which are still available at full price elsewhere on the market.
“This has been a wake-up call for small businesses that haven’t yet weathered a downturn,” says Susan Scafidi, director of the Fashion Law Institute, referring back to the Great Recession that challenged the retail environment a decade ago. “If we indeed have a recession on the horizon, whatever that may mean, Barneys’s [bankruptcy] may be a bellwether of things to come and may give lots of small brands a heads-up on how to think strategically and defensively going forward.”
The Barneys bankruptcy is hardly an isolated instance of failure in the current state of retail. Coresight Research found that the major factors which led to retail bankruptcies in the last two years included the saturation of the physical retail space in the United States, changing consumer trends, burgeoning e-commerce sales and rising debt among retail companies, each of which is still evident today. And according to a 2019 BDO Survey, more than half of U.S. retail executives surveyed believe bankruptcies will rise through the end of the year, as just as many are preparing for an economic downturn.
Given the outlook, it’s necessary that smaller brands — who may not have the parachute afforded by a cash-rich parent company — prepare for trouble in the retail market. Here are a few tips for how to protect against another disaster like the one happening at Barneys.
Diversify your retail presence
Much like an individual might do when investing, the best thing a smaller fashion brand can do to protect itself in a challenging market is to diversify its retail approach. Gone are the days in which the only way a brand could reach consumers was through a prestige physical department store based in a major city, says Charcy Evers, a New York-based retail consultant and trend analyst.
“The danger first and foremost is for any brand to get in bed with any retailer so deeply that if something happens to the retailer, it has a detrimental effect to a significant chunk of its business,” Evers says.
Building out a robust retail channel strategy necessitates, at the very least, a direct-to-consumer channel through a brand’s own website or store, while working with a mix of specialty and e-commerce retailers, as well as social media platforms which help brands meet their consumers where they are.
Take Area, the New York-based brand which Beckett Fogg and Piotrek Panszczyk founded in 2013, well after the Great Recession ended and just as the luxury and fashion spaces were finding new market traction. Area, with its celeb-beloved Instagrammable accessories and unique sense of glitzy glamour, attracted what would have once been considered the Holy Grail of wholesale relationships — from fashion-focused Barneys and Opening Ceremony to the more approachable Nordstrom. For its part, Area says some of its smallest wholesale accounts are as valuable as the brand’s larger retail partners, depending on how closely a particular retailer can get to Area’s target shopper.
Though the brand declined to provide specifics, co-founder Fogg explained that Area plans to grow its recently-launched direct-to-consumer channel and rely less on wholesale buyers who may ignore some of the essential products that give Area its unique aesthetic. The brand also plans to carry products that are exclusive to it e-commerce platform (and might have once been found at a retailer like Barneys) to attract shoppers to its site. As for its remaining third-party relationships, Fogg says Area is approaching its wholesalers more cautiously today.
“Of course, it is important to nurture specific relationships, but you must maintain exclusivity in a fiscally responsible way,” Fogg tells Fashionista via email. “The current turbulent retail landscape must be respected…it’s constantly changing and you have to be ready to adapt and reactively shift strategies. In order for that to happen, you have to have growth strategies in place that do not rely on the success of another company.”
Try alternative sales models
It’s also important that brands explore non-traditional formats for working with wholesalers. Evers explains that several department stores have created marketplaces within their retail spaces (different than the shop-in-shop model) to drive foot traffic while also helping shoppers discover new brands. Macy’s has its version, called “The Market,” while Bloomingdales has “Carousel,” and Kohl’s has “Curated by Kohl’s.” For the brands, it allows them access to the department store channel (meaning they get in front of more shoppers than they would on their own) without necessarily selling clothes to a retailer that may not be able to move the product. And if the department store channel isn’t where your brand’s customer shops, there are alternative models; think retail-as-a-service companies like B8ta, which help brands showcase their products in stores across the country and understand retail analytics to develop new products.
Alternatively, fashion and beauty brands might explore the consignment model, more commonly employed by jewelry brands, which allows the brand to “loan” its products to the department store until they are sold. Doing so requires a brand to file a Uniform Commercial Code Financing Statement with a detailed description of the brand’s goods that are consigned, explains Adrienne Montes, an attorney at New York-based law firm Gabay & Bowler and Chair of the Fashion Law Committee of the New York City Bar Association. “The financing statement once filed and perfected notifies other creditors that those goods are not owned by that retailer,” Montes explains. “It is crucial that the statement is perfected properly and regularly renewed, and that the brand keeps a detailed record of every item on consignment.”
Protective financial strategies are another way that brands can insure themselves, literally and figuratively, against the risks they face working with wholesale partners. Scafidi explains that purchasing credit insurance may be a cost-effective way to cover a wholesaler’s unpaid invoices, should it get to that, as was the case with Barneys. Another option is factoring. As Scafidi explains, it’s a common form of financing in which a factor pays you a percentage of the money a wholesaler may owe you after a purchase is completed so you don’t have to wait for the funds to keep the lights on in your showroom. Once the wholesaler pays its invoice, the factor collects a percentage of that money and gives you a remaining percentage, assuming the wholesaler does, in fact, pay its outstanding invoices.
In essence, “You have your money earlier, the factor is typically secondarily insured against loss, and the factor bears the risk of the store not paying,” Scafidi says.
When retailers go under, seek legal help
Ideally, a brand’s existing contract with a third-party seller will stipulate how the brand’s products are repurchased or discounted in the event of a bankruptcy or poor sales quarter, though that may not always be the case. In many instances, smaller fashion brands have less leverage when approaching a wholesaler in the throes of bankruptcy, left to pick up whatever financial scraps are left after a retailer’s secured creditors are paid.
Unfortunately, it’s risky for any group of independent fashion brands to join as consumers might in a class-action lawsuit, as it could be seen as price-fixing or restraint against trade, which violates antitrust laws, Scafidi says. That said, fashion brands may pool their resources to hire legal help under the circumstances of a shared retailer’s bankruptcy to recoup money or pursue a clawback (a legal stipulation a brand may include in its wholesale contracts which require retailers to send merchandise back) or a buyback, though instances of this are rare.
For a cash-strapped brand, there are subsidized and free legal resources that may help a designer pursue litigation against a faulty retailer. Montes says that local bar associations and law schools may offer pro-bono legal advice (In New York City, for example, that might include the NYC Bar Association’s Neighborhood Entrepreneur Law Project or its Fashion Law Committee, which works with the Fashion Law Institute at Fordham Law School to host clinics throughout the year.)
“What’s key for these brands is to be nimble, to be flexible and be able to fail fast,” Evers advises. “You do need to try, you need to experiment and expose yourself, but you can’t have your whole body in the water, you just need to dip your toe in it, so to speak. I think that’s the smart way to move into uncharted territory.”