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Retail Law Advisor

The New Dawn of Retail: Apocalypse or Evolution?

Posted in Bankruptcy, Retail

Major retailers that once reigned supreme with brick and mortar stores now face unparalleled challenges. Historically, major retailers dominated the retail industry by opening stores in the most desirable locations and offering fetching merchandise at a great value. But, numerous trends – including a dramatic shift in shopping habits, the rise of e-commerce, the overabundance of malls and the revival of the restaurant experience – have triggered a shift in the U.S. retail landscape and led to the demise of brick-and-mortar stores. A recent spate of store closures affecting niche-market retailers, such as Toys’R’Us, RadioShack and Payless, illustrates the impact of this new reality for the retail industry. As more and more U.S. retailers close up shop and file for bankruptcy, it is becoming clear that the industry’s decline isn’t simply a phase or a temporary blip on the radar, but rather the new normal.

The inauspicious fate of major retailers appears to be at odds with the broader economic narrative in the U.S. – one where the economy is thriving and consumer confidence is at an all-time high. These favorable economic signals would typically be a harbinger for a thunderous retail boom, yet the reality is one of gloom and doom. The rapidly changing retail landscape is experiencing unprecedented upheaval as brick and mortar stores battle to keep pace with shoppers, who have taken their business online, and is bracing for a tsunami of store closings in 2018 as major retailers succumb to increased debt. The number of store closures is expected to rise by at least 33% to more than 12,000 in 2018 according to a report by Cushman & Wakefield. When combined with the record number of store closings in 2017, an increased rate of closures in 2018 would push a number of under-performing malls to the brink of extinction. Indubitably, the most significant trend affecting brick-and-mortar stores is the meteoric rise of Amazon and other online retail companies, who have wrested away market share. But the fall of the retail industry is also largely due to the Great Recession, which placed a premium on experiences – especially those that translated into an Instagram post – and unleashed a restaurant renaissance.

In today’s retail environment, retailers must take into consideration the e-commerce effect and its impact on future store performance. Given the rise of mobile shopping and the online shopping experience, retailers are dealing with more store closures than they ever could have predicted. While it’s unlikely that brick-and-mortar stores will ever be displaced entirely by e-commerce, developing harmony between the two appears to be the most viable strategy going forward. Retailers today have an amazing opportunity to pioneer a new landscape in the retail industry, one which is date driven, highly personal and deeply entrenched in technology. And, despite the rash of store closures, brighter days and a new dawn lie ahead for the retail industry.

No More Lifetime Guarantees – The Importance of a Balanced Return Policy

Posted in Retail, Retail Sales

In February 2018, L.L. Bean made the tough decision to change its lifetime return policy, which had been in existence for over a century. Following the policy change, the company received backlash from its customers, with many of them voicing their frustrations on twitter. One user tweeted “L.L. is 100% rolling in his grave #NoRespect.” Another complained that L.L. Bean could no longer justify its price point, tweeting “Seriously? The only reason to pay the mark up at L.L. Bean was you knew that product was guaranteed for life.” One disappointed customer even filed a class action suit against the company for not honoring its lifetime warranty.

L.L. Bean’s new return policy states: “[i]f you are not 100% satisfied with one of our products, you may return it within one year of purchase for a refund.” The company’s previous policy was one of the most generous in the retail industry, with the company allowing its customers to return items even if they had bought them over a decade ago. Shawn O. Gorman, L.L. Bean’s executive chairman and great-grandson of Leon Leonwood Bean, the Company’s founder, explained that the reason for the change was that “[a] small, but growing number of customers [had] been interpreting [L.L. Bean’s] guaranty well beyond its original intent.”

The recent backlash against L.L. Bean underscores the importance of implementing a clear return policy that balances customer satisfaction and retailer economics while complying with applicable law. If a retailer’s return policy is too liberal, the retailer runs the risk of customers abusing the policy. If a retailer’s policy is too stringent, its customers may be reluctant to buy merchandise.  A return policy builds trust between a retailer and its customers and is even more important in the e-commerce world, in which customers cannot inspect merchandise before buying it. “A survey by e-BuyersGuide.com found that 86 percent of online shoppers rated return policies of significant importance in choosing an online merchant.” Many e-commerce retailers have tried to attract shoppers with return policies that provide for extremely forgiving terms.  However, as L.L. Bean learned the hard way, these companies have found that accepting returns comes at a high cost.  According to a report from Appriss Retail, ten percent of sales ($351 billion) made by the retail industry last year, were lost to returns.

In tailoring their return policies, retailers should continue aiming to balance customer satisfaction with the cost and hassle of managing merchandise returns.  In 2016, Harvard Business Review published an article about how companies may be able to achieve this balance, highlighting six specific suggestions: (1) be selectively lenient based on the cause of the return; (2) be selectively lenient based on time; (3) be selectively lenient to enhance the perception of quality for certain products; (4) be selectively lenient for more important customers; (5) limit gift returns; and (6) start the return policy later (e.g. after a trial period).

When adopting and updating their return policies, retailers should also be sure to comply with federal, state, and municipal laws and regulations. For example, the Federal Trade Commission enforces a “Cooling-Off” rule that gives consumers a three day right to cancel a sale made at their home, workplace or dormitory, or at a seller’s temporary location, like a hotel or motel room, convention center, fairground or restaurant. And at the state and municipal level, a retailer may have to meet certain disclosure requirements with regard to its policies concerning refunds, returns, or exchanges.  Otherwise, default rules may require the retailer to accept returns for a minimum period of time.

As e-commerce is becoming the preferred way to buy and sell many products, and as L.L. Bean’s experience shows, it is increasingly important for retailers to implement well-crafted and balanced return policies.

Does Trademark Protection Extend to On-Line Advertising- Apparently It All Depends

Posted in E-commerce, Retail

It seems that nearly every day another retailer announces the large-scale closure of brick-and-mortar storefronts, with such household brands as Toys “R” Us and J. Crew, just to name two, planning to shutter stores in 2018. The significant challenges faced by traditional retailers are often attributed to the rise of online shopping, while at the same time some retailers are bucking this trend and expanding their physical footprints. Further, in light of the bells ringing the demise of brick and mortar, it remains the case that e-commerce even today accounts for less than 10% of total sales.

While the debate continues regarding the threat that e-commerce poses to traditional retail, one thing is for certain — much of the marketing that fuels all retail purchases has migrated online. The rise of digital marketing, though relatively recent, has been swift and extraordinary. It was only a few years ago that online advertising revenue surpassed ad revenues for broadcast TV, and just last year that it overtook all TV ad revenue combined, including both broadcast and cable.

The astonishing ascent of digital advertising has been largely spearheaded by, and continues to be dominated by, Google, which collected an estimated $73 billion in ad revenue in 2017 alone. The lion’s share of this revenue comes from Google’s AdWords platform, which allows businesses to bid on keyword search terms. Whenever the purchased term is searched, the business’s ad is displayed in the “sponsored” banner at the top of the search results. Though Google continues to maintain its dominant position with AdWords, some also see a threat looming as Amazon’s advertising business, which operates much like AdWords, begins to gain momentum. In any event, while not the only medium for marketing online, there is no question that search-based advertising continues to be a central focus of marketing efforts, especially as more and more digital ad revenue is attributed to mobile advertising, which is driven largely by mobile search.

It is within this context that a federal district court in Manhattan recently handed down a telling decision addressing an issue at the fore of digital advertising — whether trademark law prohibits an organization from purchasing a competitor’s trademark as a keyword. The case, which was successfully litigated by Goulston & Storrs’ own Martin Edeland and Adam Safer, pitted two of the largest Alzheimer’s charities in the country — the Alzheimer’s Disease and Related Disorders Association (“Association”) and the Alzheimer’s Foundation of America (“Foundation”) — against each other in a battle for donations.

In a nutshell, as part of its online marketing campaign, the Foundation had purchased trademarks owned by the Association as keywords in Google’s AdWords. The Association sued, claiming that the purchase of its trademarks, combined with the Foundation’s use of an abbreviated two word name, created confusion for consumers constituting infringement under the Lanham Act, the U.S.’s primary trademark statute. Ultimately, the court disagreed and found that, even though the Foundation’s and the Association’s marks were similar, the Foundation’s purchase of the Association’s trademarks as keywords was not likely to create confusion for consumers and therefore did not violate the Lanham Act.

While the case involved non-profits and was not the first to address the practice of purchasing competitor keywords, the court’s decision has immediate implications for commercial advertisers who are either considering buying competitor keywords or who are looking to protect their own trademarks from others who might use this strategy. In reaching its decision, the court applied the traditional multi-factor test typically applied in infringement claims. Key to the court’s decision was its finding that the Association’s trademark was a relatively weak descriptive mark. Additionally, the court found little, if any, evidence of actual confusion among consumers between the Association and the Foundation. On this point, the court rejected surveys conducted by the Association that allegedly demonstrated confusion, finding that these studies were flawed, specifically, for their lack of a sufficient control variable.

In focusing largely, though not solely, on these two factors — strength of trademark and whether surveys demonstrate actual consumer confusion — the court provided a valuable roadmap for retailer either evaluating their own trademarks or considering purchasing competitor marks. Certainly among the largest considerations for a retailer would be evaluating the relative strength of a trademark and evaluating whether purchasing competitor keywords creates confusion for an ad audience by conducting due diligence in the form of consumer surveys. Given the complexity of this area of the law, it is undoubtedly wise to consult sophisticated counsel to assist with charting your path.

Preparing for a Retail Storm

Posted in Liability, Retail, Retail Sales, Risk Management, Technology

In the past few years, we have seen increasing temperatures, rising sea levels and extreme weather across the globe. According to NASA, 2016 was the hottest year on record and 2017 was the second warmest year on record. In 2017 alone, the world witnessed massive heat waves in the Arctic and Australia, dangerous droughts in Somalia and horrific hurricanes in North America and the Caribbean, just to name a few. As erratic weather promises to continue, businesses, including retailers, are taking note. In fact, the Center for Climate and Energy Solutions found that 90% of the multi-national, blue chip companies on the Standard and Poor’s Global 100 Index recognize climate change as a major risk to business.

Demand for products has always been driven by fairly predictable seasonal weather, both in brick-and-mortar stores and online. It seems obvious that colder weather boosts the sales of things like boots and snow removal products while warmer weather increases sales for sun care products and outdoor lighting. Planning tends to become more difficult when weather becomes less predictable. For example, when people are stuck at home due to winter storms, e-commerce sales do not increase like one may think; instead, when people are home from work, they are busy dealing with things like power outages and household chores, and are not online shopping like they may have been at their desks in the office. What becomes even less obvious is how to plan for extreme weather conditions.

Extreme weather, like storms or wildfires, has the potential to disrupt supply and distribution chains, cause inadequate staffing, render products too scarce or abundant and distort prices. Loss in revenue due to store closures or decreased foot traffic is business that is rarely made up. In fact, atypical weather disrupts the operational and financial performance of 70% of businesses throughout the world and weather variability is estimated to cost the United States about $630 billion each year. Small businesses and new businesses are especially disadvantaged by extreme weather.

Retailers historically plan for the year ahead based on the seasons. As businesses grapple with extreme weather, though, companies are understanding the value in weather prediction services. After all, the prior year’s weather is only an adequate indicator of the next year’s weather about 15% of the time. By utilizing weather data and analytics, retailers hope to better understand how weather affects customer traffic, sales, staffing, production and pricing.

Lucky for retailers, weather forecasting programs have also become more accurate, thanks in large part to artificial intelligence (AI) which enables researches to analyze massive amounts of weather-related data faster and more efficiently than ever before. IBM’s Deep Thunder, for example, utilizes weather, location and traffic data to predict the weather and therefore assist businesses in making smarter and more informed decisions ahead of time. Interestingly, IBM bought The Weather Company in 2015 to access its data in conjunction with Watson, IBM’s AI platform.

Similarly, there are weather-focused consulting firms that encourage companies to quantify the impact of weather on their businesses by measuring the impact across time and location. Weather-based sales distortions can then be removed from the company’s sales history to create a baseline for planning purposes. In a report by the National Retail Federation (NRF) in partnership with Planalytics, NRF found that businesses that remove the historical impacts of weather from their sales history can drive a 20-80 basis point annual improvement in profitability in inventory management alone.

As extreme weather continues to disrupt the globe, businesses will undoubtedly need to consider ways to develop more weather forecasting technologies and weather-focused planning services.

Credit Card Evolution: Goodbye John Hancock

Posted in Banking, Restaurants, Retail, Retail Sales, Technology

For years, the signature requirement for completing a credit card transaction has felt something like an obsolete means of confirming a user’s identity. Effective this month, however, four of the country’s largest credit card providers: American Express, Discover, Mastercard and Visa, will no longer require a signature to complete a purchase via credit card. The change is considered optional, leaving much discretion in the hands of retailers as to whether or not to require a signature. As a result, consumers may see inconsistent approaches in the marketplace.

Credit card companies, which generally cover the cost of fraudulent credit card transactions, were prompted to remove the signature requirement primarily by an enhancement of security that came with the chip-and-PIN card technology. In 2014, consumers saw the transition retailers made from accepting magnetic credit card strips to requiring updated chip-and-PIN technology for all credit card transactions, primarily as a result of a shift in fraud liability to merchants who did not adopt the new technology. Most consumers initially experienced this in the awkward form of swiping, then inserting the chip, then removing it too soon, all while holding up the line at the local coffee shop. Yet, the intent behind the change was a bit more sophisticated: such “chip cards” produce an encrypted mathematical code that is unique to each transaction, which makes counterfeiting stolen data much more difficult for would-be fraudsters.  While both retailers and consumers experienced some growing pains during the transition, chip cards now seem to be the near universal method of credit payment.

Dropping the signature requirement can be expected to have unintended consequences on particular retailers, namely in the hospitality and service industries. Typically, when paying at a restaurant, for example, the opportunity to add a tip to the check occurs when the credit card and check are returned to the customer for signature. By removing the signature requirement, we can anticipate that some patrons may unintentionally neglect to complete that step. Similar consequences can be expected for employees of industries that rely heavily on tips, such as bars, cosmetic salons and hotels.

Thus, these industries should use great care in choosing to implement the signature-free payment method, particularly when considering the effects it may have on the income of employees. One solution may be an enhanced reliance on the consumer interface: offering, for example, a tip input feature prior to the swiping of the credit card, as is already the practice in many taxi cabs. Alternatively, we may see these industries choosing to retain the signature requirement so as not to lose significant income for their employees.

These changes conform to a growing movement toward more secure methods of payment, a trend in which the United States seems to be a step behind many other developed countries. The EU had already been mandating the chip cards for years before the United States followed suit, and countries like China have been trending toward exclusive mobile payment methods like WeChat Pay and Alipay. Finally, with an increasingly present use of biometric data as a means of both collecting information and providing security, a Jetsons-like era of fingerprint and facial scanning to confirm identities of credit card users may not be such a fictional idea after all. As the nature of payments continues to evolve, retailers should be mindful not only of the unintended consequences their employees may face, but also a continued, and seemingly never-ending, need for enhanced data security.

Pop-Up Stores- From Mall Kiosks to Dedicated Mall Spaces

Posted in Pop-up Retail, Retail

It seems that everywhere we turn, there is another story about how the traditional, enclosed shopping mall is facing a slow and painful death. Big box and other brick and mortar stores are closing, and mall landlords are desperate to fill increasingly empty space. To do so, landlords are continuously attempting to cater and adapt to what the consumer wants. In today’s landscape, it seems the consumer wants pop-ups. But where does that leave the kiosk – the original pop-up store?

Mall kiosks as we know them have not enjoyed the best reputation. Known for tactics that make shoppers avoid them at all costs and for selling kitschy seasonal items, kiosks are generally not our main reason for taking a trip to the mall. The kiosks of ten, or even five, years ago meant small carts with little room for creativity or inventory that were susceptible to peak season rent increases. Despite these drawbacks, kiosks have served an important purpose for both landlords and retailers – allowing landlords to utilize otherwise dead space in the mall, and enabling retailers to test out new brands and concepts without a major investment in a long-term lease and a full-store buildout. Today, mall owners looking to include new and exciting concepts and retailers in their centers are utilizing pop-ups to do just that.

Pop-ups allow malls to bring in new, innovative, and buzzworthy brands at a time when malls are in need of a boost. Some malls are even dedicating permanent spaces, formerly occupied by traditional brick-and-mortar retailers, to various rotating pop-ups. Simon’s Roosevelt Field Mall, for example, now contains a 3,500 square foot section called The Edit where brands have the chance to feature their products and services in a temporary home within the mall.

With the pop-up store’s growing importance to the viability of the shopping mall, kiosks are seeing a bit of a revitalization. Dedicating large spaces to dozens of small, rotating pop-up retailers may make some landlords, who prefer the stability of traditional retail leases and long-term tenants, uncomfortable. That’s where kiosks come in. Landlords have already been catering to the growing needs of kiosks by running electricity and improved lighting to kiosk carts. These simple improvements have given kiosks greater control over how they showcase products and even how they charge clients. While the lifespan of a pop-up can range anywhere from days to months, kiosks can be let for somewhat longer terms, providing reluctant mall landlords with more comfort and stability.

The dedicated pop-up space has one important advantage over the pop-up kiosk, however: flexibility. When new brands come into a dedicated pop-up space—usually a blank canvas—they have the ability to design and transform the space to fit their brand and tell their story. With a kiosk, flexibility and creativity are limited by the size and space of the cart and the amenities and utilities available to it. As a result, while kiosks may have addressed some pop-up needs until now, it seems quite likely that pop-ups are here to stay and storefronts turned pop-up spaces will be the future.

Following An Evolving Retail Scene In New York City

Posted in Landlords, Leasing, Real Estate, Retail, Tenant

New York City, one of the world’s premier shopping destinations is about to get over one and a half million square feet of new retail space. Some will be delivered to Long Island City, an area that has been waiting for a retail resurgence for over 2 decades, and more will be constructed as part of a planned development dubbed “Hudson Yards” on the far west side of Manhattan. How will this influx of retail square footage affect the retail landscape, especially with uncharacteristically high vacancy rates in prime retail corridors in Manhattan?

Long Island City has long awaited attention from retailers – its distinct lack of stores is a problem for the area. When Citigroup built the tallest building in Queens at 1 Court Square in 1989, the building was hailed as the start of a new era. Common thinking was that the new tower would kickstart development, which would mean retail. Even as more offices and residential towers are built, a commensurate increase in retail has not followed.

Maybe the lack of retail growth in Long Island City stems from the fact that there wasn’t much retail to begin because Long Island City was traditionally an industrial neighborhood. Since retail attracts more retail, it is hard to get it if you don’t have it. Additionally, when you bring retail to a “pre-existing” area, zoning changes, vacancy rates, demographics, and tenant mix are dealt with over time and each play an integral role in the type of space that will become available and the type of tenant that will be attracted to the area.

Whatever the reason, a new dawn may be approaching for retail in Long Island City. Long Island City has the infrastructure it needs to support retail, multifamily development in Long Island City is outpacing the rest of the nation with approximately 22,000 new residential units planned, and more than 465,000 square feet of retail development is anticipated by 2020. As fitness, medical and educational tenants are filling up vacant retail spaces, there is a sentiment that these “first wave tenants” are a sign that restaurants and big box stores are sure to follow, and residents appear to be ready for the next wave of retail. In a survey of 1,300 Long Island City residents, restaurants, pharmacies, and grocery stores were identified as top retail needs for the neighborhood.

Unlike Long Island City, Hudson Yards, a 28-acre mega-development on the far west side of Manhattan was planned from day one to be a “mini city”. The area will have the residential, office, and schools that Long Island City has, but this “mini city” is planned with retail as an integral part of the design. Factors such as tenant mix, access, and demographics were carefully curated from day one giving retailers a certain comfort that they will have a sufficient customer base.

Hudson Yards will be home to a retail area dubbed “The Shops & Restaurants at Hudson Yards” and will house Neiman Marcus’ first New York City Location. It is scheduled to open in late 2018, and already over half of the 1,000,000 square feet of retail is leased.  Although the tenant mix is not complete, 20 percent will be luxury retailers, with mid luxury, fast casual, and restaurants – some by well-known restaurateurs, rounding out the mix.

It will be interesting to see how the retail scene in New York City evolves over the next 3-5 years, since as of the end of 2017 vacancy rates on in prime retail corridors remained high – 24.3% on Fifth Avenue between 49thand 60thStreet, and 21.9% in Soho, well above the 5% “healthy rate”. Will The Shops & Restaurants at Hudson Yards become a more compelling venue for retailers traditionally housed on Fifth Avenue, Madison Avenue, and Soho? Will the influx of residents to Long Island City and Hudson Yards help boost retail throughout New York City?  Will Long Island City retail finally have its moment?

Bankruptcy Lease Auctions – Landlords Can Play Too

Posted in Bankruptcy, Leasing, Real Estate, Retail

Toys “R” Us filed for bankruptcy in September 2017, with hopes that a strong holiday season would facilitate a successful reorganization. After holiday sales proved to be far less lucrative than the company and its professionals had hoped, the announcement was recently made that the company would commence store closing sales at all 735 of its U.S. stores. What this means for the many landlords affected by the Toys “R” Us bankruptcy filing is that a probable anchor tenant in their center is at imminent risk of going dark, which may trigger co-tenancy requirements. However, Toys “R” Us is also pursuing the sale at auction of certain of the commercial leases in the company’s portfolio.

A bankruptcy lease auction process enables a prospective purchaser to pay to take assignment of a lease without having to obtain landlord consent (though such a purchaser would have to adequately show that, at a minimum, it will be able to perform the obligations of tenant under such a lease). Given the tenant-friendly terms of many anchor leases, which are oftentimes on the tenant’s lease form, an anchor tenant lease sale may be the perfect scenario for an opportunistic retailer looking to quickly expand its physical presence in the marketplace (Amazon.com being one retailer that has been rumored to be interested in certain Toys “R” Us leases).

At risk in this process are the landlords who may be forced to live with a tenant for whom they did not bargain (under lease terms that may not have been offered to such a tenant) for, possibly, many years to come. If the lease is for space within a “shopping center” within the meaning of the Bankruptcy Code, a landlord may take some comfort that the Bankruptcy Court should not approve the sale of its lease if, in doing so, the exclusive use restriction of other of its tenants would be violated, the use is not permitted by the use clause in the Toys “R” Us lease or if the tenant mix of the center will be disrupted. However, these protections may not be supported by the lease language and, regardless, seeking the mercy of a court is never a sure path to victory. So what is a more viable option for a landlord focused on retaining retain control over its center? Bidding for the termination of its own lease at auction.

Last week, the Bankruptcy Court approved bidding procedures for the sale of as many as 157 of the Toys “R” Us debtors’ commercial leases and the auction is scheduled to take place tomorrow. Landlords were authorized to submit a bid (the deadline was Monday) to terminate their own lease(s) by “credit bidding” the amount of existing arrearages, which is effectively a claim waiver. If there is a competitive bidding process for a lease, a landlord may ultimately have to include a cash component as part of its bid, but a credit bid alone may be sufficient to secure the landlord a seat at the auction table, which is the best way to monitor the process to see who is out there bidding for a lease and what consideration is being offered. Landlords should be cognizant of the fact that there may be a bidder at auction who is prepared to offer a bid for a package of leases, which may be too valuable for the estate to break up for the sake of doing a one-off transaction with a landlord. And, of course, there may be a bidder who is simply willing to pay more for a lease than is a landlord. That said, if a landlord is worried about the fate of a lease, particularly that of an anchor tenant such as Toys “R” Us, the best first line of defense is for such landlord to submit a bid so that it has the opportunity to be the successful bidder for its own lease at auction.

No Relief in Sight from Website Accessibility Lawsuits

Posted in Retail, Technology

In February 2017, we reported on a surge in website accessibility lawsuits brought under the Americans with Disabilities Act (“ADA”). This litigation trend has accelerated over the past year and shows no signs of slowing down.

Title III of the ADA prohibits discrimination against disabled persons in places of “public accommodation.” Generally, businesses that provide goods or services to the public must provide disabled individuals with the same type of access to those goods and services as they provide to individuals who are not disabled, and must remove certain existing barriers to access. Although the ADA was enacted long before the ubiquity of websites and e-commerce, retail and hospitality businesses are targeted frequently with claims that their websites (and mobile applications) are inaccessible to blind and visually-impaired individuals.

These website accessibility claims present a challenge for businesses because, despite earlier efforts, the Department of Justice has not issued guidelines or promulgated regulations for website accessibility. In this void, plaintiffs and courts have increasingly looked to Web Content Accessibility Guidelines (“WCAG”) developed by a private standards setting organization. The WCAG, however, has not been adopted in an administrative rulemaking process and does not establish legal requirements for ADA compliance.

Typical defenses to website accessibility claims include arguments that websites are not public accommodations and that the WCAG cannot be used in place of regulatory rulemaking. A few court decisions appeared to support these defenses, with rulings that the ADA did not apply to websites or that only minimal accessibility features were necessary for compliance. Currently, there is a case pending in the Ninth Circuit Court of Appeals, which has jurisdiction over Alaska, Arizona, California, Idaho, Montana, Nevada, Oregon, and Washington, challenging the applicability of the ADA to websites and use of the WCAG on constitutional due process grounds.

Those court decisions are outliers. Many courts have allowed website accessibility claims to proceed under the ADA where a “nexus” exists between the physical place of public accommodation and the particular website or mobile application. As a result, websites or mobile applications which enable the public to purchase, view, or reserve goods and services should be considered as within the ADA’s scope. In addition, courts increasingly have incorporated or approved the WCAG as a website accessibility standard. For example, in June 2017, the first trial concerning website accessibility concluded in a Florida federal court. The defendant, Winn-Dixie grocery stores, was ordered to comply with the WCAG. More recently, in August and December 2017, a New York federal court held that the ADA and state civil rights laws applied to Blick Art Materials’ website and approved a class settlement agreement requiring Blick to implement the WCAG. In this decision, the court explained that the specific WCAG 2.0 Level AA standards provide “adequate controls to allow visually impaired individuals to access the Internet …. In the absence of competing standards, and through demonstrating that the standards are nearly universally accepted as providing adequate access to the visually impaired, the court can appropriately accept the present guidelines as presently adequate.”  Andrews v. Blick Art Materials, LLC, Case No. 1:17-cv-00767, Doc. #42 at 33 (S.D.N.Y. Dec. 12, 2017).

Businesses should take notice of the growing number of website accessibility lawsuits and majority view that the ADA applies broadly to websites and the WCAG provides accessibility standards. Although the lack of clear regulations raises multiple questions about the scope of required website accessibility measures, a proactive approach to accessibility should help businesses reduce the risk of being targeted by a lawsuit.

#Trending: Omnichannel Loyalty and Leveraging Social Media Channels

Posted in Retail

Technological advancements in the current digital age allow consumers to browse and buy products on smartphones and tablets, bringing an unlimited number of retail options to their fingertips—literally. Thus, in an effort to distinguish themselves, many brands are adopting omnichannel-based customer loyalty programs in favor of more traditional programs. Omnichannel loyalty is the practice of providing customers with seamless connection to a brand across all possible media, while simultaneously rewarding those customers for purchasing and engaging publically with the brand. These loyalty programs have significant long-term value because they serve to develop customer relationships, which ultimately leads to customer retention.

What constitutes all possible media in 2018? While traditional print, broadcast and online address channels are still important and necessary to an omnichannel approach, an increasing emphasis has been placed on socially driven engagement strategies due to the success of social media platforms and their 24/7 accessibility on our technology devices. Websites and mobile applications like Facebook, Instagram and Twitter are helping brands develop a social strategy, which, when implemented effectively, can improve customer experience. These newer channels work to create a digital community where retailers can interact with customers in real-time, allowing them to provide a desirable level of personalization in shopping and rewards programs. Additionally, customers can provide feedback to other customers or the general public, and are often motivated to do so. Posting a “selfie” online used to be a way to show off your newest clothing and accessories, however, through hashtag marketing and loyalty campaigns, the pictures and comments you post on social media channels might actually help you save money or gain access to exclusive offers and discounts in the future.

The effectiveness of strategic omnichannel loyalty is best illustrated by its impact on millennials. That’s right. While they might get a bad rap for their participation trophies and avocado toast, millennials are fiercely loyal, with over half of the generation saying that they are “extremely or quite loyal” to their favorite brands. This emotional loyalty is significant because it translates directly into dollars and cents for retailers. In fact, a recent study suggests that customers are willing to spend money on brands to which they feel an emotional connection, even when there are other similar alternatives available to them. Why? Because a brand’s social influence on its customers, which used to occur almost exclusively in person, can now be developed more quickly and efficiently through digital media on social media.

Thus, in this day and age, it has become essential for brands to engage consumers with the right message at the right time using the right channel, in an authentic and fun way.

So how can retailers ensure that they are keeping up with the trends? Prioritizing customer loyalty through an omnichannel rewards program is a must. Retailers should consider developing social media platforms that can be leveraged to create a digital community of costumers where engagement with the brand is incentivized and feedback is used to create a personalized shopping and rewards experience. At a time when retail options are limitless, consumers want to be engaged, and will develop emotional loyalty to brands that make these efforts.