The collaborative ethic of the Associated Independent Stores buying group, which negotiates discounts from suppliers on behalf of its members, is more important now than ever, say its two womenswear bosses.
With the recession having firmly taken hold in the UK, phrases like “partnership” and “leveraging respective strengths” have become increasingly popular as retailers, brands and other industry operators find that pooling their skills and resources may be the best way to achieve mutual survival.
However, the Associated Independent Stores (AIS) buying group has worked along this philosophy since it started 25 years ago. The group has about 250 independent retailer members, with a combined 500 to 600 outlets, and has divisions covering womenswear, menswear, kidswear, lingerie and hosiery, homeware, furniture and toys. It also has the licence to run sportswear buying group Intersport, which does the same as AIS in the sportswear sector.
In return for a membership fee, members get supplier discounts, have access to high-margin own-label product, can draw on marketing facilities, and benefit from the skills and knowledge of the AIS buying team. Any profits are returned to members based pro-rata on how much business is done via AIS.
So in the economic downturn, does the kind of partnership working that AIS offers become more attractive, or is the membership fee another cost that retailers are looking to cut?
AIS ladieswear controller Bernadette West (pictured right, standing) says the group has more retailers wanting to join than it has leaving, but that overall membership is steady. It has a general policy of allowing only one retailer in any town or area to join so members are not in direct competition with each other.
“We negotiate to get all our members preferential rates from suppliers,” she says. “We have a fully functioning marketing department, which produces point-of-sale material for our own label. The AIS Procurement Service can also offer special rates with utilities, insurance, waste collection and other costs.”
Ulster Stores, which owns the De Gruchy department store in Jersey and Moores of Coleraine in Northern Ireland, has been an AIS member for more than 20 years. Managing director Neville Moore says: “AIS gives us the strength in the market because they have the buying power of a big multiple retailer. They negotiate discounts from suppliers, and provide marketing and access to good deals on utilities.”
Sense of security
At a time when keeping cash flow going can be make or break for smaller businesses, AIS’s centralised payment system (Cenpac) brings an element of security.
Through the Cenpac system, all retailers are invoiced by AIS, which chases up any late payments or settles any other issues. Therefore suppliers are guaranteed to get paid on time and in full. The scheme also cuts administration costs for suppliers and members.
The pulling or reduction of credit insurance has been a major problem for suppliers and retailers, and the fact AIS guarantees payments should be a major benefit. But has the group itself had confidence problems with its lenders?
West says: “The fact that the bank is dealing with an organisation of our size means it hasn’t been a big problem. The benefits are that we guarantee payment on behalf of members and we are not constantly changing payment terms and dates. We pay within 30 days.”
AIS’s own womenswear label, First Avenue, aims to give retailers another weapon in their armoury to help combat the attack on margins from high street discounters. The brand has a mark-up of between 2.8 and 3.
Louise Garner, womenswear brand and retail division controller, says: “Our stores have had to become more careful about their margins and look to anything that gives a [margin] improvement. First Avenue sits very neatly between their branded offer and a value-led offer that a retailer might have. It gives high margin and a degree of exclusivity.”
AIS’s own seasonal trade shows, held in an exhibition space at its offices in Shirley, near Solihull, West Midlands, are vital to its operation. The twice-yearly womenswear show exhibits about 30 mid-market and contemporary labels.
Danny Saul, managing director of Frank Saul Fashions, which exhibits at the show, sums up the benefits for him. “Basically, you get paid,” he says. “You are dealing with the best retailers in the sector, with long histories, who are cash rich and successful. It’s a very straightforward way of doing business.”
West and Garner acknowledge that the downturn has created challenges for AIS’s members, including the collapse of some concessionaires earlier in the year and the stream of discounting and promotions from high street competitors. However, they both insist the independent sector is holding up.
Garner says: “They [indies, particularly indie department stores] have invested more in their businesses, and the succession for management at the businesses is clearer. More senior appointments are being made from outside but there is a high level of family succession at these businesses.”
West adds: “The profile of the product has become more contemporary. A lot of retailers were very, very traditional department stores and they’ve had to change to keep pace. They are a lot sharper about their customers now.
“There has been an impact from the level of discounting some members see at competitors. So we have been even more assiduous in negotiating discounts with suppliers. But our members have more of a point of difference and a superb level of customer service, and
a very loyal customer base.”
Who in fashion do you most admire and why?BW Vivienne Westwood is quirky and creative with longevity.
LG John Galliano. A great talent combined with hard work and determination.
What is the most successful product you have worked on?
BW The first own-label lingerie collection for Debenhams. LG That would be the first co-ordinating nightwear range I developed.
Which is your favourite shop?
BW MaxMara in Florence is shopping heaven. LG Henri Bendel in New York. It’s a must for shopaholics.
What has been the proudest moment of your career? BW The opening of the first Principles store. I was part of the founding team. LG Being given my first buyership was such a great feeling.
How did you get into fashion? BW I started at Marks & Spencer. LG As a temporary job to be in London where all my friends – and the parties – were. I worked with a great buyer and was hooked immediately.
What’s the biggest challenge for the independent retail sector at present? BW The high level of discounting on the high street. However, we have had great support from our suppliers. LG It’s the same for most sectors: how to grow your business in the current climate. But the independents have a great advantage; they have a point of difference in an otherwise very generic high street.
What would be your dream job if you weren’t in fashion?
BW Running a top-class restaurant. LG Working with dog whisperer Cesar Millan.
(Most recent only)
1997 Ladieswear controller, AIS
1995 Merchandise manager, Benson Shoes
1993 UK sales development manager, OshKosh B’Gosh
2003 Retail division and brand controller, AIS
1999 Product development, AIS
1994 Selector, AIS
1982 Lingerie buyer, Harrods