House of Fraser is to ask suppliers to contribute to its £50 million rebranding to help it reposition as an upmarket department store.
This week the management sent suppliers a glossy brochure detailing their vision for House of Fraser, which will see the chain sandwiched neatly between rivals John Lewis and Selfridges.
However, Drapers can reveal that suppliers can expect to receive a follow-up letter next week demanding that they contribute to the £50 million rebrand costs, which will be spread over three years.
House of Fraser has already hit suppliers with extended payment terms after it was bought by Baugur last November, and the latest discounts will be a hammer blow to its branded and non-branded supply base.
However, asking suppliers to contribute to marketing is not unheard of. Last year Marks & Spencer asked its suppliers to help finance its "Twiggy" ad campaign and suppliers were generally compliant, saying the leap in sales at the retailer had helped to boost their own coffers.
The marketing levy will be set at individual rates based on store locations and size of business. However, if brands achieve a like-for-like sales target HoF will give them a rebate on the levy.
Supplier reactions were mixed. One womenswear supplier said House of Fraser would have "an enormous battle with suppliers on its hands". He said: "Baugur owns so many other businesses. If you're a retailer as well as a supplier, why would you want to help a rival out in this way? The brochure is full of good intentions but I need to see delivery first."
However, one lingerie supplier said: "Provided it's a case of 'you scratch my back and I'll scratch yours' and it has a positive impact on turnover, I don't have a problem with it. M&S did it and it worked well for everybody."
The 28-page brochure detailed other initiatives being implemented by chairman Don McCarthy and chief executive John King. A total of £250m has been earmarked for investment. This includes £180m for store revamps - the first of which will be unveiled in London's Oxford Street later this month - and £20m for a new transactional website.
- Matt McCormack, buying and merchandising manager for fashion at Moss Bros, will replace Pablo Sueiras as head of buying for men's casual brands and kidswear at House of Fraser. Sueiras is leaving to join denim brand Diesel next month.
HOUSE OF FRASER'S VISION: THE INDUSTRY VIEW
Julian Dunkerton, partner at HoF concessionaire Superdry
"Regionally, House of Fraser is number one because it has more branches than any other retailer. Adding an aspirational element to the business is a good thing. I would much rather it was nipping at the heels of Selfridges than nipping at the heels of Debenhams."
Theo Spierings, managing director of HoF supplier Sixty UK
"The challenge for House of Fraser is to make the stores and the format of the stores very exciting. I like the fact that a multiple is pursuing this kind of strategy and it's very clear that the business has a strong vision."
Simon Carter, owner of HoF menswear supplier Simon Carter
"It's good that it has made an effort to communicate its plans. It also shows that it has long-term commitment. It's interesting that it is aiming higher, hoping to be more aspirational than John Lewis and closer to Selfridges, but it's quite an ambitious plan."
A VISION FOR HOF
House of Fraser will acquire the UK licence for one menswear and one womenswear brand this year to add to its own-label offer:
- Linea will act as the entry price point for HoF customers
- The retailer aims to double own-label sales in 18 months
- Denim destination areas will be launched in nine stores
- A young fashion accessories and footwear area will go into 14 stores, with 10 more planned for spring 08
- New luxury brands will include Ferragamo, Jil Sander, Calvin Klein Collection and Isaac Mizrahi
- The Childrensworld kidswear concept will open in five stores, plus concessions from Gap, Hamleys, CWF and PO.P.
- Out-of-Sale discount events limited to just two this year
- Website will launch with more than 250 brands and 8,000 products this month.