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Flannels adds fuel to indies’ Grazia promotion debate

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,
for instance.

 

Readers' comments (7)

  • This is getting beyond a joke. Its all down to greedy suits who back these companies and need a return. All the respectable indies in the UK just now are businesses that have been started by passionate individuals who love their bricks and mortar stores and these mummys boys who get handed mummys shop to run once they leave university make the classy indies shine like the stars they are. The internet is fab, however nothing makes up for the shopping experience these wonderful stores like Jules B and Sunday Best can offer. Hold tight Rhona and Jan, your stores are retaining dignity and respect by not going down this tacky route. Let Flannels and Coggles pick up the nouveau riche consumer with her huge credit card bill and anonymous shopping habit - she will not be around forever!!. You stick to your loyal local customer base who enjoys your expertise and philosophy which remember is why you now have the stunning respectable businesses you now have. Good Luck and sit tight, the indies of the UK are behind you.

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  • this is such a non-story, retailers are free to discount whenever they wish and if Jan at Sunday Best feels peeved at Coggles and Flannels, tough. Bearing in mind the close relationship the store Sunday Best has with Drapers (the owner writes a column), I find it highly inappropriate and unprofessional that the editor should accuse Coggles of being "hugely irresponsible" in her editors letter last week. Just because a couple of stores have turned a one-off mag promotion discount into sour grapes, it doesn't mean Drapers should report this non-story and especially not in such personal terms. If Grazia were to approach Sunday Best, I'd bet she'd snap their arm off at the chance. It ultimately is irresponsible of Drapers and Sunday Best to bang on about this issue as it smacks of the sort of price-fixing that is ILLEGAL!! so forget about quoting a lawyers thoughts about what "might" happen in the future, and don't get drawn into the sort of ant-competitive price-fixing with brands that can lead to legal action against stores and brands.

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  • Drapers opted to publish both the Sarah Coggles and Flannels stories because they became huge talking points in the industry and have divided opinion. You can read some of the comments here and on last week's story. The volume of comments certainly justifies the coverage we have allocated to these stories.
    My editor's comment last week was directed at independents discounting in season in general and not specifically at Sarah Coggles. One of the things that sets indies apart from the high street multiples like House of Fraser and Debenhams, which regularly discount, is the fact they tend to stick to traditional Sale periods, which means their customers trust that they can buy an item one week and it won't be marked down a week later. Trust between a customer and an indie is crucial to loyalty.
    I do believe that engaging in high street price wars could be a dangerous cycle for any independent to get involved with and that it could also damage the profile and positioning of some brands in the market, which at the moment sell well at full price.
    That said, I can see why a one-off partnership promotion with Grazia would be very tempting particularly for businesses looking to build their internet presence. Ultimately business owners must decide what is the best strategy for them but it would be very unfortunate if some indies were put out of business by other indies entering into a discount war.
    Mark Bage is a regular contributor to Drapers and for the record, I admire his business and his strategies enormously.
    I very much look forward to hearing more views on this subject.

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  • the only way for indies to counter these threats is to put pressure on the suppliers to the likes of flannels ,coggles or even hof and vote with your feet by stocking brands that arent over exposed

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  • There were many more comments posted by ex and current employees of Intimas , when Drapers ran various stories of the demise of that business- but instead of a letter from the Editor- the action by Drapers was to remove the comments altogether!

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  • Oooh, what comments? I must have missed that story.
    Asos are brave by doing an open forum. Always customer grumbles and complaints on it for all to see.
    I even had one myself as I didn't realise you had to put in a code to get free postage when spending over a certain amount . Got a reply and a postage refund straight away.

    It's almost become the place to post a query or a moan and, though they must screen it, most of the complaints are left up for all to see.......and dealt with quickly.

    I can't see why negative or controversial commnents are removed from here. Surely the subject of the article should just write and reply to defend themselves if they feel they are unjustified?

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  • The world is changing and buyers have to wake up to this. Its no longer the case that they can buy a brand and expect exclusivity in their postcode. The internet changed this many years ago.

    Grazia working with Flannels and Goggles is a natural move forward. Expect more of this, also expect magazines like Grazia opening up their own online stores, launching their own basics collections and taking % of sales when customers buy from other stores they recommend online.

    I can't see that their would be so much moaning if they were working with Collection Privee, The Outnet, Brand Alley, Rue LA LA, YOOX, Beyond the Rack or any of the countless others who are already turning over millions in this space.

    There is a massive issue here with the way large brands clear their excess inventory and the pressure that this then puts on their traditional routes to market. For example: If as a boutique you get 70% sell through on a line you expect to clear the remaining 30% in the sales, when that does not happen its probably because your sale buyers have already had their fix online you loose a good proportion of your revenue.

    I feel strongly that boutiques should be ducking out of and focussing on what boutique buyers used to do best. Knowing their customer and finding collections which their customers want to buy. So why not voting with your wallets. Got a problem with a brand whose been sold in this way either insist on a sell through guarantee or dump it and find a replacement. It may mean you have to travel a bit further next season to find the right replacement/s, it may mean that you have to take a bigger chance with a lesser known brand but if you know your customers well then none of this should be a big problem for you.



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