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Suppliers hit out at Arcadia's 'unacceptable' discount demands

Young fashion suppliers have blasted Arcadia’s demands for an additional 2% discount on all orders with a payment due after August 31 across its fascias as “unacceptable” and “appalling”.

For landed goods the group will charge a 16.25% discount, up from 14.25%. On direct import or FOB (free on board) goods there is currently no discount, but 2% will be applied from August 31.

One supplier told Drapers: “They have no idea the margins suppliers are working to these days. There is no way we can do a 2% discount. Arcadia doesn’t even give us regular, sustainable business.

“It’s not acceptable and they are playing us against one another, saying others have accepted it so we have to. The worst is the retrospective aspect as it’s adding costs on to contracts that have already been agreed.”

Another young fashion supplier said: “It is appalling. They are spending a fortune doing up the head office and getting suppliers to pay for it. I can’t afford to pay a discount as the prices they want are ridiculously low compared to other high street chains. They are squeezing the supplier and it’s going to reflect in the product. It will be lower quality to make up for the margin.”

One London-based supplier said he may have to make redundancies as a result of the extra charge. “It’s terrible and they did it coming into peak autumn season. It’s going to cost me a five-figure sum so it has hit me massively. It is retrospective so I’m not able to work that into my costings; I’m going to have to lose a number of staff to make it up. They are compromising the quality of the fabrics and they are pushing suppliers to breaking point.”

In a letter sent to suppliers seen by Drapers, Arcadia, which has a 60-day payment term, said: “In order to keep pace with the development of our evolving channels, we are investing in excess of £100m in our systems, head office and logistics – in particular to help grow our overseas business, including building hubs to enable direct delivery to overseas markets. Additionally, our investment in marketing will continue to increase in this highly competitive environment.”

It continued: “As you will be aware, we are actively looking to develop our business on many fronts, particularly internationally and through our digital wholesale channel. These developments are crucial to both your and our business.

“We are notifying you of a further 2% payment discount – this will be effective from September 1 and will apply to all existing orders with a payment due date after August 31, as well as to all orders going forward.

“We trust that given the substantial investment being made in our business and the fast-changing nature of the various retail and digital channels, you will both understand and be supportive of this to help mutually grow our business together.”

Arcadia has not yet responded to request for comment.

Readers' comments (22)

  • if all suppliers add 5% to their next lot of prices you will get your money back but they all need to have the bottle to do it.
    Hold your nerve and they will have no choice other than to agree your next season's prices.

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  • Chris Bishop

    Unethical, unprofessional or just unfair? Sadly common practice amongst large businesses to force their suppliers to give them rebates/discounts - using (you may wish to include abuse) their position doing it.

    Naturally, it can't be legally enforced it suppliers' remedy is cry breach of contract and the risk is they move to a new supplier.

    They are relying that suppliers will roll over.

    All rather unfair - or is that just business?

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  • What bloody cheek , love to hear their comments if we reversed the situation.
    When is a contract a contract,not worth the paper its written on !

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  • Easy solution. Retrospective demands should be outlawed.

    Penalised and enforced by law.

    Mr Osborne?

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  • Andrew, are you a supplier ?? Your living in cloud cuckoo land if you think you can add 5% onto next round of prices, firstly 5% and less !!!! is all some suppliers make on core lines and buyers/controllers/management will resist strongly any core lines repeats at the 2% increase let alone 5%, plus there is always someone prepared to buy the business as a loss leader and then slowly claw back margin but this is a very risky strategy however the bigger fty's do employ this tactic.

    Yes it is unfair, yes it is business and an easy win, far harder to get product and message right for the customers and have no need to do this but given current climate for discounting easily on line and a general dumbing down of quality/prices for fast fashion it's becoming harder for retailers to increase profits, an occasional smash and grab now and then is far too tempting especially when you have got away with it the past.

    I'm afraid the only way too stop this is as already mentioned in last post, by law.

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  • Don't supply Arcadia. If they all got together and said they will not work with them, where will they go then?

    You always have a choice.

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  • I'm afraid that this is now common practice among the multiples, it's not just Arcadia.

    If the 100's of suppliers got together!!

    Never gonna happen, we are all too paranoid about each other !!!! and too replace thousands of pounds worth of business over night is impossible, it takes a minimum of 6 months and often it's a case of out of the frying pan into the fire, the choice of course is there but the reality of it is impractical.
    The Government needs to legislate against it, this is the only way it will be stopped.

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  • So they cant make a profit trading, lets make the suppliers suffer! Very naughty how about the directors taking a pay cut Maybe if they bought the right merchandise they wouldn't have to suffer all the mark down!
    Does this happen when trading with Zara, H@M Mango,Uniglo etc or is it just in the U.K.

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  • Change the law? Why? We want fewer laws.

    Allow nasty businesses to behave like animals and watch morale and long-term health decline, while witnessing the growth of ethical companies with more longer term sense.

    If Green is in breach of contract sue him and develop your business with other customers and markets.

    Put up or shut up.

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  • Just adds to the latest round of discounts of payment days extended.

    Amazon just gone to 90 days.
    Asos gone to 60 days.

    Both adding a month.

    All good fun. Feel for own brand suppliers !

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