Clothing Vendors Take Chargeback Hit
The reality is this: large retail chains hold most of the
cards when dealing with designers of clothing and accessories. As a Crain’s
New York Business article
points out, retailers are levying all types of chargeback fees, legitimate
and questionable, and there is very little that most suppliers can do about
it other than go along.
Vano Haroutunian, a lawyer with Ballon Stoll Bader & Nadler,
said chargeback fees accounted for roughly five percent of yearly sales for
the firm’s clients 10 years ago. Today, that figure is roughly 20 percent.
"These costs have gotten more onerous," Mr. Haroutunian told Crain’s. "Retailers
are charging back for anything they decide they want to take from vendors."
Schlacter, another lawyer who represents manufacturers, said, "Vendors
are very frightened to talk about it because they might antagonize retailers.
If you don’t play ball with them, the retailers won’t do business with you
in the future."
Retailers dismiss many of the complaints about them arbitrarily
taking deductions from suppliers.
"Our vendors know that we are always willing to discuss our common goal
of getting floor-ready merchandise into the stores in an agreed-upon time frame," an
unidentified Macy’s spokesperson told Crain’s. "Our policies on
vendor chargebacks are well-known to our suppliers."
Discussion Questions: Are retailers imposing what amounts to frivolous chargeback
fees on manufacturers? Is the practice becoming more common as alleged by some
in the Crain’s article? What can vendors do to avoid being hit with undeserved