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‘Selective distribution is the answer to pressure on prices’

The number of enquiries from designers worried about downward pressure on prices as they face a global market is picking up pace.

The big question is how they can maintain brand value and cachet when retailers seem happy to sell at volume into low-priced markets.

Telling retailers what price they can sell at is the obvious answer.

But it is well known that fixing prices breaks the competition law.

The penalties for breaching these legal rules can be severe and linked to business turnover.

What is less well understood is whether these provisions prevent businesses in competitive markets deciding who they will supply.

Intense price competition is often the tactic of a handful of retailers. Most others operate on the basis that they want to achieve as good a margin as they can. These are the ones a design business should seek out.

There is nothing to prevent a business from deciding it will operate through an authorised distribution network and have guidelines about the outlets it wants its branded goods sold through.

A selective distribution network working in harmony with your business interest is the way to make the global market more of an opportunity and less of a threat.

  • Margaret Briffa, Solicitor and founding partner of intellectual property law firm Briffa

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