House of Fraser is facing a supplier backlash after demanding that brands and concessionaires help to finance its £250 million rebranding programme.
Suppliers who contacted Drapers this week are balking at the revised supplier terms document they received last week. Two womenswear suppliers said they were seeking legal advice and one young fashion brand threatened to pull out of the department store chain if the proposal was not reworked.
Sources said House of Fraser has been flooded with complaints after receiving a letter, entitled “Building the Brand”, from finance director Stefan Cassar. The document sets out revised supplier terms and calls for suppliers to support the department store group’s growth, development and refurbishment plans.
The new terms include a “premium location fee” for companies that supply the retailer’s flagship stores, including Glasgow, Birmingham and London Oxford Street. Those with sales of £200,000 or above must pay a £10,000 fee.
A retrospective bonus scheme will begin in January 2008 based on 2007 sales. Suppliers showing growth of more than 20% will be hit with an 8% retrospective discount in favour of HoF. The rates are staggered depending on growth. Suppliers will also face a 3% charge on the value of their invoices to help fund HoF’s £50m marketing spend.
One womenswear supplier said: “House of Fraser is going to destroy us. We have grown with the retailer and now it is going to deduct the new costs straight from our invoice.”
A branded young fashion supplier added: “From a wholesale point of view we can’t afford it. The margins are too low to sustain that kind of support. It’s a clever creative approach, but I can’t imagine HoF wants to lose most of its brands when it has such ambitious plans. We need each other.”
HoF was not available for comment.