Sunday Musings – May 17th Edition

Happy Sunday. I hope everyone is healthy and staying safe.

Have you prepared your business for a return to work? If not, it is time to do that. It’s so important for all of us to ease our way back to a working life. Nothing will be normal, but with time, we will adjust. Be resilient and be empathetic at the same time. Remember that each employee of yours will have different fears and expectations. Be cognizant of them. What may seem irrational to one person may be critical to another. Respect everyone’s concerns and do your best to compensate for them. These are extraordinary times, and it will take extraordinary people to manage them. Time to step up!

Below is a guideline that Governor Cuomo distributed. It’s clear, succinct and simple to implement.

Business Precautions: Each business and industry must have a plan to protect employees and consumers, make the physical work space safer and implement processes that lower risk of infection in the business.

1. Adjust workplace hours and shift design as necessary to reduce density in the workplace

2. Enact social distancing protocols

3. Restrict non-essential travel for employees

4. Require all employees and customers to wear masks if in frequent contact with others

5. Implement strict cleaning and sanitation standards

6. Enact a continuous health screening process for individuals to enter the workplace

7. Develop liability processes

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On a completely different issue, we at Hilldun have been pursuing the issue of how retailers and brands can engage in discussions surrounding the precarious promotional environment that has been propagated over the last ten or more years. What was intended to spur on sales has morphed into a syndrome that undermines full price value and leads to margin losses for everyone. But even initiating a discussion requires legislative action.

If the industry wants coordinate on matters like discounts and pricing, it must find a legislative solution to overcome American antitrust laws. We are in discussions with some of the best lawyers in this industry. What we’ve garnered from our preliminary meetings is that there is an opportunity in the ‘Phase Four’ stimulus process now before Congress, to help retailers and vendors reestablish some order now and going forward, and prevent a ‘pricing bloodbath’ when the stores reopen for business.

Typically, the legislative process is slow and unpredictable. But a Phase Four stimulus law will likely come soon (around July 4) and, in this instance, we have a sense for what the key policymakers want. House Democrats want to appropriate money directly to states, municipalities and individuals to fund mitigation; Senate Republicans — perhaps also willing to spend significant sums to restart the economy — want no-cost solutions like liability shields to protect companies that reopen from potential lawsuits by employees and customers who might get sick in their stores.

It seems to me that our best chance for success is to offer a similar ‘no cost’ solution to Congress that can be included in the Phase Four bill as an economic recovery measure. We should develop and propose legislation to provide antitrust relief (perhaps temporarily) so that (certain) retailers can coordinate receiving merchandise and planning things like promotions and markdowns. Part of our message would be that without Congress’s help, counterproductive price wars will harm brands and stores in the short term and ultimately hurt consumers in the long run.

This is a novel idea and should be introduced to policymakers as soon as possible. Since the pandemic has inadvertently altered the shipping and selling seasons for apparel and consumer goods, and an entirely new perspective on seasonality is evolving, now is the time for even greater changes. The Senate Judiciary Committee is the place to start, and particularly the Subcommittee on Antitrust, Competition Policy and Consumer Rights, chaired by Sen. Mike Lee, an alum of the law firm we’re using for this.

This initiative will unfortunately necessitate a considerable amount of legal expenditures in order to see it to the end. I intend to address this with the retailer group I convened last week, in the hopes of getting their conceptual support for this, as well as their financial support. I am also hoping that some of the larger apparel companies in the industry will see the value in such an undertaking and choose to participate as well. If any of you reading this have contacts or relationships with firms you believe would both benefit and be willing to endorse and contribute to such an effort, please let me know. Ultimately, everyone will profit if a promotional structure can be put into place to guide the industry. Big changes take courage. I sincerely hope that all the stake holders in the fashion/beauty industry recognize the potential near and long term benefits of this effort, and get on board.

Necessity is truly the mother of invention.

Stay Safe. Be Strong.

Gary