Arcadia Group to squeeze suppliers for greater discounts

Arcadia Group, the parent company of brands including Topshop and Miss Selfridge, is imposing tougher payment terms on its suppliers.

Arcadia wrote to UK suppliers this week informing them it will require further discounting starting from the end of this month, The Daily Mail reported.

They will now receive lower payments for items they have already committed to produce, tantamount to a retrospective price cut. Arcadia already expected some suppliers to give it a 14.25 percent discount on their bills. It is now forcing them to give it a larger discount of 16.25 percent.

Arcadia said the additional discount was needed to pay for extra investments connected to “13 years of developing our various brands in a continually changing global market place”.

Arcadia imposes tougher payment terms on suppliers

Large companies and brands often squeeze the margins of their suppliers, sometimes simply because they can. Factories and fabric suppliers cannot afford to lose bulk and large volume orders, and so they are begrudgingly forced to accept the new terms. There are always other companies that will gladly accept such sizeable orders for smaller margins.

Similarly, factories can play the same game. They can change a sewing price at the last minute, increase their margins, or refuse to make the goods, which of course when you have the shelves in your store to fill is not an option, and so these increases are also begrudgingly accepted.

Ultimately, you have to be selfish and cut-throat to be successful at retail. If the bottom line is profit-driven, a certain ruthlessness will be required. And Arcadia appears to have no issue forcing additional discounts.

Image: Arcadia Group, Miss Selfridge