Verdict Research<\/a> have forecast clothing inflation will hit 4.4 per cent in the UK this year, the highest level for 24 years.<\/p>\nAll this woe has an impact on Affiliate Marketing with some smaller retailers cutting back on their Affiliate Programs and others looking closely at commission structures. The unpopular use of first customer order metric is also being looked at, despite the unpopularity by mainstream affiliates in the implementation by merchants, looking to cut expenditure. Fortunately merchants have not undertaken this generally owing to the counter-productive nature of payment on first order only.<\/p>\n
However when companies like Next, BhS, Marks & Spencer all have to either take a cut in profit or put clothing prices up then this market space needs watching closely. Debenhams confirmed clothing prices were set to rise, however they did indicate that they hoped to shelter customers from most of the rises and predicted that budget retailers would be hard hit.<\/p>\n
Chief Executive Rob Templeman said: “Cotton prices are only part of the equation. Prices are up 4% and volume is down 2%. What is driving inflation is Forex (currency markets).” He said his firm hedged against cotton price rises over a long period to avoid possible cost problems.<\/p>\n
So will this mean a cut in commission for affiliates or the introduction of first order metrics? Not necessarily.<\/p>\n
The use of first order metric is highly unpopular with affiliates and many have publicly stated they would not act as publishers for retailers adopting this, on the grounds that a high proportion of referred sales would be rejected for commissions. This is already an issue in the fast food sector and is currently subject to review by companies like Domino Pizza.<\/p>\n
So this generally leaves a commission squeeze to reduce costs. This is already taking place in the clothing and fashion sector with many companies reducing publisher\/affiliate commissions during sales periods. The emphasis that these commission cuts are by nature a temporary affair, has in no way reduced the levels of promotion overall.<\/p>\n
Last year the clothing and fashion sectors, along with many other retailers, opted to absorb in part or in whole, the VAT increase from 15% to 17.5%. However with a rise to 20% and the potential for further rises, absorbtion of VAT by retailers will not be possible, especially when in the clothing and fashion sectors, we also see an increase in the Cotton price.<\/p>\n
Clothing and Fashion retailers are constantly competitor monitoring and this particularly affects smaller retailers with seasonal ranges. So we predict we will continue to see discounting by Brand but with the hope that the “full price” season that is just commencing will enable Clothing and Fashion retailers to recover. It all depends if the major retailers don’t “blink” and cause a ripple effect in the industry.<\/p>\n
Either way there shall be some hard decisions taken by retailers with regard to publisher\/affiliate commission structures and it is probable that these commissions shall continue to be squeezed.<\/p>\n","protected":false},"excerpt":{"rendered":"
The uncertainty in the global clothing and fashion sectors has been exacerbated by the rapid rise in the price of Cotton. Global Cotton prices have surged to a 15 year high, rising 54% in real terms. This has caused a profound contraction on profitability for many clothing retailers. It is due to a number of […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[5],"tags":[882],"_links":{"self":[{"href":"http:\/\/www.affiliateprogramadvice.com\/index.php\/wp-json\/wp\/v2\/posts\/4497"}],"collection":[{"href":"http:\/\/www.affiliateprogramadvice.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/www.affiliateprogramadvice.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/www.affiliateprogramadvice.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/www.affiliateprogramadvice.com\/index.php\/wp-json\/wp\/v2\/comments?post=4497"}],"version-history":[{"count":2,"href":"http:\/\/www.affiliateprogramadvice.com\/index.php\/wp-json\/wp\/v2\/posts\/4497\/revisions"}],"predecessor-version":[{"id":4499,"href":"http:\/\/www.affiliateprogramadvice.com\/index.php\/wp-json\/wp\/v2\/posts\/4497\/revisions\/4499"}],"wp:attachment":[{"href":"http:\/\/www.affiliateprogramadvice.com\/index.php\/wp-json\/wp\/v2\/media?parent=4497"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/www.affiliateprogramadvice.com\/index.php\/wp-json\/wp\/v2\/categories?post=4497"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/www.affiliateprogramadvice.com\/index.php\/wp-json\/wp\/v2\/tags?post=4497"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}