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.