When the news broke earlier this year that eyewear wholesaler Dragon Alliance South Pacific had been busted by the Australian Competition and Consumer Commission (ACCC) for resale price maintenance, it may have come as a surprise to some.
However, for many in the TCF sector, it was just another day in operation – the real shock was that a case had actually been reported for once – an unexpected airing of the industry's dirty laundry so to speak.
This is an issue ACCC deputy chairman Peter Kell is familiar with, and he says while resale price maintenance occurs frequently in the industry, many stockists are reluctant to report incidents for fear of being black-listed by suppliers if they speak out – but it is a vicious circle that needs to stop.
“Resale price maintenance is prohibited by law under the Competition and Consumer Act, however, this conduct in general is invisible to the end consumer, so complaints are more likely to come from frustrated traders who want to have an edge over the competition,” he says.
“But some smaller traders might be nervous at times [to report on occurrences of resale price maintenance]. This is why articles which expose the issue are good, because they can see that this is an area that the ACCC is taking seriously and that there are benefits in coming forward.”
This dilemma for stockists under pressure is no doubt made worse by the trying times the retail sector is experiencing currently and, in researching this article, it became glaringly obvious that this topic remains taboo. Although a legion of suppliers and stockists, spanning designer apparel, activewear, denim and lingerie were contacted by Ragtrader, only one trader affected by resale price maintenance offered to comment, but on the guarantee of complete anonymity.
According to Kell, the rise of online shopping and the increase of e-stores cropping up is also further exacerbating the price fixing problem, as suppliers become more wary about their online stockists undercutting their bricks-and-mortar customers.
“While this is an area where the ACCC has taken a range of actions over the years in relation to a wide set of products, it's become an interesting issue with the growth of online traders,” he says.
“The ACCC has received complaints from online traders about this sort of activity and we are certainly alert to the possibility that some suppliers may, in some cases, be uncomfortable with the lower prices that can be available online.”
One e-boutique operator, who asked to remain anonymous, says she has experienced pressure from suppliers to stick to the recommended retail price (RRP) and agrees that there may be a bias emerging from suppliers against online retailers.
“I think online stores are much more visible than bricks-and-mortar stores and I think that draws more attention to online boutiques. I suspect that there are many bricks-and-mortar stores who are struggling to catch up to what is happening in the online environment and they feel that they are being left behind and one of the ways that they can exert pressure on their suppliers is to complain about online store pricing, and this happens regularly,” she says.
“It [resale price maintenance] is an issue which is rife in the industry and it has happened to me, although I myself haven't complained because I would lose all my suppliers. And while I can understand why brands act to maintain a RRP, I think it's unethical that brands seek to fix a price for certain retailers where they might not be applying those terms and conditions to other retailers, such as online.”
In her experience, she says resale price maintenance occurs after placing an order via invoices which contain terms and conditions stating that “certain items are to be sold at recommended retail price, and online stores are not permitted to put it on sale prior to end of season sale period”.
Darlene Gianoli, owner of e-boutique Style Palace, adds another point of view and says that while she hasn't experienced problems with her suppliers, she can understand why suppliers and physical outlets in some cases may hold a grudge against e-tailers.
“To start, I think online has created a problem for bricks-and-mortar stores. I've started online, but I've got friends that have got boutiques and it is a problem for them – their sales are down,” she says.
“The main problem for bricks-and-mortar stores is that girls are going in, trying things on and then going online and buying items a lot cheaper. Then, because they are buying them a lot cheaper online, all the e-boutiques are forced to go on sale earlier, and that is the problem for the designers/suppliers. So it's a domino effect.”
It's certainly a multi-faceted issue, but with the ACCC on the war path, Ragtrader's anonymous e-boutique source says retailers of all types best keep their wits about them to avoid any trouble.
“A lot of smaller retailers just don't have the leverage to negotiate the kind of terms they want to – they're stuck between a rock and a hard place, but I think you have you have to be savvy and avoid putting yourself in a position that is unlawful – because that is effectively what price fixing is,” she says.
“It's called recommended retail price because it is recommended. Having seen the recent case of Dragon Alliance I think it is also an issue that the ACCC is more concious of now and I think that we as retailers need to be very careful in not agreeing to terms that could put us at risk of being part of a fashion industry price fixing scandal. Because that's just not going to be good for anybody's business.”