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Vendor Group Meets on Chargebacks

Vendors have followed through on a promise and formed a coalition to work with retailers on key business practices.

NEW YORK — Vendors have followed through on a promise and formed a coalition to work with retailers on key business practices — especially chargebacks.

The group met for the first time Thursday at the Phillips Nizer law firm in Manhattan, said Donald Kreindler, a lawyer at the firm. However, Kreindler declined to name those who attended, citing the coalition’s agreement that meetings and the identities of those involved stay confidential.

“We had a very encouraging and positive first meeting,” Kreindler said. He described the meeting room as “overflowing.”

Kreindler said the group named itself the “Vendor Coalition for Equitable Retailer Practices.” The mission is to “create a better partnership with the retail community so both retailers and their vendors can make a fair profit,” he said.

Four guiding principles of the organization were established: Educating the vendor community and retailers about the applicable laws governing their relationship; developing, in partnership with retailers, practices that are more fair and equitable to both sides of the business partnership; recognizing that retailers need to be viewed as partners, not adversaries, and acknowledging that the organization represents the vendor community, not individual vendors.

The movement to organize a vendor group gathered force after Saks Inc. disclosed issues surrounding markdown allowances for the bridge collection of its Saks Fifth Avenue division. As a result, Saks said in March it would need to restate its financial statements for certain periods. The retailer has since widened its internal investigation to include chargebacks. It also is reviewing whether related accounting issues at its Saks Fifth Avenue unit extend to categories beyond the bridge area.

Kreindler said that the coalition represents all vendors, not just those in a particular merchandise category, and that a key goal is to address the “grossly abusive practices by some, but not all, retailers.”

This story first appeared in the June 24, 2005 issue of WWD.  Subscribe Today.