I O U

The recession has spawned many dicey situations—between coworkers, friends and family members. Thanks to the lack of cashflow, the relationships between retailers and wholesalers (not to mention reps) could be quite frayed at this point. I heard one manufacturer say that she has 150 accounts that owe her money. Ouch. While it’s a given that if product doesn’t sell, stores are cash poor, I wonder how these sticky situations are being handled—professionally or unprofessionally. Even before the economy went south, reps and vendors would tell me about retailers who either skipped trade shows or dodge certain aisle to avoid coming face to face with a company they owed money to. Then as things started to slide, tales of unethical behavior began to mount. Today’s New York Times has an article about one Chicago store’s bad times that lead to bad blood with designers who where previously adoring. As it’s told in the story, the shop owners waited way too long before coming clean on their business difficulties, which only got them in deeper. It’s scary times. And it seems these two opted for the head-in-the-sand method, which so often turns out to exacerbate rather than ameliorate problems. Using this as a cautionary tale then, what’s the best way to deal with the fallout when consumers are no longer interested in consuming? At what point do retailers owe vendors a full accounting? And ultimately, will full disclosure help salvage the relationship?  

(And yes, I realize that though this story deals with retailers owing manufacturers, there are many wholesalers in the same spot with their factories and suppliers. And so it goes…)