RealReal's stock slumps after loss warning, job cuts

Shares of RealReal Inc. REAL, +1.44% slumped 2.4% in morning trading Tuesday, after the online luxury consignment site warned of a wider-than-expected net loss for the first quarter, but provided an upbeat outlook on gross merchandise volume (GMV). The company also said in response to the negative effects of the COVID-19 pandemic, it has cut its overall workforce by 10% and furloughed about 15% of its staff, as it has temporarily closed its stores and luxury consignment offices. The company said it was off to a "strong start" for the quarter until the spread of COVID-19 led to shelter-in-place and social distancing mandates. It now expects a first-quarter net loss of $39.9 million to $38.9 million, compared with the FactSet consensus for a loss of $30.4 million. Gross merchandise value is expected to be up about 15% from a year ago to $258 million; the average estimate of two analysts surveyed by FactSet was $224.5 million, with a range of $156.9 million and $292.0 million. The stock has shed 56.9% over the past three months, while the S&P 500 SPX, 0.42% has lost 14.0%.
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J.Crew Prepares to File for Bankruptcy

Consumer spending fell 7.5% in March, prompting further concerns about the impact of the coronavirus pandemic on the economy. Here’s why consumer spending is so important and how it can signal if the country is heading toward a recession. 

 

Like many companies right now, J.Crew is facing a difficult financial situation.
The beloved New York-based label — which has become a wardrobe staple for celebrities including Michelle Obama, Kate Middleton and Meghan Markle — is preparing to file for bankruptcy as early as this weekend, CNBC reports, citing “people familiar with the matter.”

Though the source says plans are not finalized, the privately held company is currently “working to secure $400 million in financing to fund operations in bankruptcy,” according to CNBC.

The news comes after reports that the retailer (which operates the denim-driven label Madewell, in addition to its namesake brand) has been struggling with a heavy debt load for years. According to CNBC, the economic downfall caused by the novel coronavirus (COVID-19) “exacerbated” the problem.

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Unlike the younger and trendier Madewell, J.Crew has also faced a decline in sales, with many criticizing the label for maintaining a high price point and an idealized aesthetic that feels out of touch, prompting loyal customers to walk away.
In recent years, J.Crew has lost both retail executive Mickey Drexler and longtime creative director, Jenna Lyons.
Lyons became somewhat of a fashion icon during her 26 years at J.Crew, thanks to her signature thick-rimmed glasses and affinity for colorful prints. She is also largely responsible for revamping the brand using neon, sequins and statement accessories— and shaping the way American men and women dressed in the 2010s.

The company has been grappling with competition from online firms such as Amazon.com Inc (AMZN.O) that have been eating into traditional retailers’ market share.

The Death of the Department Store: ‘Very Few Are Likely to Survive’

Shuttered flagships. Empty malls. Canceled orders. Risks of bankruptcy. The coronavirus has hit the behemoths of the retail world.

Neiman Marcus has stopped accepting new merchandise.Credit...Karsten Moran for The New York Times

Retailers have begun taking extreme measures to try to survive. Le Tote, a subscription clothing company that acquired Lord & Taylor last year from Hudson’s Bay, said in a memo on April 2 that the chain’s entire executive team, including the chief executive, would be let go immediately. It also suspended payments of goods to vendors for at least 90 days, citing “immense pressure on our liquidity position.”

Macy’s, which also owns Bloomingdale’s, extended payment for goods and services to 120 days from 60 days and, according to Reuters, has hired bankers from Lazard to explore new financing. Jeff Gennette, the chief executive, is forgoing any compensation for the duration of the crisis. The company was dropped from the S&P 500 last month based on its valuation.

J.C. Penney has hired Lazard, the law firm Kirkland & Ellis and the consultancy AlixPartners to explore restructuring options, according to two people familiar with the matter, and confirmed that it skipped an interest payment on its debt last week. It is expected to make a decision on what to do, including potentially filing for bankruptcy, within a few weeks, one of the people said.

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But none of them were in as immediate dire straits as Neiman Marcus, which has both an enormous debt burden — about $4.8 billion, thanks in part to a leveraged buyout in 2013 by the owners Ares Management and the Canada Pension Plan Investment Board — and a raft of expensive rents in the most high-profile shopping destinations, signed during boom times.

In late March, Neiman stopped accepting new merchandise and furloughed a large portion of its approximately 14,000 employees as the rumors of bankruptcy began to swirl. Its chief executive, Geoffroy van Raemdonck, announced that he was waiving his salary for April. The brand denied to vendors and its own employees at its sister brand Bergdorf Goodman that it was engaging advisers to explore a bankruptcy filing, but on April 14, S&P downgraded Neiman’s credit rating. Last week, the retailer did not make an interest payment that was due on April 15, angering bondholders and further fueling suspicions that a bankruptcy filing was imminent. A spokesperson for Neiman Marcus declined to comment.

Barneys offered steep discounts after declaring bankruptcy last year.Credit...Stephen Speranza for The New York Times

Even Nordstrom, widely considered the healthiest department store, said this month that it could be facing a “distressed” situation if its physical locations closed to customers for “an extended period of time.” Erik and Pete Nordstrom, chief executive and chief brand officer, are both receiving no base salary for at least six months. The chain has stunned some vendors with last-minute cancellations via email in recent days.

Across chains, prices for new merchandise sold via e-commerce have already been slashed by 40 percent in some cases. Order cancellations for the pre-fall season — which would normally have started delivering next month — have been increasing. Some brands said shipments have even been turned away upon delivery to warehouses, and extensions of payment terms are cascading through vendors, who are then forced to negotiate with their own manufacturers, marketing agencies, fulfillment centers and landlords.

“I’ve had a showroom for over 30 years, and we have always used the word ‘partnership,’ when talking about our relationship with the department stores,” said Betsee Isenberg of the showroom 10Eleven, which represents numerous brands such as Vince and ATM. “Through 9/11, through 2008, we worked hand in hand with our retailers. This is the first time the onus has been on the brands — many of which are losing millions and millions of dollars because of the canceled orders. It is just not fair that it is survival of the fittest.” In a new report, McKinsey refers to the situation as “wholesale Darwinism.”

The resort season has been canceled entirely, and fall orders have been put on hold, raising questions about what inventory will be left if and when shops reopen and consumers return to store.

The Neiman Marcus store at Hudson Yards in Manhattan. With stores closed, retailers have seen sales plummet.Credit...Mark Wickens for The New York Times

“Nobody knows what Q4 will be like, but you have to start putting the orders in now,” Sucharita Kodali, a retail analyst at Forrester, said of the holiday season, normally the most lucrative time of the year for the chains. “Some people don’t even have the money to put in Q4 orders, and may have to cancel Q4 orders anyway, and it’s a mess. There’s never been this much uncertainty.”

Robert Burke, the eponymous founder of a luxury consultancy, said he expected brands to move further away from a wholesale business, focusing on direct-to-consumer and a model with department stores where they control their own space and inventory.

Shares of J.C. Penney, which has temporarily shut its more than 800 stores, closed at 23 cents on the dollar last Wednesday after the retailer said it did not make a $12 million interest payment due that day. Brooke Buchanan, a representative, said it was a “strategic decision” in order to take advantage of a 30-day grace period before it was considered in default.

Normally bustling stores like Saks Fifth Avenue are now empty.Credit...Haruka Sakaguchi for The New York Times

Ms. Buchanan said J.C. Penney had “been engaged in discussions with its lenders since mid-2019 to evaluate options to strengthen its balance sheet, a process that has become even more important as our stores have also closed due to the pandemic.”

Cash flow for all department stores has dropped sharply. In a note on April 13, analysts at Cowen estimated four months of liquidity at Macy’s, six months at Kohl’s and seven months for J.C. Penney. Nordstrom, they predicted, could withstand store closings for 12 months.

“The nature of the mall is if you lose a big anchor like a Macy’s, you have co-tenancy issues and you have more pressure on the mall traffic, which was already a big issue,” said Oliver Chen, an analyst at Cowen. Co-tenancy clauses typically allow other tenants to demand rent reductions if certain key chains depart. Mr. Chen said that could accelerate the ongoing divide between top-tier malls and the second- or third-choice malls in certain areas.

According to a report this month from S&P Global Market Intelligence, department stores were more likely than any other consumer industry to default on their debt in the next year. It estimated the probability at 42 percent.

Nordstrom’s new store in Manhattan. Analysts predicted that it had enough cash to withstand 12 months of stores closures.Credit...Karsten Moran for The New York Times

In its April 2 memo, the management of Le Tote and Lord & Taylor said only “key employees” were being retained to preserve the business. A representative for Lord & Taylor and Le Tote declined to comment or disclose the number of employees who were furloughed and laid off.

“It appears to be a virtual certainty that Lord & Taylor will liquidate its business in the near future, either in or out of bankruptcy,” said James Van Horn, a partner at Barnes & Thornburg and a specialist in retail bankruptcy. “They were already one of the most challenged department stores prior to the coronavirus pandemic, and when the majority of the management team is leaving, the vast majority of employees are laid off and a minority of employees furloughed, there does not seem to be any other strategy but to liquidate the inventory.”

Mr. Van Horn said he expected that other chains might strategically employ Chapter 11 reorganizations to legally shed stores, lightening their rent burden.

“It will likely be a domino that falls,” he said. “Whether it is first or 10th, we don’t know.”

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How Covid-19 Changed the Resale Market

Secondhand fashion platforms like Poshmark, Depop and Thredup are seeing high demand during the pandemic. But will it last?

Louis Shapero was a casual user of the resale platform Depop before the pandemic. But with retail shut down across Europe and North America, his once-sleepy online storefront is suddenly buzzing.

The 22-year-old British university student says he’s handled dozens of sales for Stone Island sweatshirts, Van X  Supreme sneakers and other streetwear items in the last three weeks, more than he logged in the previous six months. He’s doing some shopping as well on the platform, which targets Gen Z with its Instagram-like feed of used clothes and accessories.
Shapero isn’t the only Depop seller who’s red hot right now. The platform says US sales are up 150 percent from the same time last year in mid-April, and have doubled in the UK. At Poshmark, a rival resale site where sellers tend to list low-price fashion from brands like Anthropologie and Kate Spade, the third week of April was the company’s best ever in terms of sales.
Resale sites are coming out big winners as the pandemic plunges the economy into a deep recession. They will have their pick of inventory, as brands look to shift clothes that went unsold during lockdowns. Soaring unemployment is good for the secondhand market too: analysts predict the newly jobless will turn to sites like Thredup and Rebag to clean out their closets for extra cash. And consumers, stuck at home and worried about their finances, may have stopped buying new clothes, but they’re still hunting for bargains online.
“We aren’t going out drinking or clubbing but still have leisure time,” said Shapero. “People are now just spending money on clothes instead of going out.”

People are now just spending money on clothes instead of going out.

Shoppers aren’t quite as eager to splurge on used luxury goods, even at a discount. The RealReal, which sells $700 Louis Vuitton bags and $350 Prada pumps, saw sales plunge 40 percent the week of April 8, according to data compiled by Earnest Research, which monitors consumer spending habits. The company’s stock is down 22 percent since late February.
Some expect secondhand luxury to take off as well, particularly if a deep recession forces even wealthy consumers to watch their spending. Vestiaire Collective, a luxury reseller with a mostly European clientele, saw sales jump 20 percent in late April, and Rebag sold more handbags in late April than it did over Black Friday. At StockX, which sells sneakers that can cost thousands of dollars, sales were up 75 percent the week of April 15 compared with last year, according to Earnest, though the average price of sneakers sold decreased.

“[Resale sites] are better off than retail, and they are way better off than department stores,” said Sonia Lapinsky, a managing director in AlixPartners’ retail practice. “This crisis will completely change shopping behaviours, and when every dollar counts, resale will be far more attractive.”
New Opportunities
Before the pandemic hit, the resale market was on track to double from $24 billion in 2019 to $51 billion by 2024, according to a report from Thredup and GlobalData, a retail analytics firm.
This growth may very well accelerate. The 2008 financial crisis paved the way for “flash sale” sites like Gilt and Rue La La, where the pairing of discounts and a ticking clock proved irresistible to shoppers. Resale sites, with their ever-changing assortment, offer that same combination, said Chris Ventry, vice president of business solutions firm SSA & Company and a former Gilt Groupe executive.
Resale sites also add a feeling of community to the equation. Platforms like Poshmark and Depop allow buyers and sellers to comment on each other’s listings and send direct messages (though Depop has also struggled with predatory messaging aimed at younger users). Fans have created Facebook groups to talk about their secondhand finds, while sneaker resale drama fills forums on Reddit.

This crisis will completely change shopping behaviors, and when every dollar counts, resale will be far more attractive.

“These shopping platforms are social networks,” said Andrea Szasz, principal at global consulting firm Kearney. “Flash sale sites hooked consumers with scarcity and newness, but the needs of consumers today is that sense of community in the digital world.”
On April 29, Poshmark added a short video feature similar to Instagram Stories. The platform moved up the launch from later this year in response to the platform’s surging activity.

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Poshmark's new feature, Stories. | Photo: Courtesy

In the luxury market, a recession could steer fashion back toward a more muted aesthetic, analysts say. Shoppers could end up selling the ostentatious and logo-heavy items they purchased in better times.
Sasha Skoda, head of women's merchandising at The RealReal said searches for classic jewellery, such as Cartier earrings and gold necklaces, are up 40 percent and 72 percent, respectively, over the last month, as “people gravitate toward classic investment pieces.”

Sales for investment watches like the Patek Philippe Nautilus and Rolex Daytona are up on the watch resale site Chrono24, said chief executive Tim Stracke.
Resale and the Excess Inventory Problem
Many brands offload their inventory to resale sites, whether it’s luxury labels at The RealReal or Adidas dropping product on StockX. Gap, Abercrombie & Fitch, Madewell and J.C. Penney have partnered with Thredup too. Still, they often see resale as competing with new clothing in their own stores.
That attitude seems to be shifting out of necessity, with entire spring collections gathering dust in warehouses and stores. Poshmark’s Chandra said his company is in discussions with large brands about creating wholesale lines that would be sold by professional Poshmark sellers.
Depop Chief Operating Officer Dominic Rose said Depop is building a wholesale platform for brands to sell on the site too. Come mid-May, brands can start selling directly to Depop sellers.
New Challenges
As masks and social distancing become ingrained habits, consumers might become warier of allowing used clothing to be shipped to their homes.
“As the crisis goes on, concerns will be about what people touched, and this could create social resistance towards used products,” said Szasz.

Depop sales are up during Covid-19. | Source: Courtesy

Peer-to-peer platforms like Poshmark have a dedicated landing page that addresses sanitary concerns during the coronavirus pandemic, pointing them to the Centers for Disease Control and Prevention’s guidance, which says it's safe to receive packages.
Consignment sites, which store and ship sellers’ items, can sanitise products directly, a potential selling point to customers. But they risk having to shut down warehouses if workers are exposed to the coronavirus. The RealReal had to close storefronts where sellers could have items appraised in person, and cited “limited warehouse operations” as a problem in the first quarter. Thredup is about a month behind in processing inventory due to low staffing at its warehouses, said chief executive James Reinhart.
Both consignment and peer-to-peer sites also need reliable shipping methods, which have become harder to secure with hundreds of millions of people shopping more online while under lockdown.
“This specific health crisis has brought vulnerabilities in the system,” said Poshmark’s Chandra. “We’re keeping an eye on logistics.”
Some resale start-ups operate at a loss, and could struggle to take advantage of the flood of merchandise hitting the market. Warehouses and appraisers are expensive, and margins on used goods are thin. StockX laid off over 100 employees earlier in April and is shifting “from a growth-focused mentality to one rooted in operational efficiency.”
“Many don’t have the working capital to make that kind of product acquisition,” Ventry said.
Resale sites also aren’t the only ones offering deep discounts. Fashion brands and retailers are increasingly resorting to sales, and the deals will only get better if the economy worsens further. More brands are launching resale on their own, including Patagonia, Eileen Fisher and Nordstrom.
“The competitive advantage resale has will be less when we come out of this,” Ventry said. “If everything is on sale, customers will surely go to retail first.”
Editor's note: This article was revised on 30 April, 2020 to reflect that searches for Cartier earrings and gold necklaces are up on The RealReal, not sales.
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Counterfeit Fashion-Manufacturers Now Making Counterfeit Masks

Christian Dior, Chanel, Gucci, Givenchy and Prada are among some of the most well-known names temporarily pivoting away from making (some of their) high fashion garments and revenue-boosting fragrances in order to manufacture hand sanitizers and face masks, as shortages continue to plague medical professionals and other individuals across the globe. These luxury brands are not the only ones whose factories are churning out relatively out of the ordinary products in light of the continued spread of COVID-19, though. Counterfeiters are working overtime in response to the sweeping health pandemic, as well.

In response to a spike in demand for protective masks as the COVID-19 virus continues to impact individuals on a worldwide basis, claiming tens of thousands of lives in the process, “hundreds of thousands of counterfeit medical masks are being peddled,” and such fake masks are being made “in unsterile sweatshops previously used to make phony handbags or designer jeans.” According to a lengthy report from the Independent, counterfeit-manufacturers are looking to bank on rising need for surgical and high-tech respirator masks and the large-scale shortage of them by saturating the market with black market alternatives that look a whole lot like the real thing.
From manufacturing products and even packaging that bears the counterfeit trademarks of “well-known medical supply companies” like Minnesota-based conglomerate 3M to carefully mimicking the certification stamps and documents that commonly come with these goods (such as the “CE” stamp that indicates that the mask is “approved by the European Economic Area for safety, health, and environmental protection standards”), these unauthorized products look perfectly legitimate. However, recent seizures by law enforcement agencies tell a different story: the global market is rife with counterfeit masks.

Related Article: Can Coronavirus Live On Clothes? Your Fashion Questions, Answered

The Independent’s Borzou Daragahi reports that the “fake masks may pose a threat to the wellbeing of [their wearers] because they are not made with the correct materials or in sterile environments.” Unlike their authentic counterparts, counterfeit alternatives are not being made from the National Institute for Occupational Safety and Health-approved textiles used by 3M, which are precisely what enable its respirator masks to boast a “95 percent or greater filtration efficiency” against solid and liquid particles, such as the ones that transmit the COVID-19 virus.
So, while many of these batches of counterfeit masks may be coming from factories formerly used to make fake Dior handbags or imitation Gucci sneakers, the stakes are quite a bit higher when it comes to counterfeit face masks, which is why law enforcement agencies say they are focused in cracking down on the marked proliferation of such products.
In a release dated March 11, Interpol revealed that counterfeit facemasks, substandard hand sanitizers and unauthorized antiviral medications were all seized under Operation Pangea XIII, an Interpol-led effort that saw “police, customs and health regulatory authorities from 90 countries take part in collective action against the illicit online sale of various medicines and medical products.” The Lyon, France-based organization stated that it had seized “more than 34,000 counterfeit and substandard masks,” among other products, and warned that this is merely “the tip of the iceberg for this new trend in counterfeiting.”
More recently, Turkish police seized 1 million masks and arrested five people in a raid last week on a sweatshop making unauthorized medical supplies in Istanbul, a move that comes on the heels of Chinese officials disposing of more than $1 million worth of substandard masks that had been imported from Turky, which boasts a $2 billion medical supply manufacturing sector.
All the while, U.S. Customs and Border Protection has been on high alert after its agents intercepted shipments at Los Angeles International Airport and at Chicago’s O’Hare International Airport in March containing counterfeit COVID-19 test kits, which had been shipped from the United Kingdom. Both U.S. Customs and the Federal Bureau of Investigation have issued warnings that the health care products, in particular, are at an increased potential for fraudulent activity in light of the global health pandemic.
As Jay Kennedy, an Assistant Professor of Criminal Justice at Michigan State University, wrote earlier this month, “Counterfeiters have long preyed upon consumer vulnerability in order to make a quick profit, and the current coronavirus crisis will likely be no different, except instead of the usual names – such as Louis Vuitton, Nike and Rolex – being among the hardest hit by counterfeiters, the primary targets will likely be 3M and other medical goods suppliers.

Can Coronavirus Live On Clothes? Your Fashion Questions, Answered

 

The coronavirus pandemic continues to significantly affect the lives of people across the globe. Major events are cancelled or postponed, travel is restricted, employees are work remotely, and face masks have become a part of our daily wardrobe. And while many grapple with disruptions to their everyday routine, some coronavirus patients suffer far worst fates as hospital beds fill up and the death toll rises.

A lot remains unknown about the virus, specifically when it comes to one of the mainstays of daily life: your clothing. Can coronavirus live on clothes? How about shoes? Is it safe to rent clothing or shop online? Here’s what experts are saying:

Can coronavirus live on clothes? If so, for how long?

Information on whether coronavirus can live on any surface is still unclear, but there are a few reassuring things to remember. Harvard Health says the disease is more likely to survive on a hard surface than a soft surface like fabric. Smoother surfaces, like patent leather, may be safer to wear. The length of time that coronavirus can live is also still under speculation. The World Health Organization estimates the lifetime of the disease is between a few hours and a few days.
Saralyn Mark, American Medical Women’s Association leader and Senior Medical Advisor to HHS, tells Bustle it’s best to practice good clothing hygiene. “If one is living with a person who is vulnerable — age, pre-existing conditions — it may be worthwhile to change clothing once inside your home and wash items.” She recommends washing clothing in detergent in hot water, and washing surfaces with alcohol-based products.

Can coronavirus live on shoes?

Dr. Joseph Allen, professor of exposure assessment science at the Harvard School of Public Health and author of Healthy Buildings, says most people don’t need to be concerned about transporting the virus via shoes.
“The general public shouldn’t be worried about tracking the virus in on the bottom of their shoes,” Allen explains.
Still, it’s good practice to take your shoes off at the door when you’re home. For those in healthcare who may be exposed to an infectious person who’s shedding the virus — which can land on their pants or top of the shoes — it’s advisable to leave your work clothes and shoes outside when you get home.
“It’s also really important not to forget all of the other important public health advice out there,” Allen says. “Like frequently washing your hands, covering your cough, keeping a six-foot buffer from others, and wearing a mask in public.”

Where to buy face masks?

There are plenty of places to buy cloth face masks online, many of which are donating all or a portion of sales to coronavirus relief efforts. You can also flex your DIY skills by making one at home using a few household items like an old T-shirt, scissors, and string. It’s easier than you think, it requires little to no effort, and it’s a more sustainable approach.

Can coronavirus survive the laundry?

Currently, there’s conflicting information about whether the coronavirus can be killed at a certain temperature or if it can survive through a laundry wash. To be on the safe side, wash items in hot water when possible. You should also consider wiping down your washer and dryer with a disinfectant.
“People can practice infection control through basic hygiene,” Mark says. “Wash surfaces with alcohol-based products — at least 60% — and clothing in detergent in hot water.”
If you don’t have your own in-unit washer and dryer — which is especially common in major cities — you should take extra precautions when heading to your building’s laundry room or laundromat. Experts recommend wearing gloves and sanitizing all of the shared spaces you might use. You may also want to dry your clothes on high heat and for a little longer than usual.

What are the benefits of hand washing clothes versus machine washing?

“Unless you invest in a high-end washing machine and dryer, hand washing is the best method of cleaning for your delicate items,” advises Katie Brown, owner of Rytina Fine Cleaners in Sacramento. “By hand washing, one can control those extremely damaging conditions that break down fibers — i.e. heat, mechanical cycles, etc. — therefore prolonging the lifespan of the garments.”

How often should I wash PJs and sweats, even if I only wear them inside?

Dr. Joshua Zeichner, director of cosmetic and clinical research in dermatology at Mount Sinai Hospital in New York City, explains that the closer fabrics come to directly touching your skin, the more frequently they should be washed.
“If you are sweating heavily from exercise or you are not showering as often as you should, the garments may become soiled more easily,” Zeichner says. “Undergarments should be changed and washed daily, ideally so should your sweatpants. Especially in the areas between the legs and in the groin, sweatpants may become contaminated with microorganisms, including yeast and bacteria.”

How do I protect myself from coronavirus when shopping?

Some good news: For the most part, you should feel free to shop away. The likelihood that a person can infect a package — and that the infection will last through the shipping process long enough to infect the recipient of the package — is relatively low.
“The biggest risk from shopping is going to come from interaction with other people, not the product,” says Brian Labus, assistant professor at the University of Nevada Las Vegas School of Public Health. “If you minimize direct contact, you will reduce your risk of disease. As it is a rapidly changing situation, there may be numerous changes in recommendations as to how we go about our day-to-day lives, and that will include our shopping behaviors.”

Can you get coronavirus from packages?

All official government sources estimate the risk of infection via a package is low, even if an infected person has handled it.
“By the time products reach your store shelves, it has usually been a few weeks since they were manufactured,” Labus explains. “The virus might be able to survive a few days given the right environment, but it will be long dead by the time you purchase that product. Even if something you order online is shipped to you the next day, it has been sitting in a warehouse somewhere long enough for the virus to die.”

Can coronavirus be spread through renting clothes?

In a statement provided to Bustle, the clothing rental service Nuuly explained how it’s working to ensure the safety of its customer base.
“Even before the coronavirus, we have had precautions in place when handling newly returned and therefore unwashed garments and bags,” the statement read. “During the receiving and unpacking process, our employees have always worn gloves and we have fully stocked our fulfillment center with hand sanitizing stations. Additionally, one of our areas of expertise at Nuuly is cleaning and sanitizing clothing.”
The company also uses both wet and dry cleaning for all of its garments and bags to eliminate dirt and germs, and it sends everything through a steam tunnel at 250 degrees. “The end result: clothing that is clean, free of germs or bacteria, and safe for the next consumer to use,” Nuuly said.
Another player in the rental space, Armoire, is doing the same.
“All Armoire clothing is cleaned and sanitized prior to shipping,” says the company’s founder and CEO, Ambika Singh. “We use both wet and dry methods for cleaning, and utilize a steam process, which heats to 250 degrees. We are also doubling down on our standards and quality control around shipping.”
According to Singh, Armoire hasn’t seen major changes in customer usage yet. “As the situation evolves and more people are working from home, that could change,” she says. “We would like to urge our customers to keep supporting the services you rely on normally. Your support of small businesses matters.”

How are retailers dealing with coronavirus?

Retailers are taking the spread of coronavirus day by day, but they are in a critical position: supplying the public with much-needed everyday items. Walmart, known for its response to Hurricane Katrina, has pledged to remain open as long as possible. The retail giant wants the ability to provide necessary materials to those who need them like antibacterial soap, food, water, disinfectants, among other items.
Target released a statement informing customers it would be increasing the inventory of priority products (disinfectant, hand soap, toilet paper, etc.) and cleaning times to every 30 minutes in accordance with CDC recommendations.
Several retailers, including Nike, Lululemon, and Aritzia, have closed stores due to the coronavirus, but their e-commerce sites are still running.
Luxury brands aren’t faring as well as the big box brands. Brands like Burberry are experiencing closures all over China — where the outbreak began — that have affected global supply and demand. COVID-19 will likely have consequences for the luxury space for years to come.
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10 Key Takeaways from Homeland Security's New "Combatting Counterfeits" Report

On Friday, the Trump administration released its highly-anticipated report on the massive global trade in counterfeit goods. A 54-page document drafted by the U.S. Department of Homeland Security (“DHS”)’s Office of Strategy, Policy, and Plans, and signed by Acting DHS Secretary Chad Wolf, the report, entitled, “Combating Trafficking in Counterfeit and Pirated Goods,” follows from Donald Trump’s April 2019 memo calling for “action in the U.S. Government’s fight against a massive form of illicit trade that is inflicting significant harm on American consumers and businesses.” 

The newly-released report is aimed at helping “develop a deeper understanding of how e-commerce platforms, online third-party marketplaces, and other third-party intermediaries facilitate the importation and sale of massive amounts of counterfeit and pirated goods,” while also identifying “appropriate administrative, statutory, regulatory, and other actions, including enhanced enforcement measures, modernization of legal and liability frameworks, and best practices for private sector stakeholders.”

Ten key takeaways from the report are as follows … 

1. E-commerce has contributed to a shift in the sale of counterfeit goods in the U.S. 
 Consumers are increasingly purchasing goods online and counterfeiters are producing a wider variety of goods that may be sold on websites alongside authentic products. While e-commerce has supported the launch of thousands of legitimate businesses, e-commerce platforms, third-party marketplaces, and their supporting intermediaries have also served as powerful stimulants for the trafficking of counterfeit and pirated goods. 

The scale of counterfeit activity online is evidenced as well by the significant efforts e-commerce platforms themselves have had to undertake. A major e-commerce platform reports that its proactive efforts prevented over 1 million suspected bad actors from publishing a single product for sale through its platform and blocked over 3 billion suspected counterfeit listings from being published to their marketplace. 

It is not just a rise in the volume of counterfeits we are witnessing. The Government Accountability Office notes that counterfeiters are increasingly producing a “wider variety of goods that may be sold on websites alongside authentic products.”

2. Consumer attitudes towards counterfeits are changing. The sale of counterfeits away from so-called “underground” or secondary markets (e.g. street corners, flea markets) to e-commerce platforms is reshaping consumer attitudes and perceptions. Where in the past, consumers could identify products by relying on “red flag” indicators – such as a suspicious location, poor quality packaging, or discount pricing – consumers are now regularly exposed to counterfeit products in settings and under conditions where the articles appear genuine or otherwise more enticing than they would be if presented in other settings.

While the risks of receiving a counterfeit may have been obvious to a consumer purchasing items on street corners, with the rise of online platforms, it is not so obvious anymore. For example, it is unlikely that anyone would set out to purchase a counterfeit bicycle helmet given the potential safety risks; however, such items are readily available to unsuspecting consumers on e-commerce websites. 

3. The rise in consumer use of third-party marketplaces significantly increases the risks and uncertainty for U.S. producers when creating new products. It is no longer enough for a small business to develop a product with significant local consumer demand and then use that revenue to grow the business regionally, nationally, and internationally with the brand protection efforts expanding in step. Instead, with the international scope of e-commerce platforms, once a small business exposes itself to the benefits of placing products online – which creates a geographic scope far greater than its more limited brand protection efforts can handle – it begins to face increased foreign infringement threat. 

Moreover, as costs to enter the online market have come down, such market entry is happening earlier and earlier in the product cycle, further enhancing risk. If a new product is a success, counterfeiters will attempt, often immediately, to outcompete the original seller with lower-cost counterfeit and pirated versions while avoiding the initial investment into research and design. 

In other words, on these platforms, the counterfeit and pirated goods compete unfairly and fraudulently against the genuine items. While counterfeit and pirated goods have been sold for years on street corners, alleys, and from the trunks of cars, these illicit goods are now marketed to consumers in their homes through increasingly mainstream e-commerce platforms and third party online marketplaces. 

4. Counterfeiters have taken full advantage of the aura of authenticity and trust that online platforms provide.
E-commerce models have enabled counterfeiters to easily establish attractive “store-fronts” to compete with legitimate businesses. In a common scenario, third-party marketplace websites contain photos of the real product, fake reviews of the counterfeit product, and other such disinformation designed to mislead or fool the consumer into believing the legitimacy of the product. 

The proliferation of such disinformation is the hallmark of the successful online counterfeiter. Such deception not only provides counterfeiters with an enormous competitive advantage over their brick-and-mortar counterparts; legitimate sellers on the internet are harmed as well.

5. Certain products and brands are more prone to being targets of counterfeiting than others. 

Apparel and other types of accessories, along with footwear, top the list of intellectual property seizures by U.S. government bodies at 18 percent and 14 percent of seizures, respectively. Commonly counterfeited items in these categories include brand name shoes such as Nike and Adidas, as well as NFL jerseys. 

Watches and jewelry follow at 13 percent of total seizures. During one particular operation on August 21, 2019, for example, U.S. Customs and Border Patrol (“CBP”) officers seized counterfeit Rolex watches valued at over $1.4 million. Handbags and wallets represented nearly 11 percent of all seizures, including counterfeits of luxury brands such as Louis Vuitton, Michael Kors, and Gucci. Consumer electronics represented 10 percent of seizures, including products such as iPhones, hover boards, earbuds, microchips, and others. 

6. Selling counterfeit and pirated goods through e-commerce is a highly profitable activity. For counterfeiters, production costs are low, millions of potential customers are available online, transactions are convenient, and listing goods on well-known platforms is inexpensive and provides an air of legitimacy. They minimize the need for incurring significant – and costly – research and development expenditures by stealing intellectual property, technologies, and trade secrets. Moreover, the popularity of social media also helps reduce the costs of advertising counterfeit products. 

In the case of apparel, such as running shoes, employees from a legitimate branded company may leave the company and set up their own facility. These employees have the expertise to manufacture identical-looking shoes; but they will typically do so with cheaper, inferior components. The result: the shoes may fail during activity, injure the user with an inferior insole, or, at a minimum, wear out faster than the real product. Moreover, technological advances in modeling, printing, and scanning technologies such as 3D printing, have also significantly reduced the barriers for reverse engineering and the costs of manufacturing counterfeit products. 

Counterfeiters also benefit from the speed at which they can steal intellectual property through e- commerce, which can be very rapid. If a new product is a success, counterfeiters may attempt to immediately outcompete the original seller with lower-cost counterfeit versions – while avoiding research and development costs. The result: counterfeiters may have a significant competitive advantage in a very short period of time over those who sell trusted brands. 

7. The risks associated with selling counterfeit and pirated goods through e-commerce are generally low.
Not only do counterfeit sellers benefit from greater anonymity on digital platforms and websites, when sellers of illicit goods are in another country, they are exposed to relatively little risk of criminal prosecution or civil liability under current law enforcement and regulatory practices. In many cases, American enterprises have little recourse aside from initiating legal action against a particular vendor. Such legal action can be extremely difficult. Many e-commerce sellers of infringing products are located outside the jurisdiction of the United States, often in China; existing laws and regulations largely shield foreign counterfeiters from any accountability. 

All the while, in many cases, counterfeiters hedge against the risk of being caught and their websites taken down from an e-commerce platform by preemptively establishing multiple virtual store-fronts. The ability to rapidly proliferate third-party online marketplaces greatly complicates enforcement efforts, especially for intellectual property rights holders. Rapid proliferation also allows counterfeiters to hop from one profile to the next even if the original site is taken down or blocked.

The same is true for social media, where counterfeiters promote their products by creating multiple accounts so that if one account is identified and removed, they can simply use another.

8. In 2019, CBP initiated Operation Mega Flex.
 In response to the alarmingly high rates of contraband uncovered by DHS and a request from the White House Office of Trade and Manufacturing Policy, the CBP operation uses enhanced inspection and monitoring efforts to identify high-risk violators that are shipping and receiving illicit contraband through international mail facilities and express consignment hubs. 

Among the discrepancies uncovered by Operation Mega Flex were 1,061 shipments of counterfeit products. These counterfeits range from fake name brand items, like Louis Vuitton bags to sports equipment made with faulty parts. Other contraband included drug paraphernalia, deadly opioids, and counterfeit drivers’ licenses. In all, counterfeits constituted more than one of every three discrepancies uncovered by inspectors.

9. Fakes are slipping through the cracks. Foreign entities that traffic in counterfeits understand how to leverage newer distribution methods better suited to e-commerce than the traditional trade paradigm (i.e., imports arriving via large cargo containers with domestic distribution networks). Today, mail parcel shipments, including through express consignments, account for more than 500 million packages each year. Seizures in the small package environment made up 93 percent of all seizures in 2018, a 6 percent increase over 2017. From 2012 to 2016, the number of seizures from express consignment carriers increased by 105 percent, and the MSRP of those seizures had a 337 percent increase. In contrast, seizures from cargo decreased by 36 percent from FY17 to FY18. 

10. Government action alone is not enough.
In order to bring about the needed paradigm shift and ultimately stem the tide of counterfeit and pirated goods, all relevant private-sector stakeholders have critical roles to play and must adopt identified best practices, while redoubling efforts to police their own businesses and supply chains. 

Foremost among these best practices is the idea that e-commerce platforms, online third-party marketplaces, and other third-party intermediaries such as customs brokers and express consignment carriers must take a more active role in monitoring, detecting, and preventing trafficking in counterfeit and pirated goods. oa here