Clinton Cards to go in to Administration?
Just a few years ago Clinton Cards sat astride the uk market for greetings cards like a Goliath and it seemed as if it would be there for ever.
It had almost 1000 stores and had also bought the Birthdays chain to add hundreds more stores.
Yet it now appears that it may be forced in to administration by its largest supplier, American Greetings. It made a loss of £3.7m over the 6 months to January 2012 and it did not believe that things would get any better during 2012.
I have commented before about Clinton Cards as I believe that their buying choices have been driven by their terms and conditions rather than by product. Not only does this means that their choice of products is narrowed significantly, but also how can the supplier afford Clinton's T+Cs without it impacting on the quality, design and material of the product?
I am not talking about cards as I have no knowledge of this market, but the gifts which must make up a vital part of Clinton's sales.
And if you think I am being a bit harsh here are the terms and conditions quoted to me by the Clintons buyer when we talked in 2009
Standard terms are
Advertising contribution: 2%:this is off cost of orders per annum – this is used for radio advertising/local press, mainly surrounding seasonal times .is not product specific and is more about promoting footfall at key seasonal times i.e mothersday
Exit strategy :SOR or a supplier writedown contribution to half price at the end products life for an agreed period. Assume 2-3 weeks then supplier uplift of remaining stock or write off in store. e.g if 10 items left in stock and original cp is £1.00 funding is for 50p x 10 items.
All lines epos bar coded and pre priced
Prices quoted to be inclusive of direct to store delivery.
We walked away at this point as we couldn't see how we could make a profit on direct to store delivery with no delivery charges,especially since they wanted a discounted price based on volume.
It also made us laugh that if they decided to discontinue something we could feasibly be paying Clintons clearance before they had paid us for the product!
Compare this business model to Cath Kidston where the product is king. First and foremost they decide whether the product is right for their stores and customers, and this is the most important decision. Sales are booming even in this recession.
I have every sympathy with the employees of Clintons who I am sure work very hard and are now facing a horrible uncertainty about their future. However I think that if you have a business model where you sell based purely on price you need to be good at it! The various pound shops do very well because they have a clear cut strategy on what their customers want.
If you are trying to sell gifts and cards then the product should be King.
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