Discounts kicking off this week mean brands stocked in the chain’s concessions will face reduced margins.
Brands with concessions in Dorothy Perkins have warned they may pull out of the womenswear chain after it went on mid-season Sale this week, leading to slashed margins.
The Arcadia-owned retailer launched its Sale on Thursday (September 13), ahead of some current stock even landing in stores.
A manager at one women’s young fashion brand, which is stocked in a Dorothy Perkins concession, said: “It’s crazy – mid-season Sales are normally in October. It’s indicative of the times that stores such as Dorothy Perkins are having to go on Sale to drive footfall.”
Concessionaires have been asked to discount clothing by 40%, resulting in a potentially significant reduction in payment to suppliers.
“It will hit our bottom line,” added the manager. “I certainly won’t be expanding [in Dorothy Perkins] but I will perhaps look at consolidating the portfolio.”
The managing director of another brand said the move would make him consider pulling out of the retailer.
“All they do is markdown, markdown, markdown,” he said. His autumn 12 stock has not yet entered stores – a far cry from the normal seven-week period for standard pricing.
“Sale periods are way too early,” added a third brand owner. “In some cases the discounts you are forced to give are a very high level, almost half, and then that leaves you with virtually no margin.”
It is understood that other retailers including Oasis will follow suit and launch Sales on September 25.
Honor Westnedge, senior analyst at Verdict Research, said earlier mid-season Sales could be widespread this year.
“Retailers are just trying to shift stock. Footfall levels are down and consumers are increasingly reluctant to buy.”
But multiples aggressively discounting so early in the season could pave the way for more brands to set up standalone stores in order to retain margins.
“If you supply to 100 boutiques and then start selling in a chain store where they slash the prices, the boutiques can’t compete and you end up losing them,” one brand told Drapers.
Westnedge said Dorothy Perkins’ aggressive discounting would not damage the brand image but would leave consumers unwilling to buy at full price.
“It’s a vicious circle, which will be very difficult for them to break out of. It’s a risky strategy to have.”
Dorothy Perkins declined to comment.