Designer Kym Ellery is fast approaching crunch time, as negotiations with Myer over her exclusive fashion line must reach a settlement on Wednesday or head to the Supreme Court.
The 29-year-old designer has caused a stir in the retail industry recently after jumping ship on an exclusive contract with Myer and entering an arrangement with David Jones, 18 months before the end of her contract.
Myer also alleges the designer has breached her exclusivity contract by not providing the store with clothing from her autumn and winter collections.
Get business news first
Sign up to SmartCompany’s daily newsletter
If a settlement is not reached by February 20, the case will go to trial in the Supreme Court on April 15.
The argument has continued to burn in the background. On February 7, David Jones, who had previously positioned itself away from the conflict, opened its autumn/winter runway show with Miranda Kerr dressed in Ellery.
Partner at law firm Hall and Wilcox, Sally Scott, told SmartCompany it would be in the best interests of both parties to reach an agreement out of court.
“There are advantages in reaching a decision early because you avoid the extra legal costs, time, greater risks and uncertainty and the time away from your business. You are also able to control the outcome and insert a confidentiality clause between the parties.
“But there is a value on those items and therefore you pay a price for settling. For a settlement, both parties need to compromise and both parties won’t be entirely happy with the outcome,” she says.
Scott says entering into an arrangement with a department store, while boosting a designer’s credibility and stature, can sometimes bring exclusive contract terms.
Myer spokesperson Jo Lynch previously told SmartCompany the store maintained a good relationship with Ellery since 2011, but “we think there has been a breach of contract”.
“We think Kym is talented, and have promoted her significantly as well as the Ellery brand. Our customers love it, and in our view we owe it to our customers to showcase her collection,” Lynch says.
Scott says department stores have been increasingly seeking out exclusive contracts with designers, particularly newer faces, in order to compete with the online market.
“Department stores as a point of distinction are profiling emerging designers and this is a smart move because their stock can’t be bought as easily from overseas,” she says.
In 2011, Myer acquired 65% of Australian label Sass and Bide when the company was floated, paying $42.5 million.
Scott says emerging designers need to be cautious before entering into contracts with the department stores.
“Designers need to realise big department stores aren’t going to prepare contracts that are anything but in favour of them. Usually they have so much power they are not willing to negotiate their terms of contract and emerging designers need to be wary,” she says.