It’s been a shocking week for the designer sector. British brand Luella ceased trading, Manchester mini chain Flannels issued a proposal for a Company Voluntary Arrangement (CVA) and Cruise directors John Heath and Ian Baird made a sudden exit from the Scottish-based chain.
That the sector turmoil has spread so rapidly to the luxury market, which rode out the first few months of the recession pretty well, begs the question whether there needs to be a wholesale change of how designers and their retail partners do business.
In tough times, trading with the wafer-thin margins offered by the luxury houses and the sometimes erratic deliveries of the smaller designer labels, may just not be possible any more.
Brands will undoubtedly be hit hard by the Flannels fallout, and some will be feeling the pinch twice over after the pre-pack administration of Cruise earlier this year.
But this sector more than any other needs inspirational and innovative indie stockists. Both Cruise and Flannels have been run by great retail entrepreneurs and the businesses have 61 years of trading history combined. Circumstances have conspired against them to create this latest crisis.
Designer brands must recognise that they cannot survive on luxury department stores with their high commission rates alone. Suppliers must be proactive in supporting their stockists with stock swaps, restructured pricing, better margins and payment plans while retailers must seriously assess which are their must-have labels.
It’s a painful time for both parties but one without the other just isn’t an option.