A few months ago, I wrote about how Sears Canada has been trying to strong arm its suppliers following the appreciation of the Canadian dollar. Now the Globe and Mail reports that at least one major brand is pulling out of Sears as a consequence (Chanel to quit Sears in dispute over dollar, Jul 22):
Chanel is pulling its high-profile fragrance products from Sears Canada Inc. stores amid an escalating battle over the department store retailer’s efforts to claim a share of suppliers’ savings from the strong Canadian dollar.
Sears spokesman Vincent Power confirmed Chanel will stop shipping products to the retailer, saying the retailer’s discussions with its suppliers over the value of the dollar are aimed at lowering prices for Canadian consumers.
“We feel Sears’ role is to advocate for the customer with suppliers for lower pricing,” Mr. Power said in an e-mail. “We hope suppliers will agree with our request; that may not always happen. Our goal is to engage with suppliers in meaningful discussions that result in benefits for them and our customers.”
And Chanel may not be the only vendor to go:
Other suppliers are considering halting shipments to Sears in a bid to pressure it to drop its demands. Some stopped deliveries but started again after Sears shelved the matter, sources said.
“In four or five cases, people told me they will not ship to Sears until the matter is resolved,” said David Schachter, president of the National Apparel Bureau, which represents fashion suppliers. “The anger level of people who had money deducted is certainly increasing.” …
Sears’ demands for retroactive currency payments have raised eyebrows in the industry because they’re tied to contracts that are already signed and products delivered.
I must admit that I am a little dubious to the claim that Sears is just looking out for its customers as opposed to maintaining its margins. As long as the market is reasonably competitive, there is going to be pressure on Sears to sell Chanel’s products at a fair price. And I doubt that Chanel really wants its brands to be part of a price war. Chanel is probably happy keeping prices for its premium product relatively high even though it allows a modest windfall for those Canadians willing to cross the broader to shop.