The Failure of Modern Decency™ : Saks Global takes the Fall?

i. What happened

Valentine’s Day 2025- WSJ runs an article entitled,” Saks Warns Suppliers They Will Have to Wait for Payments: Luxury retailer moves to reassure vendors after merger with Neiman Marcus (WSJ 2/14/2025 byline Lauren Thomas

Which tells of a promise (?) to pay bills for new orders within 90 days and past due payments to be paid in 12 installments  starting in July  . That means that vendors who are owed money February 2025 (however old the debt) cannot expect to be repaid until July 2026.

What was not stated was the original due date of these orders. According to other news sources including the Wall Street Journal state that these problems have gone back at least more than 2 years. That journal cites an Australian company named Luna Bronze that shipped 5 orders between July and October 2023, and got paid for none of them.

The same article also states that:

 “Reports of Saks stiffing suppliers surfaced last year. The retailer had been conserving cash as it negotiated to buy rival Neiman Marcus. The $2.65 billion acquisition, announced in early July, is awaiting approval from the Federal Trade Commission. 

The deal irked vendors to whom Saks still owes payment. ‘You have the money to do an acquisition, but you can’t pay the people that you owe?’ Shnitzer-Bartocci said. ‘They sold the merchandise we’ve given them. They’ve made money on it, and yet they still haven’t paid us back.’” 

Saks response to inquiries: 

“The Saks spokeswoman said funds that support operations or vendor payables wouldn’t be used to finance its Neiman Marcus acquisition." 

Does that statement make the problem better or worse?

Not paying vendors on time (or at all), whether it is Saks or anyone else, is a selfish and reprehensible practice, no doubt. Think about it: If Saks’ customer didn’t pay their bills, and told Saks that they were just going to have to wait and would pay over 12 months (without interest, I assume), would Saks accept that? Especially after the customer has taken possession of the item and used it?

I am going to assume that Saks did not pay a deposit of any sort to their vendors when they placed their order. Let’s assume they ordered some apparel from a foreign country. The vendor should pay for all the materials, labor, packaging and at least preparation for shipping on their own nickel. If we assume a processing time of 90 days and shipment of 30 days, plus Saks proposed 90 days from receipt term, even on time payments will be 210 days, or 7 months, for the vendor to bear. IF paid on time.

Saks is calling attention to itself, after the much-glorified merger, but it is by no means alone in not paying its vendors on time or at all. To Saks’ credit, at least they are addressing the problem. Further investigation would be pointless, but I would like to hear from the retailers that are actually paying on time. That could be a deafening silence.

ii. What is the problem?

So, what’s the problem? Answer: The Failure of Modern Decency™.

First, what is Modern Decency™? It is a term I coined, and later incorporated into my university Playbook (non-textbook learning), The Way of the Unicorn(C), to signify an attitude and best practices which are the opposite of Modern Slavery:

Modern Decency™ is: Running your business and living your life in a manner that considers all people in all countries as the same as you: deserving of respect, fair compensation, and a living wage; they, as you, have the desire and the right to preserve our planet for future generations. 

Modern Slavery is defined as: “when an individual is exploited by others, for personal or commercial gain. Whether tricked, coerced, or forced, they lose their freedom. 

Wait. Isn’t it a bit extreme to accuse Saks and others who either pay their vendors late or don’t pay of Modern Slavery?

You decide. If someone orders something and doesn’t pay for it or doesn’t pay as agreed, is this not exploitation?

As I said before, it is not just Saks. If anything, their (eventual) transparency sets them above those who just don’t pay and, if confronted, lie about the outcome. What is wrong is the selfish and greedy mindset that considers the factory or supplier something on a level lower than the buyer. 

This mindset has become institutionalized. Let’s look at some internet definitions of Global Sourcing:

* Global sourcing is the act of searching for a domestic or foreign manufacturer to produce a product. 

* Global sourcing refers to a procurement strategy that a business uses to find the most cost-effective location for manufacturing one or more of its products (Upcounsel.com)

* it is the process of sourcing goods and services from the international market across geopolitical boundaries. It aims to exploit global efficiencies such as lower cost skilled labor, cheaper raw materials and other economic factors like tax breaks and low trade tariffs. (Purchasing Procurement Center)

* Global sourcing refers to buying the raw materials, components, or services from companies outside the home country. In a flat world, raw materials are sourced from wherever they can be obtained for the cheapest price (including transportation costs) and the highest comparable quality. (saylordotorg)

a. What’s the problem with these definitions?

1. Cost-effective. That’s it? Just cost?

2. Exploit? OMG. Cheaper? So exploitation to achieve a cheaper price is the goal? Yeah, it says global efficiencies but that is a BS term that legitimizes taking advantage of low wages and bad working conditions.

3. Cheapest price and highest comparable quality? First, price and quality almost always have a linear relationship; second, compared to what? And which wins, price or quality? 

What is my definition of Global Sourcing?

• The practice of planning, developing, manufacturing, and shipping products from the location(s) that are optimal according to Comparative Advantage;

• Developing partners who can work with you over the long term for mutual benefit of workers, employees, and customers;

• The solemn responsibility of providing beneficial work to peoples in other countries for a fair price and wage;

• The even more solemn responsibility of making sure these workers are treated fairly and not abused in any way, and that local and global laws and social standards are obeyed.

iii. Why the current situation sucks and needs to change

How many times have I heard buyers refer to the supplier as “the factory” as if it is an inanimate object, not a group of people working to make something for a fair wage? Too many.

Are factories not of a level that they can expect the simple quid pro quo: You buy. I sell. You pay. You get. 

Because they are a supplier and not a buyer, are they somehow lower order of being? 

If I give you something before you pay, I trust you to pay later. If you don’t, I lose trust. (So what, right? There is always another factory that will accept my order and doesn’t know my history of paying)

What makes the situation worse is when sellers continue to take orders despite already being owed past due debts. They are afraid to lose the customer, but is a customer who doesn’t pay really worth having? Financially, Dignity-wise, the answer is no. But in doing so, they reward the buyer's behavior.

Here’s the worst part: Do you think that those business owners who got stiffed on their payments will pay their workers what they are owed, on time? After all, they did what they were hired to do, right? So now buyer mistreatment works its way into the kitchen.

We have always paid a deposit, usually 30%, when our orders are placed. This gives us skin in the game, and vendors know it. It also strengthens our negotiation position on future orders.

Why does it need to change? There are plenty of factories out there, right? Am I being too soft? 

If we are in business for the long term, our success as retailers, wholesalers etc. depends on the same factors as those of our final customers: Trust, loyalty, integrity, quality, dependability. The quality of those factors add up to CLV (Customer Lifetime Value), which is everyone’s goal. 

We can also say that Sustainable Value Creation is the goal of every investor. Stiffing vendors or causing them problems that result in workers getting F**ed, will be a route to buying from the vendors who are looking for one-order stands and don’t care too much about relationships or their workers. Those vendors who care about relationships and profitable business over the long term will not be willing partners until the above relationship factors are built.

Finally, no matter whether our vendors are in a foreign country or our own, they deserve to be treated decently with the same standards we would apply to our company and family. Why? Because that is the DECENT way to do business. 

As I said in my definition of Global Sourcing, suppliers need to be treated as equals, deserving of the same respect as buyers want. Not paying is a sign of disrespect. Ordering more when you can’t pay is the same.

I believe that the only difference between those who do and don’t pay, be it Saks or another buyer, is mindset. Paying their suppliers should be priority one for a retailer, because without suppliers their shelves and floors are empty. Fair play cannot be discarded temporarily. Either you are an honest businessperson, or you aren’t.

That and terribly poor merchandising.(if you buy something, or a lot of somethings, that don’t sell, it’s you who made the bad choices, not your supplier). But that’s another story.

(C)Michael Serwetz 2025