The Designer-Retailer Friction Edition

Louis here. I’m just back from Paris Fashion Week.

Why is this interesting?

Because every night, after a few drinks at various gatherings, I unexpectedly found myself in the same conversation with different designers. I’ll keep them anonymous to protect their businesses, but the gist was this: These days, selling to the major online multi-brand retailers—your SSENSEs, your Farfetch’s, etc.—can be both a blessing and a curse.

The blessing, of course, is the legitimacy that comes with having your clothes on their platforms, not to mention the financial support that comes from their orders.

But the curse is that some of their practices can have the unintended effect of killing the same small brands they’re trying to support.

For one, there’s the constant stream of sales events these retailers’ customers have become used to. And when these stores discount your products long before your independent stockists can afford to, suddenly the online customer, comparing prices on Google search results, feels like a schmuck for paying full price with the indies. This means your product—still listed for its full RRP everywhere else—doesn’t move anywhere else, and those relationships suffer.

The second issue is that one season’s major order can easily be followed by a pull-back the next. But in the meantime, to hit those initial order totals, you’ve scaled up your business to accommodate the production needs. Maybe you’ve hired staff, maybe you’ve committed to a contract extension with your factories and suppliers—whatever it is, if the next season’s order isn’t as large, you’ve suddenly now got to find a way to pay for your enlarged operations.

Which brings us to another sticking point: Payment terms. The bigger and more influential the retailer, the more power they have to pay you at the time and speed that works for them. Oftentimes, for cash-strapped independent designers, this eventual date comes far too late—and loan interest and debts have grown in the meantime.

But the designers aren’t sitting idly by. They’re noticing these issues, and considering whether to accept these major orders at all. It’s a risk, certainly. But a few are deciding it’s less risky than the threats outlined above.

And to be clear, the retailers have cause for concern also. Ultimately, they need access to the best designers in order to stay relevant and maintain their cultural cache. My (probably naïve) hope would be that both sides can come together to draft new contracts that work for everyone. Fewer sales events, potentially, or multi-season commitments, or locked payment dates. This industry’s been around long enough that there are probably plenty of reasons these aren’t done, but I’m curious to see what happens if this uneasy status quo rumbles on. (LC)