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Indies call for suppliers to take collaborative approach

Independent retailers have called on suppliers for support and more open dialogue to minimise the impact of coronavirus on future supply chains.

In a letter to 100 suppliers, a group of 40 UK independent fashion retailers have called for a collaborative approach, as they fear the lockdown may continue past May.

Boutiques in Business (BiB), which was set up before the Covid-19 coronavirus outbreak, has asked suppliers to “recognise that this financial burden cannot stop with the retailers”, and to have a more open communication with their retail partners. 

This includes being flexible in managing autumn 20 deliveries to plan for likely delays and reduced consumer demand.

However, the independents have also called for “a complete A-to-Z review” of the supply chain to protect it after coronavirus and make it “the most efficient and profitable for all concerned going forward”.

Speaking to group members in the early stages of lockdown, Drapers learned there had been mixed responses from suppliers. 

“Some [suppliers] are actively communicating with their retailers, but some are very actively not communicating and simply reminding retailers of their contractual obligations,” one independent retail owner said.

She added: “As soon as every part of the supply chain accepts that we are all likely to all lose money this season, the sooner we can move forward. Too many people are looking to protect their own interests first, regardless of the effect that has further down the line. The only businesses that will get through this are the ones that work together.”

Another BiB member agreed: “Most of our suppliers went quiet [when the lockdown was announced]. A few approached us with an offer of a 10% settlement discount if we paid within one week in the first week of the crisis. Others simply just sent out an email reminding us of our contractual obligations, which was very disappointing.”

She told Drapers: “There will be some casualties on both sides. The relationships can either strengthen or fall apart. We are a fifth-generation family-run department store, and have traded through both wars and number of economic crises. We are willing to work with the suppliers, but only if they are willing to recognise that this financial burden cannot stop with the retailers, but has to be shared throughout the supply chain.”

Others disclosed that suppliers have been taking a firm approach to communication.

“Some have been quite robust in their wording of emails that we are not to even think about not paying!” said one member. “We have to realise that we may have a legal requirement to pay as we took that risk but if we lose a whole season but survived as individuals, we may not want to buy from suppliers soon enough for them to survive.”

Another told Drapers that although most of their suppliers had been “OK” in offering payment plans or extended payment terms, none had offered a discount on orders or been willing to cancel autumn 20 orders without a cancellation fee.

The group also raised concerns over the devaluation of spring and autumn 20 stock further impacting their profit margins.

“Our current stock is sitting in our shop, devaluing daily whilst we are still expected to pay full price for it to the suppliers,” said one member.

Another told Drapers: “A lot of online retailers and brands that we stock will discount heavily, so how can we compete unless we discount ourselves and consequently take a hit on profit?”

“Many supplier and retailer relationships will be very strained [from this scenario],” said one member, ”But it ought to be an opportunity for a complete change in the way we do business, and suppliers ought to be willing to have those conversations.” 

However, suppliers are also facing their own pressures of cancelled orders from large retailers and unpaid invoices. One supplier, who asked to remain anonymous, called for retailers and brands to pay up for cancelled goods

Others have warned of a coronavirus cancellation “armageddon” as the number of retailers cancelling orders and delaying supplier payments has escalated amid the pandemic. 

BiB has been facilitating group meetings with suppliers over video chat program Zoom, to communicate on the immediate and long-term future of the industry. It is working to create its own buying guides for future seasons, and says it is focusing on the return to work and sharing practical plans for the re-opening of boutiques. 

 

Readers' comments (4)

  • Are brands actually going to be producing and delivering their full AW orders ? I cant imagine they will, they must surely have supply and production issues, not to mention concerns about producing all this stock that no one may want or be able to take delivery of

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  • Brands will try to deliver as near as possible full AW orders although their ability to do so may be constrained depending on the location of production and logistical issues arising from COVID-19. Meanwhile their preparedness to extend payment terms but unwillingness to accept cancellations is understandable. Indeed for quite a few brands it is probably better that the contracts which cover the orders in question are not examined too closely as the interpretation of certain provisions and their enforceability may be uncertain.
    Stephen Sidkin
    Chair
    Fashion Law Group
    Fox Williams LLP

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  • darren hoggett

    In our experience so far, brands are being fairly reasonable. There has to be some give and take, though it would make no sense for a brand to send out any items that a retailer could not afford, so in many cases I'm sure a deal can be reached, e.g extended terms, moving items to next season, discounts etc.

    It is in both parties interest that a deal can be reached, otherwise it would be impossible for the retailer to buy into SS21, though that season may been truncated due to the potential level of unsold SS20 told.

    It must be pointed out that COVID-19 has not affected all brands and retailers in the same way. Core items such as denim, t-shirts and sports causal wear have still sold well online, whereas seasonal items such as shirts and formalwear have been poor to non existent for obvious reasons.

    The message to brands and retailers is to work together to find a solution. If either party starts to play hardball, it will be counter productive with the relationship difficult to continue.

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  • Hi How do I I find our more about Boutiques in Business please cant find anything on google, very interested to get in touch.

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