Fast fashion’s fearful forecast


February 4, 2020

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The government wants to keep razor competition sharp. The Federal Trade Commission said yesterday that it’s suing to block Edgewell, which owns Schick, from buying D2C razor upstart Harry’s for $1.37B. The FTC says the sale would dull innovation, but the companies say it would give consumers an edge. Today:

  • Fast-fashion buyers are kings of the mall
  • MSCHF’s stunts are confusing us all
  • Airbnb’s scammers are hoping you’ll call
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Mall owners want to buy a mall staple: Forever 21

The mall magnates Simon Property Group and Brookfield Property Partners are part of a group that wants to buy the fast-fashion trailblazer Forever 21.

The $81m price tag would be a downright steal for a company whose annual revenues once exceeded $4B

If it sounds like a fire sale, Fast Company explains why it makes sense: The landlords are trying to keep their tenant from leaving town.

That’s because malls are already ghost towns…

… and Forever 21’s exit would probably make things worse. The company filed for bankruptcy protection in September, announcing a plan to close hundreds of stores.

At the time, experts said the move was a sign that fast fashion was going out of style:

  • Those dirt-cheap duds are terrible on the environment, and younger buyers are getting thrifty.
  • Worker safety is a big concern. In 2013, more than 1k people died in a garment-factory collapse in Bangladesh.

So was the fast-fashion frenzy just a fad in a cheap suit?

Maybe! Vox pointed to some McKinsey research projecting a dim outlook for global fashion brands in 2020.

  • 58% of fashion honchos said they expected the forecast for value-oriented outfits (that’s you, Forever 21) to get worse.
  • Consumers are only going to demand more sustainable choices, but the industry has a lot of catching up to do. Just one example: Fashion accounts for 20-35% of microplastic flows into the ocean.

But experts say there’s still a gap between what consumers say they want (greener jeans) and what they actually buy (cut-rate clothes).

This sale isn’t final — yet

Forever 21 wants the mall owners’ group to be the lead bidders in a bankruptcy auction. Rival bidders have until Friday to make a counteroffer.

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Research suggests CEOs are most successful when they lead for 11+ years

Last year, WeWork co-founder Adam Neumann was booted from his role as CEO after serving as the company’s chief executive for 9 years. 

And just 2 months ago co-founder of Away luggage Steph Korey stepped down from her job as CEO — only to return to the post several weeks later.

Both controversial case raised a question:

How long should CEOs stay in charge?

Eleven to 15 years (at least according to new research from Spencer Stuart, a search firm for executives).

According to the research, CEOs enter their golden years once they’ve accrued deep institutional knowledge and dealt with several sh*t storms — and that usually takes at least 11 years.

And CEOs are staying in charge longer

CEOs in the S&P 500 stayed at the helm for an average of 7.2 years in 2009. In 2018, they hung on to power for an average of 10.2 years.

And it’s also becoming more common for founders to give themselves special voting powers or stock majorities in order to stay in power (no, we’re not just talking about Zuckerberg — execs at Snap and Lyft also have supervoting supercontrol).

Still, all of this doesn’t mean super-CEOs can’t screw up: WeWork’s Neumann and Uber’s Travis Kalanick both got the boot despite owning supervoting shares.

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What in the name of sweet Jesus shoes is MSCHF?

MSCHF, a group of 10 offbeat creatives based in a small office in Brooklyn, is responsible for creating:

Some of the group’s self-proclaimed “drops” are simply socially shareable stunts. But others feature physical products (like Jesus shoes) that actually make money. 

So… who the hell are these people?

Don’t call them a startup

Why? Well, for starters, they don’t really want to make money.

Gabriel Whaley, the 30-year-old founder of the group, explained to The New York Times that making money is “not why we’re here.”

And they don’t really want to take on clients either: The group once ran an advertising agency that worked for clients like Casper, but shut it down to focus on social commentary, which Whaley says is “the point.”

But advertisers want to invest in ‘structured chaos’ anyway

Despite MSCHF’s lack of interest in making money, the group still managed to raise $11.5m from outside investors. Why?

“I don’t see anybody doing exactly what MSCHF is doing,” technology consultant Frank Denbow explained to the Times. “Everybody is able to get a one-off campaign that works, but to consistently find ways to create content that really sticks with people is different.”

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Five flavors of common Airbnb scams

Phantom “plumbing issues,” phantom damages, phantom hosts — travelers can fall into all sorts of sketchy situations on Airbnb. Last fall, Vice exposed the seedy side of the short-term rental platform. 

Sometimes, the getaway doesn’t feel like a vacation

They asked readers to send in their worst tales of Airbnb stays gone awry. Hundreds of people responded. Their complaints fall into a few big categories:

  • The bait and switch: Those “plumbing issues” usually mean you’ll be offered another place to stay — but the digs are always divier.
  • The 3rd-party payment racket: Some hosts asked guests to pay outside of the app. Pro tip: If your host asks you to pay in Bitcoin, run.
  • The damages deception: Including the host who tried to charge a guest $2k to clean up a coffee stain on the carpet. 
  • The 5-star shakedown: Some travelers said their hosts strong-armed them into leaving good reviews.
  • Guests can suck, too: Airbnb angst is a 2-way street. Some hosts said it’s notoriously hard to get the company to reimburse them when the guest breaks the shower-curtain rod.

They’re trying to stop the swindlers

After the investigation was published, the company made a pledge to verify all listings on its platform by the end of this year.

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