Thursday, July 20, 2006

Consignment! The Dirtiest Word in the Business!

Consignment! What does that mean?

As a young designer just starting out and not really having a knack for the business side of the fashion industry it will be very easy to fall prey to this situation.

A designer will apporach a store, usually a very popular boutique, and set up an appoinmnet with the buyer.
at the appointment, much to the designer's delight the buyer shows interest in the line and offers "consignment". This usually means that the designer will leave some pieces at the store with absolutely no commitment from the buyer to purchase these items. In most instances, buyers will appear to be very excited, very reassuring that the line will sell and will mention or explain that once a month the designer will receive the check.
In many reported instances from designers in my community, this is hardly ever the truth.

In defense of retailers, there are some stores that will takes a new designers merchandise to give it a "chance" and test the market. A boutique will never have complete control on what sells and what doesnt, however they should know their general clientele.

As a designer in a situation where you are just starting out, try "consignment" in a few stores and don't sell anything, then the product might need reevaluation.

On the other hand, the norm is that high traffic, trendy boutiques will take "consignment" and actually move the product rather quickly!
I put 8 pieces of my line in a very popular store in Los Angeles. The pieces were being retailed for 4 times the wholesale price and sold out in about two weeks ( I later found out from one of the employees).
This store in particular has a "special process" that I had not been alerted to when I first handed over my line. Basically the designer had to call before 11am on tues, oh wait when I called on tues they said it was thurs, whatever.
Anyways the designer has to call in at the appropriate time & day to "schedule" an "inventory appointment" with the buyer. During the appointment with the buyer you will just walk around and try to identify pieces that you left are not on display and they paid off of that and the origianl xerox color copy they give you of the pieces when you drop them off.
That was insane, this high volume, celebrity filled store did not have a POS system or any time of inventory tracking! And it took me three months of stalking the buyer to finally find that out!

So one note to take from that type of experience and a word of advice to help avoid things like that, my mistake for not communicating properly...

1. Question the stores inventory process. Will your items be entered into their POS system and assigned a vendor code? Will their system be able to track the sales of your items?
2. How do they handle their accounts payable? Who is the accounts payable contact? Anyone who pays their bills on time will be very open and honest. Just remember any other type of business that conducts financial transactions with another company is required to provide trade references & banking information. (i.e. real estate, financial businesses).
3. What is the store policy on exchanges & returns? What if an item is damaged or stolen?
4. How often should non selling pieces be rotated?

If I would have thought to ask any of these questions that one day in my career where I let myself get excited about getting into such a "hot" store, if I would have thought more "business" than "prestige", I would have saved three months of headaches.


Anonymous Kathleen Fasanella said...

You have an awesome great post and nobody's commented on it? WTF?

Oh this is just ridiculous. Really RB, we have got to do something about this. You need more exposure, once the new site is set up of course.

How've you been sweetie? Hope the market went great for you. I look forward to catching up with you soon.

8:56 PM  

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