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Design retailer Naiise apologises for payment delays after brands exit

Naiise founder Dennis Tay. The company told BT that the rate of brands withdrawing has been “low” and within its usual rate of brand churn.

YEARS of repeated late payments have led to several brands removing some or all of their products from multi-label lifestyle and design retailer Naiise’s shelves in Singapore and Malaysia.

Frustrated vendors told The Business Times (BT) that they are each owed amounts ranging from hundreds of dollars to five-digit figures from their goods sold at Naiise.

The Straits Times (ST) reported on Monday that some vendors had spent years chasing for payment, with five of them starting to pull their stock out due to weariness and concerns over Naiise’s finances.

In response to media queries, the retailer said in a statement on Monday: “We sincerely apologise for the delayed payments to some of our brands.”

Although it did not disclose the number of brands that have pulled out, Naiise told BT that the rate of brands withdrawing has been “low” and within its usual rate of brand churn.

The retailer said it has experienced a "tight cash flow situation" because of unexpected delays in payments that were due to Naiise, despite its core operating revenues growing by more than 40 per cent year on year.

In its media statement, Naiise did not provide details on who owed it these amounts. Vendors had likewise received an email on Monday evening from Naiise saying that the company will seek to reduce its "reliance on receivables that are out of our scope of control". One of these vendors said: "But it’s unclear what these receivables might be, seeing as Naiise operates retail stores."

BT understands that at some of its stores, vendors are required to pay "rent" or monthly operational fees to display their items, on top of the commission fee.

Products are sold on consignment at Naiise. Suppliers are paid only for the merchandise sold, minus a commission fee of between 30 and 45 per cent of the retail price, BT understands.

A spokesman for Singapore brand Freshly Pressed Socks - which exited Naiise’s outlets three weeks ago - told BT that it has yet to receive about S$3,000 for its socks sold over the June-November 2019 period in the Singapore and Malaysia stores.

Meanwhile, design studio Concrete Everything, which creates concrete homeware products, collected all its goods from Naiise’s Singapore stores early this month. It is also waiting to transport its Malaysia stock back to Singapore, said Alvin from Concrete Everything. The Singapore-based studio is owed more than S$850 in payments for sales since February 2019, he told BT. 

Despite Naiise’s assurance that it would make some earlier payments in September or October 2019, Concrete Everything has not received “anything” from the whole of last year, Alvin said. He pointed out that payment had initially been prompt when they began selling their products at Naiise in 2015.

Founders at another vendor that is still displaying its items at Naiise said the retailer had defaulted on numerous payments to them in 2017 and 2018, although those sums were eventually paid in early 2019. "But in 2019 they started defaulting again, and till now have not paid us for the March-December 2019 period," they added. "Over the months we've sent multiple reminders to Naiise's finance team who responded with apologies but have taken little action."

Vendors told BT that the legal agreements they signed with Naiise typically stipulated a 60 to 90 day period for payments, although there is no clause providing for penalties in the event of a non-payment or delayed payment.

One brand pulled its products from Naiise's shelves in 2018 after long-drawn payment delays and discrepancies in stock-taking. However, it went back to Naiise later that year, citing a tough retail market and "a lack of good alternatives" that feature local brands, its spokesman told BT. "We tried selling our items in supermarkets, department stores and a bookstore, but our sales there were not as good as in Naiise's outlets."

Naiise said it has reached out to most of the affected brands to explain the situation, and will be in touch with the rest of the affected brands "as soon as possible".

“We will work towards ensuring that they are swiftly paid,” Naiise added. A handful of vendors told BT on Tuesday that they have been promised payment within the week of Jan 27, although they are sceptical that they will be paid.

Across its website and six physical stores in Singapore and Malaysia, Naiise houses about 800 brands, of which 600 are based in Singapore. 

It also operates Design Orchard, a Singapore government project which opened in January 2019 along the Orchard Road shopping belt to showcase local designers. Naiise said that payments to brands for sales at Design Orchard have not been affected. Vendors there confirmed to BT that they have been receiving timely payments.

ST reported that the company’s troubles started in 2016, when it began to expand and stock more brands. Late sales reports, accounting discrepancies and evasive replies are now the norm, vendors told ST. In response to BT's queries, Naiise said it "carefully considers" expansion plans before executing them. "We have continuously rationalised operations by closing unperforming stores. We also operate with a relatively lean operating and rental cost structure as a majority of our stores are on a pop-up basis," Naise added.

In July 2018, The New Paper (TNP) reported that Naiise had failed to pay at least four companies. Naiise founder Dennis Tay told TNP then that it faced problems with payments because key staff had left and it was transitioning from a startup to a full-fledged company.

Mr Tay had emphasised in 2018 that the failure to make payments was not due to financial reasons. He also said that Naiise was looking into automating payment processes.

On Tuesday, Freshly Pressed Socks' spokesman told BT: "Naiise had said that their new system would better manage invoices and their internal systems, but we’ve been using it since May last year and it has not helped Naiise pay us promptly either."

"This makes it hard to manage our own financials, because you never know when you might get paid, and that’s why we decided to leave," the spokesman added.

In its statement on Monday, Naiise wrote: "Amid a challenging retail environment in 2019, we have helped more than 60 per cent of our brands achieve positive year-on-year sales growth last year."

Said one vendor who is owed "less than S$10,000" in payments but is still with the retailer: "We don't harbour any ill will towards Naiise, and hope they can see this as an opportunity to improve and grow, so that struggling local brands like ourselves can continue to have a platform to showcase our products and ideas."

Founded in 2013 as an online store, the Singapore-headquartered Naiise describes itself as a “creative marketplace” for creatives, makers and customers to connect with one another, serving more than 200,000 customers each month.