EDITOR’S VIEW: HOW LONG CAN VENDORS WAIT FOR PAYMENTS?
Everyone’s talking about last week’s letter from Marc Metrick, CEO of Saks Global Operating Group, to their vendor partners. In it, Metrick outlined a payment plan that asks vendors to continue (or resume) shipping goods while waiting for payments that are long overdue and not about to happen anytime soon.
For the most part, the December announcement that Saks’ was acquiring Neiman Marcus Group was welcome news (albeit a bit sad, since many industry insiders and upscale shoppers were hoping that the legendary Neiman Marcus could pull through on its own). Still, the economies of scale afforded by joining forces should ultimately mean a healthier bottom line for all three luxury behemoths.
In his letter, Metrick refers to the difficulties of navigating “a complex integration process” and states that “As a newly combined company, we have set out to change how we operate, breaking the traditional multi-brand model to drive growth for Saks Global and our brand partners.” As far as I know, there’s been no specific info on how the traditional multi-brand model will change, leaving vendors concerned about the efficacy of the plan.
And even more concerned about getting paid! According to Metrick’s letter, all purchase orders will be paid (by wire) 90 days from receipt of inventory; past-due balances (based on previous terms) will be paid in 12 installments beginning in July 2025.
Is this too many months for brand partners to wait? Might it not make sense to pay them something upfront before threatening to change the matrix?
Make no mistake: I’m rooting for this acquisition to succeed. As editor in chief of MR for the past 35 years, I’ve worked with so many wonderful merchants at Neiman’s, Saks and Bergdorf’s, from Stanley Marcus, Derrill Osborn, and Russ Patrick to Phil Miller, Tom Ott, Louis DiGiacomo, and Bruce Pask. (A favorite memory: I met with Stanley Marcus shortly before he died; he was doing a book signing at the NYC Oxxford store and asked me if I thought the pinstriped suit he was wearing was perhaps a bit too bold, as suggested by his wife back in Dallas…Such a lovely man!)
Saks Fifth Avenue, Neiman Marcus, Bergdorf Goodman: may you be fair to your vendor partners and live happily ever after!
Karen, I’m so happy to see you write about this. I’m surprised there aren’t any comments yet. Perhaps like I did, people are sitting on it for a bit to be more thoughtful in a response. The repercussions to retail for not paying their brands – deciding to use their brands as banks if we’re honest – is that eventually those stores won’t get the best selections of their brands or even the best brands. Play that one out.
And, when retail stores decide the brands are the last to be paid, they are indicating that the risk of losing that brand is worth it. In this deal, ‘keep shipping us’ and we hope to pay you, says ‘we matter more to you than you do to us’. What about the margin guarantees in their contracts? What about their chargebacks? And all the other clawbacks? How does all that play out if the brand decides not to ship now?
It would be great if they would show their side of ‘partnership’. Brand partnership matters…it’s the long play, but it matters in specific moments like these as well. I hope they’ve got good will in that partnership bank as they go through this acquisition. I’d like to see it succeed as well.