How to Sell to U.S. Department Stores

I went to see Mary Gehlher, the fashion director of Gen Art and author of The Fashion Designer Survival Guide, give a talk to the London-based Fashion Business Club with Imran Amed of the Business of Fashion blog. The fashion business club is a networking group for people trying to break into the fashion business. Although Mary's talk was primarily directed towards helping young designers, there were some bits of information on the workings of the U.S. department stores that I thought Fashion Inc readers might find interesting:

The main advantage of selling to a department store is that you can be in 40 locations overnight. But working with them is not for the faint of heart. For instance, most chains demand that the clothes be delivered ready to hit the floor -- on the hanger, with bar codes and price tags attached, on the specific day agreed, shipped by the specific company agreed. Any failure to meet these requirements will result in a charge to the designer.

When stuff in a store goes on sale, who do you think takes the hit to their profit margins. The retailers? Guess again. When goods are bought a sell-through (the number of pieces that will sell at full price) is agreed. Say it is 70 percent. If only 60 percent sells at full price, the designer is charged the mark-down on that last ten percent. Which means, of course, that a designer must do everything in their power to make sure the stuff sells. And sometimes it is pretty basic. Mary told a story of a designer who had a shipment delivered to Bloomingdales. He rang after the first week and asked the buyer how much had sold. None, he was told. He rang the second week, still no sales. In a panic he went to the store. He found that his rack of clothing was still in the storeroom. It was an honest mistake, but had he not visited, he would have been charged the mark down money at the end of the season. (Now you know why those vendors decided to sue Saks Fifth Avenue.

She pointed to Shoshana Lowenstein, Jerry Seinfield's ex-girlfriend, and Zac Posen as examples of how to best work the system. Both designers are frequently in the stores they sell to, meeting the sales teams, asking questions, talking with customers. It might not be their store, but it is their clothes and they responsibility for doing what they can to see they sell.

Although it seems all the power is in the hands of the stores, Mary urged young designers to negotiate on every point. Generally speaking department stores want 60 or 90 days to pay for a shipment. But Zac Posen's mom was able to get 50 percent of his order paid up front. "If they want the product bad enough, they'll make concessions." she said. And department store buyers want to see a designer fight for their territory. "They want to see there's a business person in the room, not a difficult designer," she said. It's not enough to say, "I want to sell to Barneys," she said. A designer should be saying, "I want to be on the 3rd floor, in the back next to Lanvin."

Because of the volumes involved, department stores tend to ask for a three to 15 percent discount. "They're always going to get it," Mary said. "But there's a big difference between three percent and 15 percent."

Mary also pointed out that this is a very connected business. But once you've attracted the interest of a store, it is in their interest to help a designer on all fronts. So ask them which stylists to ring to loan clothes to celebrities, which magazine editors would be most interested in the collection.

And, even if you've done all this, a store might decide to reject a shipment because they're having a bad season. They can reject a shipment for the flimsiest of excuses -- a pin hole under a color, say. If this happens a designer should do everything they can to avoid giving money back to the store. They should offer to fix it, ask for a credit towards the next season or ask if they can swap it between branches of the chain. And they should be very, very careful before deciding to do business with that store again.