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Brands concerned over USC's "bulk-buying" approach

Brands have expressed anger at USC, accusing it of moving towards a “massmarket” offering akin to a “fashion Sports Direct”, and squeezing discounted goods from suppliers via bulk purchases and shorter payment terms.

USC, which is owned by Mike Ashley’s Sports Direct group, is understood to be stockpiling clothing from some key brands after buying large quantities at discounts of up to 50%.

A number of brands have already served notice that they will stop selling to USC in the past year, with a source saying high-profile suppliers are thought to be disgruntled and considering the same move.

The young fashion retailer is believed to be offering payment terms as short as 24 hours to some core brands including Diesel and G-Star in order to secure the discounted stock, and is firming up new supplier terms to drive down wholesale costs.

A source close to USC said it had been buying “up to a year’s worth of stock” from brands and offering payment terms of less than seven days, particularly on categories not as prone to seasonal fluctuations such as denim and footwear.

One brand manager said his company had ceased trading with USC because of the “mass-market” nature of the business. He said: “We saw the way it was going with the change of ownership and we didn’t want our brand to be a part of that.”

Another unnamed brand said the practice of retailers buying large quantities of stock and clearance stock had become more widespread. “It’s just margin building,” he added.

A brand listed as being sold by USC confirmed it had served notice on the chain, which was still selling its goods online and in its stores, while another – which has also decided not to move forward with USC – said the promise of greater exposure through selling larger quantities at discount prices had not come to fruition.

Ashley took an 80% stake in USC in July 2011 from owner Sir Tom Hunter, picking up the remaining 20% six months later. Since then Ashley has taken its UK store count from 38 to 84.

Sports Direct and several major brands all declined to comment.

Ashley is also believed to be planning to relaunch Republic as a pure-play etailer after completing a programme of store disposals in the past six months.

Sports Direct bought the young fashion business out of administration in February last year, and in the last two months has closed or subsumed the remaining stores into USC.

Sources close to Republic said it could re-emerge as an etailer, possibly focusing on womenswear. It is thought that when Sports Direct bought Republic its etail arm was in profit, but its 114 stores were loss-making.

In February, Sports Direct approached landlords of 50 Republic stores to appeal for concessions and turnover-based rent in order to save the business, but Drapers can reveal that the rest of Republic’s stores have since closed despite most landlords agreeing to the terms.

Readers' comments (6)

  • at the end of the day brands will still supply as there are a lot of them out there - too many brands for too few retailers these days

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  • Totally agree with the above, compared to the 80's and 90's the indie retailer count is tiny, labels have much fewer places to go, who remembers IBEX and MAB with hundreds of brands and tons of independents, bit nostalgic but the choice was vast for the buyer and the consumer, sadly don't think we will see same ever again.

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  • Wow Mr Anonymous has a good memory! but its over and you have to ajust accordingly or get out the business.
    Sorry having a reality check, not good.

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  • Douglas, I'm Mr Anonymous, i own a factory oversea's we supply the multiples with young fashion. I started in this business as 16 year old selling in an indie. I saw the writing on the wall in my early twenty's and got into contract orders, the multiples started to emulate the brands and eventually over take them, dominating the high street, I never looked back, only in nostalgia, some great characters and great story's. With the rise of the e-tailing and the recession many Mulitples have now pulled out of towns up and down the UK, covering these towns with on-line sales, makes sense with rents and rates so high, problem is these guys pushed the rents up and pushed the indies out, this is all well documented and discussed, issue is the knock on effect with discount e-tailers and discount retailers dominating both sectors, brands having few choices. Interesting debate on here re discount culture, there are some shining lights but not many. I'm in my forties and still enjoying it more than ever, just not quite as much fun as it used to be.

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  • Douglas, I'm Mr Anonymous, i own a factory oversea's we supply the multiples with young fashion. I started in this business as 16 year old selling in an indie. I saw the writing on the wall in my early twenty's and got into contract orders, the multiples started to emulate the brands and eventually over take them, dominating the high street, I never looked back, only in nostalgia, some great characters and great story's. With the rise of the e-tailing and the recession many Mulitples have now pulled out of towns up and down the UK, covering these towns with on-line sales, makes sense with rents and rates so high, problem is these guys pushed the rents up and pushed the indies out, this is all well documented and discussed, issue is the knock on effect with discount e-tailers and discount retailers dominating both sectors, brands having few choices. Interesting debate on here re discount culture, there are some shining lights but not many. I'm in my forties and still enjoying it more than ever, just not quite as much fun as it used to be.

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  • Don't really see what the fuss is about here. Stockpiling clearance stock from Brands is nothing new. What gets up some peoples noses is that Ashley can afford to do it, whereas many cannot, but USC are not really a credible threat to any decent Indie.

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