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CPSIA: The effect on retail stores
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Esther
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PostPosted: Mon Jan 05, 2009 2:31 pm    Post subject: Reply with quote

Chargebacks, whether a part of the original agreement or not, are just the cost of doing business with the big guys.
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J C Sprowls



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PostPosted: Mon Jan 05, 2009 2:31 pm    Post subject: Reply with quote

No, the lesson is to know your industry and to do your best to grow with some sort of strategy. IOW: all accounts are not good accounts; and, all accounts are not appropriate for where you are in your business's development.

If you have demonstrated and consistent cashflow, you look good to factors. And, if you plan to go after a larger retailer's door, you should seriously consider having a factor in your pocket, first.

As with all things, there's even a hierarchy among factors (e.g. CitiFinancial isn't going to get your back; but, a larger factor, like Credit Lyonnais, will).
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Kathleen F.
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PostPosted: Mon Jan 05, 2009 2:46 pm    Post subject: Reply with quote

J C Sprowls wrote:
If your friend had a factor all she'd need to do is forward that letter to the factor's office and they'd call Red Envelope and inform them of their commitment.

Actually, if she had a factor, she likely wouldn't have gotten a letter at all. Even if, she could safely ignore it. Factors deal with this stuff, that's why you pay them the big bucks.

Quote:
A DE one of my contractors works for told me that Barneys tried to reduce their cutting ticket with her after her order was cut. She simply forwarded the letter on to her factor who promptly informed them that the PO was binding and they expected payment by the due date. Barney's backed down and agreed to the PO as it was submitted.

This is a different matter altogether because Barney's wasn't invoiced for product delivery yet.

Quote:
And, if you plan to go after a larger retailer's door, you should seriously consider having a factor in your pocket, first.

You really can't sell to big box stores without a factor but that does NOT mean I recommend getting one. Not typically anyway (vesta got a deal). If you find yourself at this juncture, you have to rethink your whole direction and strategy. If it were *me*, I'd deliberately limit my growth to stores such that I wouldn't need a factor. If it were obvious that my line were outgrowing me, I'd sell it, let someone else take it on and start something new.
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Vesta
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PostPosted: Mon Jan 05, 2009 5:07 pm    Post subject: Reply with quote

Listen to these people. Playing with big stores is not fun, not satisfying, and not easy. The additional operational costs and business complexity are onerous. Ick.
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Miracle
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PostPosted: Mon Jan 05, 2009 7:01 pm    Post subject: Reply with quote

Vesta wrote:
Listen to these people. Playing with big stores is not fun, not satisfying, and not easy. The additional operational costs and business complexity are onerous. Ick.


Are you open to discussing this in sales and marketing? I'd love to ask you a question about it.


Quote:
On a similar note, a friend recently had Red Envelope write her a letter that said "due to lackluster holidays sales, we will be paying your invoice at 90%." They just gave themselves a 10% discount on a purchase order that was delivered within the specified terms. A purchase order is a legal contract.


Been reading WWD and apparently this is happening across the board. I wish I could do that.
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annika
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PostPosted: Mon Jan 05, 2009 8:40 pm    Post subject: Reply with quote

A year ago, I probably would have thought "success" meant getting in Target but I have realized that is not necessarily the case, and have certainly learned that not all accounts are good accounts (even ones that order a lot). I also used to push for or hope for things to happen that had they come to pass they probably would have killed me. I have no desire to get a factor now and I have deflected requests for international distributorship contracts until such time as I feel more confident that my production capacity and speed is where it needs to be. What astounds me about this stuff is that is strikes me as so slimy and yet it seems par for the course. I am not naive and certainly not uncompetitive but there are some things I wouldn't do just because I could. At least I like to think so.
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Vesta
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PostPosted: Tue Jan 06, 2009 2:18 pm    Post subject: Reply with quote

miracle wrote:

Are you open to discussing this in sales and marketing? I'd love to ask you a question about it.


Sure.
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Kathleen F.
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PostPosted: Fri Jan 09, 2009 12:48 pm    Post subject: Reply with quote

I was sent a link to a position paper from Earnshaw's. Bad bad bad. They're basically recommending that stores ship everything back.
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J C Sprowls



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PostPosted: Fri Jan 09, 2009 1:08 pm    Post subject: Reply with quote

And if they don't have an RA#, the mfg can just refuse the shipments and congest the system for a while. Bedlam...
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Kathleen F.
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PostPosted: Mon Jan 12, 2009 8:42 am    Post subject: Reply with quote

Moving more entries:
Aria wrote:
...will she risk being fined simply for selling items that aren't certified, or will someone have to buy an item and have it tested as unsafe in order for the her to be fined?


Kathleen F. wrote:
Please see this entry for more information:
CPSIA, Denial and Retailer’s Liability

If that one doesn't help, here's a complete list of entries:
//fashion-incubator.com/archive/cpsia-please-take-the-economic-impact-survey/


Guest wrote:
I'm trying to figure out whether or not this means a retailer will get in trouble for selling things that don't comply with the lead and phthalate levels or just certification. I can't find anything in those links to clear that up.I'm trying to figure out whether or not this means a retailer will get in trouble for selling things that don't comply with the lead and phthalate levels or just certification. I can't find anything in those links to clear that up.


Kathleen F. wrote:
Seriously? How did I fail to make it clear?

I would amend my entry by saying I wasn't trying to be quarrelsome. I genuinely want to know how I failed to make this information clear.
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SarahJ
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PostPosted: Tue Jan 13, 2009 1:54 am    Post subject: Reply with quote

I have found this point pretty much unclear everywhere, actually. Kathleen, I read your post more than once (I am not a retailer, or a manufacturer, but a close friends owns a retail store that is vulnerable) and to be honest, it was not clear to me from your post whether you think noncompliance means "without certification" or "over the legal limits".

I read one legal opinion (from law360) that defined "noncompliant inventory" as product that actually did exceed the lead limits, but I also see people implying that simply not having a certificate would put you at risk of jail time and/or fines.

I have read the relevant sections of the law (I had to go to the unofficial amended version, dated Oct 2008, in order to find section 19 which breaks down all violations) and it says that it is a violation to sell items that are not in conformity with applicable safety rules and standards BUT that you will not be in violation if you hold a certificate of testing OR have been assured by the manufacturer that these rules do not apply to the item in question. Which says to me that if you do not hold a certificate, but you have a lead free item, you will not be fined or criminally charged. But then it says that if you don't produce your certificate you will be in violation (which makes no sense, because if everyone has a certificate, why do they need to point out that any rules don't apply to everyone with a certificate?) So, still unclear.

Here's what I'm looking at:

Quote:
SEC 19
(a) It shall be unlawful for any person to—

(1) sell, offer for sale, manufacture for sale, distribute in
commerce, or import into the United States any consumer
product, or other product or substance that is regulated under
this Act or any other Act enforced by the Commission, that is
not in conformity with an applicable consumer product safety
rule under this Act, or any similar rule, regulation, standard,
or ban under any other Act enforced by the Commission;


Quote:
(also from Sec 19)
(b) Paragraphs (1) and (2) of subsection (a) of this section shall
not apply to any person (1) who holds a certificate issued in
accordance with section 14(a), [15 U.S.C. § 2063(a)] to the effect that such consumer product conforms to all applicable consumer product safety rules, unless such person knows that such consumer product does not conform, or (2) who relies in good faith on the representation of the manufacturer or a distributor of such product that the product is not subject to an applicable product safety rule.


Quote:
SEC 19
(a) It shall be unlawful for any person to—

(6) fail to furnish a certificate required by this Act or any
other Act enforced by the Commission, or to issue a false
certificate if such person in the exercise of due care has
reason to know that the certificate is false or misleading in any
material respect; or to fail to comply with any requirement of
section 14 (including the requirement for tracking labels) or
any rule or regulation under such section;


I'm thinking noncompliance=no certificate, but I certainly see why people could think it means no lead. I'm assuming you think it means no certificate? Am I right?
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Kathleen F.
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PostPosted: Wed Jan 14, 2009 10:30 am    Post subject: Reply with quote

Moving entries
ShariB wrote:
I know there's lots of talk about sending inventory to congress etc...but realistically, how are you all preparing for Feb 10? Every item in my boutique is for kids 4 and under...do I wait to see if something changes before Feb 10? Or should everything go 70% off, 90% off etc...just to move it? Or are you all thinking of donating it for a tax break? We're a small boutique with small quantities and realistically cannot get our manufacturers to accept returns. We're also just 5 months new without long standing relationships with our manufacturers.
Just wanted to know what other retailers for kids items are planning to do before the big day gets here in just a few short weeks? I was thinking of doing XRF but now understand toys need pthalate tests too by Feb 10, so not much point in doing XRF on winter clothing that is almost out of season...
I had an idea to try and sell my stock to a Canadian boutique if they are interested...that seems like it might work, but might not be easy to find. Trying to be solution oriented in this thread...so please, let's help each other out!
Shari
happychickadee.com
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Kathleen F.
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PostPosted: Wed Jan 14, 2009 10:36 am    Post subject: Reply with quote

ShariB wrote:
Or are you all thinking of donating it for a tax break? ...I had an idea to try and sell my stock to a Canadian boutique if they are interested...

There's a lot of people trying to unload product now. I'm getting a lot of email about it. Whatever you do, you have to do it before February 10th because after that, it will be illegal to donate or export product. Sorry!
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Vesta
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PostPosted: Wed Jan 14, 2009 10:38 am    Post subject: Reply with quote

SarahJ wrote:
I'm thinking noncompliance=no certificate, but I certainly see why people could think it means no lead. I'm assuming you think it means no certificate? Am I right?


Isn't this pretty straight-forward?

Quote:
SEC 19
(a) It shall be unlawful for any person to—

(6) fail to furnish a certificate required by this Act
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Lisa Bloodgood
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PostPosted: Thu Jan 15, 2009 11:31 pm    Post subject: Reply with quote

If stores send everything back, they won't have any inventory. No one will shop there and they won't be making any money on selling their stuff. They'd have to close. More jobs lost. Ugh!
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