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Sale or Return: the great debate

I am starting this new blog with a topic of great debate, an industry hot potato, and a subject that divides the jewellery industry like no other…

Sale or Return (SoR) / consignment / memo / apro….. whatever the term you use, it means the same thing, jewellery that is given to retailers that is not paid for until sold, at the expense of the designer.

Now there are two sides to this argument (and to be fair I can see both of them):

From the retailer’s corner, new designers often graduate from college with great pieces that from a design perspective may have the wow factor, but on a wearable and commercial level, noone in their right mind would buy. So retailers often have to work with these designers to hone their skills and develop the commercial element that will make their collections sellable.

This can often be time consuming and stressful for the retailers. These retailers are regularly taking a risk and giving these designers their first chance, where other retailers would not. So it is understandable that they would want to minimise the risk and work on a SOR basis.

Young graduate designers enter the professional world with little or no idea about how the “system” works and are often totally unprepared, lacking the basic tools needed, quite often having nurtured their design ability and creativity, with very little understanding of margins, mark up, production and marketing. They tend to be lacking in a focused strategy of where they want to go and how they intend to get there. Again this can be time consuming for a buyer working with a designer that doesn’t know the ropes, especially when they have many other designers to deal with and deadlines need to be met within the seasonal cycle.

SOR can also a good way of giving a designer an opportunity to launch without the financial risk on the retailer. It gives the designers a foot in the door and an opportunity to sell where conventional retailers would not necessarily even give them an opportunity.

From the designers perspective, SOR can be very difficult to manage and costly, requiring them to keep producing stock for retailers that is not paid for until it has been sold. It means deep pockets are needed to put the investment into production and stock upfront, with no guarantee of sales.

There have been many horror stories of retailers abusing SOR terms where designers are not paid of long periods of time, or stock is damaged. This gives the SOR process a negative reputation and can leave a nasty taste in the designer’s mouth.

Whatever your position is on this great industry debate, one solution is to find some middle ground and work with the retailers to negotiate a solution that benefits both parties. One approach that has often worked is to meet half way, a possible solution is for the designer to provide some stock on SOR and some stock is paid for, this goes some way to show a commitment by the store to the designer and vice versa.

Readers' comments (1)

  • Lets be honest , retail is finding it tough .As a retailer I have a limited budget and need results from any spend . With the massive overheads I have i need the incentive of sale or return to run a new product.

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