With the end of yet another key Australian fashion agency, Status, Garland & Garland co-founder Phoebe Garland argues it's time for change.
In a shrinking wholesale market, the one area that needs to be revisited is the fashion agency agreement.
With so many chain stores, vertical operators and higher rents causing closure of many independent retailers, the wholesale industry is without a doubt a declining market.
More alarming, the ones that tend to be the most vulnerable are the middlemen i.e.: the fashion agents.
In the US it is standard for distributor agencies to charge a monthly showroom retainer fee as well having a 22 per cent commission structure.
I have also heard of Australian manufacturers having to pay for overseas shipping and all taxes and duties.
PR agencies also charge a retainer for their services plus other costs.
Commissions in the wine industry in this country start at 27.5 per cent, whilst we’re still earning draconian commission rates established 30 years ago.
The standard rate for agents is 15 per cent, 20 per cent for accessories.
So why are we so far behind?
Whilst the commission only agreement between a manufacturer and a fashion agency may have worked in the 1970’s when there were no chain stores and cheap rents, with a flourish of independents, it’s no longer a financially viable arrangement.
It is an area where fashion agents need to band together and get a better working model.
No wonder agents could work on a commission-only structure; you could almost sell anything to anyone back then.
My husband, who has over 40 years in the industry, said you wouldn’t even consider taking on a label that didn’t do a minimum of 100K in orders.
Fast-forward 30 years later, and it’s a very different story.
Simply, the volume sales for labels have shrunk.
Now retailers are inundated with so many labels each season that it’s fair to say the retailer is controlling the wholesale industry.
There is also an abundance of overseas chain stores, which make no mistake, are eating into the wholesale market, taking away that business from the independent.
We are also facing the flood of cheap imports and a very price pointed market.
The competition is fiercer than ever and, well, essentially, the business of launching new labels is no longer an easy task, nor has it been for quite a while.
Fashion agents are, and have been, notoriously at the peril of others.
The agency doesn’t get paid unless retailers pay, and they are also at the peril of manufacturers not delivering their orders in a timely fashion.
There are sizing problems and they face a huge risk of manufacturers using their client list for their business, only to have it taken away and placed with a competitor.
And in some instances no payment at all from unscrupulous manufacturers/distributors.
In essence, they have very little control over their businesses.
Whilst an agency can make good money long term from volume sales, it still relies on good payment from retailers, ethical and experienced manufacturers who can produce volume labels that get good sell-through consistently.
An agent’s business comes down to good will. Sadly, however, too often the good will is not always reciprocated.
A stricter agency agreement needs to be enforced to protect agents, with a monthly retainer for fashion agencies, as well as an increased commission structure on new labels with no existing client base.
This needs to be addressed in the industry to protect the agent. The grey area of confidentiality of client lists when a label moves agencies also needs to be looked at.
Fashion agents used to be represented by “The Apparel Agents Association”, which listed all agents and their labels.
However, there is a definite need for an industry body to be resurrected to ensure and regulate an industry standard agency agreement that is more relevant than the commission only structure today.
This would protect agents from unethical matters and ensure a smooth working relationship with their suppliers and retailers.
Whilst I am no fan of unions per se, this is an area that needs an industry representative.
It’s something fashion agents need to come together on to ensure an even playing field and to ensure manufacturers adhere to, and more importantly sign the agreements.
The amount of unsigned agency agreements is alarming at the moment.
Whilst manufacturers usually rarely speak to other manufacturers, as they seem to be fearful about giving away any competitive edge, agents do on the other hand, speak to each other and are usually in agreement about the backwards commission structure.
Whilst I am sure that any manufacturer/distributor who appoints an agent will be very resistant to a new way of doing business, I am sure that if the shoe was on the other foot and if the manufacturers/distributors were placed in such a vulnerable position, they would be interested in protecting themselves as well.