Arcadia to impose discounts on suppliers
Sir Philip Green's Topshop to Burton Arcadia empire has contacted suppliers to inform them of its intention to impose a 2% discount on current and future orders from next month.
In a letter sent to suppliers the group's CEO Ian Grabiner said: "I know this is not news that you would wish to hear, but we have absorbed significant costs in technology, distribution and people [...] in order to remain competitive in the global market and we trust you will continue to support us," The Guardian reports.
The move follows a drop in profits at the group in 2016, following the collapse of department store BHS, and the appointment of advisers McKinsey to work on its strategy, in particular its online strategy. Accounts for Green’s holding company, Taveta Investments, which owns the Arcadia group, showed a 16% drop in profits to £211m in the year ending August 2016, along with a drop in sales of 2.5% to just over £2bn.
Since then Arcadia has made some key appointments at its flagship Topshop and Topman brands. Paul Price was brought in from Burberry to become CEO of both brands while David Hagglund, founder of a Stockholm-based creative agency which counts H&M and Hugo Boss as clients and a former art director at Vogue Paris, was appointed creative director across both Topshop and Topman,
Hagglund replaced long-standing Topman creative director Gordon Richardson and Topshop creative director Kate Phelan, who was also a contributing editor to British Vogue. Topshop's former managing director Mary Homer announced her departure last March to become CEO at fashion and lifestyle brand The White Company.
In a statement Arcadia, which also owns Miss Selfridge, Dorothy Perkins and Evans, confirmed the move to approach suppliers for discounts saying: “We recently asked our suppliers for a small increase in our discount terms. The cost of servicing and delivering to our customers through new channels is considerably higher than through the traditional retail market place.”
Arcadia is far from the only high street retailer to be feeling the effects of tough trading and highly competitive activity on the high street and online. Recent reports from New Look suggest it is considering closing up to 10% of its stores (a total of 60 stores), while Debenhams, House of Fraser and Marks & Spencer are all in the midst of turnaround and restructuring programmes.