The head of fashion retail chain Glue has warned brands engaging in constant discounting they may be barred from appearing in any of the company’s stores, in a twist on the usual retail price maintenance debate.
Glue owner Hilton Seskin – who founded Rebel Sport and is also the chairman of the local Topshop franchise – says the company won’t be pursuing a multi-channel operation, instead focusing on the experience of the bricks and mortar stores.
“Once a brand gets into the spiral of discounting and just looking for sales, the value of the brand depreciates and we don’t want to be involved with brands that will be entering that spiral,” he told The Australian.
“They will definitely be reduced in our business, and if the performance doesn’t outweigh what they’re doing elsewhere then they will be dropped,” he said.
Glue sells a number of major fashion brands including Puma and Levi’s, and Seskin notes that the company operates online with the intention of driving traffic to stores.
While the warning may seem harsh, Retail Doctor Group chief executive Brian Walker says retailers need to pay attention to the value associated with their brands.
“I think he’s right when he talks about brand. Retail is very much about preserving the brand, and making sure the brand grows strongly.”
“Everyone talks about Apple, but the reality is they don’t discount. They focus hard on keeping the brand pure.”
The warning from Seskin is a twist on the usual price maintenance debate, with retail suppliers warning online businesses they must sell goods at a certain price in order to keep receiving inventory.
But Seskin said Topshop, which opened the first Australian store in December, would not be chasing a multi-channel strategy – a decision that has baffled retail experts.
“We are focusing very much on the bricks-and-mortar offering in Australia – there’s a lot of theatre and entertainment that goes on in stores, which is something that you can’t get online,” he said.
This comes after several major Australian retailers, including Myer, David Jones and Harvey Norman, have all announced they will be placing more emphasis, money and time into the “omni-channel” strategy.
Telsyte senior research manager Sam Yip told SmartCompany this morning he found it odd Topshop would want to “swim upstream”.
“You can’t fight against the consumer demand for multi-channel. They’re browsing online, purchasing online, and it’s all about accessibility.”
“You can’t fight consumers’ changing shopping behaviour. In the past two months we’ve seen all major retailers say the multi-channel retail operation is the way to go.”
Walker says he would caution that selling online shouldn’t necessarily be associated with discounting. And although he warns a multi-channel strategy is something he encourages retailers to follow, he acknowledges Seskin is making a good step in emphasising the quality of brands sold in both stores.
“We think brand quality should be maintained at all levels, whether it’s product, or service, or anything in a store.”
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
