Designer mini chain Flannels has inflamed the debate about out-of-season promotional activity after it launched a 25%-off promotion with women’s glossy Grazia, just one week after York indie Sarah Coggles ran a similar 30%-off campaign with the magazine.
Flannels, which stocks brands including Paul Smith London, Luke and Vivienne Westwood and has 11 full-price multi-brand stores in key shopping locations such as Manchester, Liverpool, Leeds and Birmingham, took part in a wider Grazia promotion this week, joining high street stores such as Warehouse and Wallis in offering readers a 25% discount between October 13-21. In addition to offering the discount in its shops, it also gave shoppers a code to use on its website.
Last week, Sarah Coggles was lambasted by rival indies for offering 30% off more than 200 brands on its website, which the indies said had damaged the sector and harmed their own sales.
Several indies remained incandescent that two of the leading multi-brand indies were discounting so early in the autumn season, particularly via their websites.
Drapers has learnt that Grazia does not charge retailers and brands to take part in its promotions. Instead, it uses them to drive newsstand sales of its magazine, which has a weekly circulation of about 228,700 copies.
Jan Shutt, owner of Sunday Bestin Rawtenstall, Lancashire, said she could understand the temptation of taking what was effectively a free full-page ad in Grazia, but added: “Where does this all end? This might be a quick fix for some retailers but it could change the shape of retailing forever. Why would anyone buy anything from a store if it can be bought cheaper online?”
Rhona Blades, co-owner of five-store north-east indie Jules B, added: “Everybody has to think cleverly but this is just wrong. This kind of behaviour is leading the industry nowhere.”
However, the attitude of some indies to the discount strategies had softened this week. One rival to Flannels said: “It’s a minefield out there and retailers have to take a realistic view. Each retailer needs to do whatever they need to do to keep their business healthy. No multi-brand retailer would choose to discount because the margins are so small, but the mild weather just isn’t shifting stock.”
Flannels owner Neil Prosser was not available for comment.
Changes in online distribution legislation are on the horizon…
The European Commission is reviewing its selective distribution legislation after consulting with a range of trade bodies, brand owners, retailers and etailers.
Although the changes to the legislation are still in draft form, they are widely expected to impact most on brands which supply etailers.
Stephen Sidkin, fashion law partner at law firm Fox Williams, said he expected the changes to crack down on restrictions to “passive selling” online, defined as stocking a brand but not actively marketing it to consumers via email shots and such like. At present, brands can prevent online stockists from selling their goods outside of certain territories or can impose limits on how many online sales they can make. These options are likely to disappear.
Sidkin added that brands dealing with etailers would need to replicate the qualitative selective distribution policies they use in relation to bricks-and-mortar stockists to protect their brand positioning.
There is also an indication that there may be a limited relaxation of the prohibitions on resale price maintenance for both online and bricks-and-mortar stores. Brands cannot dictate selling prices under competition law but in future may be able to co-ordinate promotional activity across their stockist bases or restrict discounting if they are a new entrant to the market,