Nick & Nora: chargeback casualty

A little bird tells me that Nick and Nora, the 20 year flagship manufacturer of high quality ladies pajamas will cease production of the popular product line which is mostly sold in department stores. Little bird stresses the line is both profitable and popular but that the company has become fed up over department store chargebacks to the extent that they no longer choose to manufacture it. As I wrote in the entrepreneur’s guide, department stores are not the choice vendor accounts they once were. 10 years ago, stores withheld payment on invoices for 60-90 days while today it seems most stores are holding paper for 6 months.


In a NYT article published yesterday, Stores and Vendors Take Their Haggling Over Payment to Court details that chargebacks have become such a problem that the Securities and Exchange Commission and the United States attorney’s office is investigating Saks for violations. Last week, Saks -which has admitted it has “overcollected” chargeback fees from manufacturers- fired 3 executives for what was described as kickbacks.

I doubt that consumers are aware just how much chargebacks have limited their clothing choices. With the current system of department store fees and penalties leveled against manufacturers, wholesale pricing has to be higher to cover the arbitrary discounts that stores take for themselves. For example, it’s common to offer discounts of 2 to 8 percent on invoices paid within 10 to 30 days but stores are paying in 5 to 6 months and taking the discount anyway. While it seems that the number of manufacturers who have sued their customers seems to be increasing, it’s difficult to know the exact figures as retailers are settling out of court with non-disclosure a condition of settlement. The situation for many manufacturers has been to see their invoices reduced by half.

I don’t understand why stores are cutting off their noses to spite their faces when mall traffic continues to fall and department stores are fighting neck and neck to get people into the stores (see TV, blogs, girlie-girls and call of the mall). With the only products available there (push manufacturers) the range of product fit and styling continues to degrade. Hopefully stores will realize that chargeback fees will become untenable for their domestic manufacturer suppliers before it’s too late.

For all of you my advice remains unchanged except that I’d strongly suggest you read Paco Underhill’s Call of the Mall and Why We Buy: the Science of Shopping. Department stores and malls, while prestigious for a new line, are not the selling venue they once were and haven’t been for a long time. Pull manufacturers (DEs) should stick to smaller specialty and boutique stores. You do not need a customer who can’t cover their invoice between delivery and 30 days.

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10 comments

  1. Josh Latham says:

    My intuition from the start has been to sell on the internet, forgo the sales rep, and push your clothes to small boutique stores directly on my website in conjunction.

    I must vent something here, as it’s the only place I can talk about my toils of sewing and hope to have someone listen. I smashed my finger when helping my mother hang window trim Saturday. The thing swelled up like a blue egg on the end of my finger. Well, that night my whole arm throbbed (not just the finger) so bad I couldn’t sleep. I “woke up” in even worse pain. I had to sew anyways. There is no, well geez I can’t sew today. I have to get a certain amount done each week. I can’t tell my boss that I had a bruised finger and couldn’t finish my expected quota. I had to lift each fabric peice making sure not to bump my finger, which is throbbing despite the many tylenol I took. It’s just now returning to normal. It’s been a week from HELL. I’ve smashed my finger before, but this time has taken the cake. I’ve never been in so much pain. You don’t realize how you use each finger in the process of sewing until you lose the ability to use one.

  2. kathleen says:

    Boy, funny you should mention that. The reason I haven’t been blogging is due to injury, going on for about 3 weeks now. I’m reading on the web, just not typing much. My right arm falls asleep all the time now, this can’t be good (although it doesn’t hurt much, there’s that high pain tolerance thing I have, also not good).

    Have you ever sewn through a finger? Ugh, I have. And once on a dundering old Adler walking foot on some embossed calf skin, it was totally inconvenient, totally. I was trying to finish this 130 unit lot for an 8AM delivery and sewed through my right index finger –and of course, made that mistake that every stitcher, everywhere, every time makes, to try to pull my finger out of the way at the last second, miss, than then rip the whole top of the thing open. ack. messy too. I did that when I was sewing that lot, I was in Capitan NM (pop 800, elev 6,000) and the closest medical attention I could get was from the county vet -who most emphatically, as she assured me later- wasn’t licensed to sew up people. She did it anyway and showed me how too. I started keeping suture kits on hand after that considering the local medical infrastructure, the closest hospital being over an hour away under ideal weather conditions, lol. Believe me, I never ever thought I could sew up anybody but it does -has- come in handy.

  3. Josh Latham says:

    I have sewn through my finger twice. The first time was the worst. I was about 13 years old and had just begun working on a straight needle machine. A loud, old, ominous, black Singer that look like something that ate little children for lunch lol. I had only sewed on a three thread serger (the beautiful Mark 5 Union Special) up until this point. My job was to insert zippers into the front of coveralls, helping my mother out with her deadline after I got home from school. I had not yet learned how to control the machine yet and my first attempt at sewing a straight line at 4,000 stitches a minute was horrible, it was more of a zig zag. I broke 25 needles learning because I ran into the zipper ends. Eventually the machine ate my finger, right on the top, crunching into the nail and splitting it open, leaving half the needle inside my middle finger. It had to be pulled out with sewing tweezers. I really had to force myself to continue after that because I feared it happening again. And I was very careful afterwards and never did it again until a few months ago. But not as severe. Luckily it was the very tip of my finger. It didn’t phase me.

  4. Cinnamon says:

    I dreamt so many times that I had sewed through my finger. It’s like my unconscious mind rehearsed all the different scenarios. I would wake from each of these dreams shaken. But then I actually did sew through my finger while attaching a zipper and instead of freaking out, I calmly turned the crank to raise the needle. Then I freaked out.

    It was very painful, but I was almost grateful for all of those rehearsal dreams. Haven’t done it since. Yet.

  5. Christy Fisher says:

    On the chargeback thing:
    I was stiffed by Macy’s South for THOUSANDS when they went bankrupt in the 80s (funny how the big guys can reform, merge, and keep on going while leaving us little guys in the dirt).. I was part of a class action settlement and 4 years later i received something like 9 cents on the dollar of what I was owed. I had put most of my eggs in that big basket and needless to say, I went out of business for awhile because of it. (Wound up teaching design and merchandising at a college for awhile.. I used to – and still do – PREACH about the necessity to not get glammed out by the big names. the big guys for the most part will take advantage of you financially- and it’s nothing personal (as the Don says).. it’s strictly biz and that’s the way they operate.
    I couldn’t care less if I ever sell to another major in my life.
    I make my moola from the small boutiques..
    I don’t even like to deal with chains of more than one or two “sister stores”// after one or two, the buyer is too far removed from the accounts payable department.
    Lessons learned.

    ..oh.. my first “sew through” was a stint at the serger around 2 AM one winter night and the knife took off my fingerprint..huge slice.. I went to the fridge, stuck my finger in a jar of honey (my roommate said it had healing qualities), set the removed slice back where it looked like it belonged, wrapped the concoction in a bondage of muslin scraps, took an advil or two, and kept on going till the end of the run ..
    ..had to ship the next morning.

    We are all bozos on this bus.
    It’s an insane business..

  6. La BellaDonna says:

    Ugh. Twice bitten by sewing machines: once through the finger, once through the nail AND the finger. And burning my fingers, and having to work (inspired, I swabbed the burned bits with Ambesol. I have also used Chloraseptic spray.). And with broken fingers (and one of the breaks took off the end of a fingertip). And with a broken arm. Ugh, ugh, ugh.

    If your right arm is falling asleep, it sounds as if you have a pinched nerve in your neck. Do you have a chiropractor whom you trust? It would be worth a visit. Or two.

  7. J C Sprowls says:

    On sewing thru fingers… twice, personally.

    The first was during a rush in the costume shop. Someone had played a Hallowe’en prank and stole all 8 of the female costumes for a show we were producing 5 days later.

    Although I was pretty pleased with myself for getting the cutting & sewing rooms on track (and, pissing off the designer ). I apparently got too full of myself.

    I was trying to push the 20U33 Singer a little too hard when setting princess seams into the bodices, when I stitched right through the index finger of the left hand. The needle didn’t break, so, I had to rip down that section of the seam to remove the top and bottom layers of the garment from my finger (it was a finger sandwich). Very little blood got on the garment; but, the geyser started after I pulled the threads out.

    And, the second time was shortly after I bought my Husqi. One of the key selling points of this household machine is the needle will “penetrate anything”. Well… it does. It absolutely insists that when the needle starts its descent, it will complete the stitch, regardless the obstacle, including the index finger of your left hand.

  8. steve says:

    Has one heard from Josh Latham?? I’m an old friend trying to get in contact with him again. I’m hoping that this is the same Josh

  9. PamelaG says:

    Oh yeah… I was repairing some clothes for my ROTC gung-ho military type boyfriend in college. Put the needle right through my index finger while threading it.

    I called him in to get him to help remove it. He took one look, turned white and asked, “Uhhhh… can you take care of that?” He turned on his heel and dashed for the door, after which I heard a loud CLUNK in the hallway.

    When I finally got myself sorted out, I went to see what had happened. He’d passed out cold. Tough guy.

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