Yep, that’s right the FBI are on our side or at least they are in the USA.

According to the web site www.theverge.com the Feds are going to crack down on counterfeiting.

The FBI announced on Friday that it was launching a new strategy in collaboration with the Department of Justice, working with third-party marketplaces — such as eBay and Amazon — to enforce intellectual property laws by giving them analytical tools to work out when people might be selling fake goods…………

Loretta Lynch, the Department of Justice’s attorney general, detailed the new strategy in a press release, saying that the digital age has “revolutionized how we share information, store data, make purchases and develop products.” Lynch said that strengthening defenses against cybercrime was one of her top priorities as DoJ attorney general, referencing high-profile hacking cases such as last year’s Sony and Target attacks to demonstrate the “seriousness of the threat all business[es] face” for “sophisticated adversaries to inflict real and lasting harm.”
THE STRATEGY IS FOCUSED ON PEOPLE SELLING FAKE ITEMS THROUGH THIRD-PARTY STORES
Rich McMormick October 5th 2015

On the surface, seems like good news. But aren’t these the very same guys who didn’t do so well in the prohibition era. Yes, they arrested a lot, shot a lot, and smashed loads of bottles but it still carried on. So without all the shooting (or maybe not?) what makes them think they are going to be any more successful. Of course, they have got some major bits of technology. But so have the baddies.

In my opinion, it is political rhetoric. They make some arrests, there maybe some prosecutions, and the best scenario would be a short period where the major offenders will have to regroup. But regroup they will.

So who are our Feds? For counterfeiting it is the National Crime Agency, or posh bobbies and on a more day to day level your local trading standard officer. I can’t see dawn raids on dodgy party shops (if such a thing exists) or the premises of dodgy on line operators( there maybe the odd one) . Our industry is just not big enough to justify the resources. Even in an industry where the stakes are higher eg fashion, or jewellery they would only scrape the surface.

This is not to say we should demean any effort to clamp down on counterfeiting but realistically the only policing will have to be done by us. So when some some sharp suited salesman or woman comes into your office , offering you ‘……a bit of gear that you just gotta ‘ave, at a price you ain’t gointa believe mate….’ Tell them   ‘no thank you very much, did you know  there are teams of special forces out there looking for you…’. That will stop them in their tracks.

Anyway, if the guys in stab jackets and glock pistols do come visiting ask them if they have rung the front door bell of EBay. Having done a bit of research on eBay looking for counterfeits, looking at items such as frozen costumes, I receive an email 2 days later. Usual stuff …as you have been looking at frozen costumes, perhaps the following will be of interest….and guess what it was highlighting ..Chinese knock offs, from Chinese sites …

This weeks breaking news concerning the deceit of Volkswagen, is not something that would appear to have any effect on the party market. Initially, it won’t .

What they have done is potentially destroy the consumers faith in any brand let alone a major international brand such as VW.

This is a brand that has been built on , reliability, quality engineering and yes , quite possibly honesty. Consumers have trusted the VW brand. It may never be the fastest car, the most luxurious, at the cutting edge of design, but it was probably the bench mark for honesty in car manufacturing. That has been blown away.

How does this leave every other brand? How will they rebuild that trust?

It gets worse,it is a German company. Recent research , and less recent research , shows Germany as the most trusted nation in Europe. 

The enormity of this news, goes beyond trust. It will hit the pocket of the customers. Firstly, they will believe they have made an error in their purchasing decisions but they will also loose out on resale values. Apart from the consumer there will be a huge number of people who have a connection to the motor industry, will pay a price. Loss of business, loss of jobs, loss of capital, loss of investments, and the list and implications go on.

I don’t want to go into a load of detail on the car market, as it won’t have an immediate impact on what we all do. But I do believe the consequences will filter down. If one of the world’s most trusted manufacturers from one of the world’s most trusted nations cheats on its customers the doubt may creep in a lot further down the chain.

What I do think is relevant is that Halloween is around the corner. There has already been an announcement (24/09/2015) on the BBC web site that   spot checks on ‘hundreds’ of retailers will be carried to ensure that children’s costumes meet the EU norms. There is no doubt that all major suppliers and brands will conform. But be wary of the cynical consumer , who questions the validity of the certification. ..

If we can’t trust VOLKSWAGEN,how can we trust KOSTUMEKINGS, even if they are the largest costume supplier in the world…

(Apologies to any supplier that is called Kostumekings. I have checked and I don’t think there is. If there is, they are certainly not the world’s largest supplier!)

I don’t want to scaremonger but I do want our industry to be aware and prepared. VW have the resources to , eventually, restore their credibility. We need to make sure we do everything to maintain consumer confidence.

This week  Sainsburys announced a deal enabling them to sell in China. They are not opening stores nor have they bought an existing chain. They are going to distribute some of their product via Alibaba, the Chinese equivalent of Amazon.

The first reaction maybe of thinking this was good news , that is one of our leading retailers exporting their product to China. My view is that long term the flow may not always be eastwards .

Within the last couple of months Alibaba purchased a chain of about 1200 electrical stores in China. Part of the rationale was to enable a ‘click and collect’ function for Alibaba and their electrical wares.

Many of you will know that Alibaba also created a site called Aliexpress. Part of the function of Aliexpress was to create a more consumer orientated site aimed at pursuing Amazon consumers in the west.

All jolly interesting stuff but so what ? I maybe putting 2 and 2 together to equal 5, it maybe me being overly cynical and overtly sceptical. Sainsburys have 1200 stores in the UK. In the long term I can’t see Alibaba getting over excited about some Sainsburys ‘taste the difference ‘ or ‘So Organic’ items . Incidentally, this is what Sainsburys have said they will be distributing in China. But I can see them getting very excited about having  1200 ‘click and collect ‘ stores in the UK. Why the UK and not a European chain? Because the UK has by far the highest per capita spend online in the world. Furthermore, it will give Alibaba, or Alixpress some credibility with the consumer.

It may never happen. Maybe my sums don’t add up. But then in it’s present form I don’t see the sums of the other two parties adding up either, without something else in the formula . 

If I am right then we would be looking at the flow westwards of Chinese goods coming directly into the homes of the UK  consumer possibly direct from the factory……in China.

In a week when data showed that August retail figures for the UK showed a fall, I was, somewhat, gobsmacked to experience bad retailing from a major international retailer ie Zara. A retailer who, generally, is feted for its cutting edge retailing. Moreover,analysts believe that fashion retailing accounted for much of the drop.

Friday night in a major London shopping  centre ,should be a good time to harvest funds from your consumer. Indeed, this was the case, however, there are some buts. This a particular large branch, but on entering it felt like a particularly unloved market stall. It was a dump. Yes, it was very busy but there were no shortage of staff, none of which were tidying anything up nor were they helping the potential customers. Worse still were clothes that had been tried on and were covered in makeup (women’s clothes , for anyone interested) . It is bad enough that a consumer lets their makeup mark ‘tried on clothes ‘ , it is worse still that staff put them back on the hangers heavily marked, making  them virtually unsaleable .

However, in my book, the cardinal sin was 4 unopened tills, with a queue of at least 40 customers. Even if the available staff were not ‘ till ‘ trained, which would be a management issue, it is surely a gross error not to maximise your cash take in the shortest possible time.

All these errors could, of course be down to local management. But this in itself is the responsibility of senior management. When my wife and I walked into Top Shop (yeah right ..’what are you doing in Top Shop..’) which is virtually next door, it was the complete opposite. They were a perfect example of ‘Good Shop…Bad Shop’

What has this got to do with party retailers? Poor retailing is not restricted to any market sector and especially when you have more than a single outlet,underlining the importance of local management. Even the best of retailers can get it wrong. Success is created on discovering and rectifying the mistakes. I doubt very much that Zara read my blogs . Even if they did they are not going to take any notice of what  I say. 

Retailing is tough and takes no prisoners. International multiples, will always have under performing  stores. Small chains and independents cannot afford that luxury.

Every market place has its share of good and bad retailers. We have all been into shops, where you think ‘ how do they stay in business?’ And you go into another selling the same type of product and feel enticed to buy.

So what? Who cares? The good ones survive and prosper and bad ones go to the wall. That is not always the case, but importantly in a relatively small market place like party I believe it has other implications.

Bad shops….discourage innovation and efficiency by suppliers. If the supply chain is faced with outlets that don’t perform well, they will not create new and innovative product as they, rightly, think that the outlets are unlikely to be able sell the product. Generally as poor retailers are happy with the status quo they will not push supply chain to greater efficiencies. To use an historical context, prior to the invasion of the party Giants from across the Atlantic, traditional British party suppliers, were just that ‘traditional ‘. There was no impetus to innovate and profitability was reasonable as there was little competition. Most suppliers were small family businesses , who had been around for some time and did not look beyond what happened last year or maybe tweak a colour or shape, or worse still wait for a major event eg Royal Wedding.

The interesting feature here is that in Europe it was a little different. The suppliers were larger and more innovative, albeit relying heavily on the carnival season. Maybe not as a consequence but perhaps just coincidental party retailers appear to be developing more quickly there than in the UK. 

Bad shops…..discourage customers. In my experience some quite literally. They seem to actively dislike anyone who walks in the shop. As a party is an occasional purchase for those who only have access or experience a ‘poor retailer’ are unlikely to return and maybe think every retailer is the same. Not all will turn to the internet, as it could inconvenient or not realistic ie large minute decisions. For those that do it may obviate their need to find a good retailer.

So what set me off along this negative path. I have seen some in recent weeks and start thinking if there a future for the party retailer. Then I go into a good one and all is well again……

What is to be done ? Nothing …..we can only hope that any potential new entrant into retail market visit the better stores and say ‘yes, this is the sort of store I want to operate’. This needs to happen if we still want bricks and mortar party stores in the UK in ten years time.

A couple of weeks ago Progressive Party magazine announced the opening of a retail store by Party Delights. As it is only a half hour drive for me , I thought it worth a look at what could be a significant event for our industry.

There will be some out there, thinking what is significant about a new party shop …they come and go all the time…yes they do, but this is a little different.

Party Delights is the U.K’s largest online party retailer. It is also owned by the worlds largest party product supplier. Either one would be significant on its own, together it is highly significant, not only for the UK but possibly for Europe. But I will come back to that.

The store, itself, is located in a very busy shopping area in Romford, Essex. It is not for me to write a review of the shop. However, what it does emphasise is that even as the worlds largest supplier of a particular product range it is very difficult to create a successful retail format. Unless, you are Apple, a parfumerie or a specialist chocolatier it is very tough creating a retail store formula that can capture the imagination of the consumer. Nike, Sony et al try and succeed to a lesser degree. No matter how big your range is it is unlikely to offer the consumer everything they are looking for when browsing for ideas. Consumers go to Nike because they want the Nike brand. When they go into a party shop they are looking for ideas. 

A regular customer of the Party Delights web site, will be somewhat surprised if they were to visit this store as the offering is very different. A retail store cannot offer the same depth of product as a web site. But whereas the web site, in this case, offers the best product of a number of brands. The store offers only the best of one brand.

The significance of this event, is that Party Delights (and Amscan) feel that there is a need to be on the High Street. I cannot see it being the only store, if for no other reason than a single store will not make them enough money. Consequently, there are likely to be more, and I suspect not just in the UK. 
For the party retailers out there, at the moment, these are two good signs.

1. The largest party web shop feels the need to have a bricks and mortar store

2. In its current format, this store will not be a threat to the independent party retailer.

There is a ‘however’. It is further evidence that the future is not through a single channel. If you are web based, some form of store connection is needed. If you are store based you need a web presence. Alibaba (China’s Amazon) has just announced a tie up with a Chinese electronics retailer which has 1600 outlets. More will follow.

It is quite extraordinary if you chance upon certain counterfeit items, the extraordinary lengths the counterfeiter will go to, in order to replicate the original detail. It is believed that many counterfeit products come from the original factories. The channels of distribution are varied. In the past we, in the UK, would generally come across counterfeits on street markets, boot sales, pubs, or the backs of vans. Today, the volume comes through the internet.
Some within the party market, would say fortunately it is not something they come across. If only that were true. There is a huge amount of counterfeit product arriving on our door step and mainly through the internet. What is particularly odd, is that it appears very open and obvious.

As far as we are concerned there are a number of types of counterfeits that affect our market.

• Branded licensed product

• Generic designs but counterfeit EU labelling (costumes and party items)

• Counterfeit copyright design graphics. This is more copyright infringement rather than actual counterfeit product. There is a legal difference but the effect is the same.

Branded licensed product

This takes various forms. An example is say a Frozen costume. It is not difficult to find this particular item. You only have to log into EBay, type in the description and it won’t be long before some examples appear. At the time of writing, the first 6 entries were based in China or Hong Kong. As to whether they are counterfeit, the reader would not be qualified to know but the price and image would suggest that they probably are. Within Amazon it is not so obvious. However, if you dig deeper, it would not be long before you find offending articles and from UK sellers. To quote a review from a happy customer on one resellers shop ‘….it is not Disney product, but it was not a Disney price…..’

Generic Designs

This refers to a design such as a Pirate costume that does not infringe anyone design or copyright but generally comes directly out the Far East and where relevant, has never seen the inside of a testing lab yet carries a CE mark plus text to say it conforms to the relevant EN procedure. This does not involve just costumes but also party products eg latex balloons, plastic party items , in particular loot bag toys, blowouts, party poppers, and numerous other ‘accessory products’.

Counterfeit copyright design graphics

Licensed party product and decoration, where the design is infringed.

A further form of counterfeiting which is rather more furtive. There are online sellers who will use the bar codes, descriptions of well-respected brands to make the sale but then substitute it with cheaper and inferior product.

It is a big problem and will only get bigger, especially when players like Alibaba & Aliexpress become more focused on the European markets. It would appear on the surface that the big players seem to be doing little about it. There is an argument, mainly promoted by the likes of Amazon and EBay that the problem is so big that it is too big to police. There is, undoubtedly, some truth to this. However, speaking to UK resellers many would say that they are very quick to pounce on them with dubious and often fallacious claims of selling counterfeits. One reseller said they were upbraided by Google+ for using a genuine logo with a genuine product .

This would be appear on the surface to somewhat bonkers, as surely, one way to identify brands is by using genuine logos. Having been shown sites that clearly do not have genuine products, and do not pretend to use logos purely words Frozen and Winnie the Pooh for example. Surely it is not beyond the wit and ken of these behemoths to write software that high light such anomalies.

Perhaps the more honest conclusion is that the legal complexities between nation states makes this a complete nightmare. A leading law firm ‘… said there has been a sharp rise in European litigation and soaring costs for businesses trying to stop the theft of their trademarks, products and content…’ makers of the Rubik’s cube have said it has sued the European Court of Justices over delays in trying to trademark its shape. The case began in 2006.

Local primary suppliers in the UK are trying their best but ultimately it is a bit ‘King Canute like’. One method they are trying to use is encouraging their customers not to cut prices. This is not a convincing argument , as increased margins only increase the motivation to counterfeit.

This problem is not going to go away. It is very difficult to see how it will get any better. Licensors (the Brand owners) not the licensees need to work closely with the online masters of the universe. A further simpler but less likely step would be to convince the consumer that they are getting a fair deal and value for money as opposed to looking elsewhere because of the perception of a ‘Disney Price’.

If we can sit on our sofa, make a few taps on our screen, have a video conversation with a friend 12,000 miles away or make a purchase that arrives the following morning, surely the technology giants can stop a load of hooky gear being sold. Stopping deals in dodgy played in out of the way pubs, or gear being flogged on the street corner, back of the van , all very nefarious and tough to police. But when counterfeit product is blatantly flouted in the virtual shop windows of the worlds biggest on line retailers, it is hard to swallow .

This a shortened version on article I have written for Party Party, which should be published in the next edition. However, as it consistently rears its ugly head, I felt that any thought or discussion would not benefit from waiting a couple of months.

AO one of our largest online retailers for home appliances has just announced whilst there are no immediate plans to open High street shops, it is an option they would consider.

This is nothing new . Or rather let me clarify, before a reader claims they once went into a shop, it is not new for an online operator to open or consider retail outlets. Both Google and EBay have had pop up shops and Argos, whilst not solely an online operator are probably the nearest, you currently get to a web site with shops.

A financial journalist recently said in five years time entrepreneurs will start opening things called shops. It was not said with tongue in cheek. Retailers, both on and off line are beginning to understand the importance of some representation on the high street. Richard Perks , retail director of Mintel, says about the future of retailing that ….setting them against each other is a red herring…it’s more about bringing them together.

The point I am trying to make is that online accounts for just under 12% of retail sales. Conversely, 88% of purchases, are made in shops. That 12% will continue to grow but for some time the vast majority of purchases will be made in retail outlets. The primary motivation for any business has to be profit, or else it does not survive. This is why it is so important that …retailers look at bringing them together…

If you look through photography magazines, you will invariably see  a story on ….Jonny Snapshot has been running his local camera shop for over 350 years, but has decided to close because ‘them, there Internet people….’it is a crying shame’, said a local..’we have had a camera shop in this town since the 16th century ‘…The point being that there is a relationship between camera party shops. Both rely on customer service. In my own experience, having an interest in photography, Customer service is not always as evident in some independents, as it should be.

If you were new to photography, you would find it very difficult to buy the right gear by just going online. If all camera shops disappeared, they would have to be re-invented. I believe the same is true of party shops. If this were not true, why would Party Delights, the U.K’s largest party web site, be involved in a new retail outlet. 

Online operators, of all varieties, are increasingly finding it difficult to operate successfully. There are issues with operating costs, maintaining customer loyalty, brand awareness and increased competition. Couriers are finding it increasingly difficult to make the delivery at first attempt. Second and third attempts increase dissatisfaction and increase costs.

Retail outlets without an online presence, will be severely hampered to maintain their business. Web sites without a high street presence are just as exposed. Retail analysts talk about consumers making store visits as a leisure as opposed to a purchasing activity.  As a consequence, major retailers are looking at ways they can incorporate all three, online, in shop and leisure all in one location. The theory is the longer time spent in a retailer, the more likely loyalty will grow. 

With some ‘out of the box’, ‘blue sky’  thinking, and some hard commercialism, the party shop should be the ideal retail outlet to incorporate these three fundamentals, in shop, online and leisure.

As a footnote, with Amazon dramatic share price increase, the company value exceeded Walmart, the worlds largest retailer. I find this, especially, interesting, as an Amazon buyer tried to convince me at the NEC, that they were not as big as TESCO. 

Actually it should be the Bank of Amazon, but I didn’t think it would be as eye catching. But then when I started writing, it might behave been a better title. Just over two weeks ago Amazon announced a lending programme to invited resellers in the UK.

Yes, that is what I said they are offering loans to resellers. Or initially to resellers of their choice. My first reactions were that this was a very smart move by Amazon. The details are sketchy, as the announcement was a bit under the  radar, but they would select certain retailers and offer them funds to develop and they would take the repayments from commissions.

As a business initiative, it is pretty clever stuff. Amazon would have a company’s complete history on revenue flows, in much more detail than any bank or financial institution. It would also have a pretty good idea on the margins enjoyed by resellers. In terms of security, it would be a fairly sound proposition. If  Amazon saw a reseller experiencing falling revenues it could assist in increasing its revenues, until the repayments had been made. Clever stuff, but a double edge sword for the reseller.

However, on reflection, and a lot of reflection wasn’t needed for this, there are some nasty bits. Two come to mind.

Firstly, Amazon are building a huge data base, which will quite soon reach a level , unmatched by any other institution, of any description, in the world. They are accruing sales data at an alarming rate, now they will be garnering related financial data. 

Secondly, should they decide to extend this offer to other resellers, it raises the spectre of  the Amazon market place favouring resellers with loans against self funded sites. 

At the moment, this is all slightly hypothetical, as there are no details. I don’t know how the loans would be structured, apr’s, payment terms, plus how national governments would view or define these loans on a local level. In the USA, where they have already started the programme, the loans can be anything from $1000 to $600,000 and the repayments are generally over months as opposed to years. Moreover, it is not a totally new idea as a similar scheme has been run by PayPal. 

Whilst currently owned by eBay, PayPal is due to be siphoned off as a seperate company in 2015. Hence with the operating differences between eBay and Amazon, plus PayPal becoming a seperate company. There are few similarities.

As to whether it is a good or bad thing is too early to tell. My initial reaction is of concern with the long term attitude of Amazon towards their resellers who they are assisting with finance against those who are being self financed or funded by third parties. Commercial logic would suggest favouring those who owe them money.

I suggest it will not be long before we begin to see what are the intended consequences of this financial munificence.