Nike and adidas informed their smaller London stockists this week that under performing stores' accounts would be closed unless total sales of product from the respective companies exceeded 25,000 pounds - roughly $41,000.
The move - which will also close out some credit facilities - is slated to impact at least 50 independent retailers in the area, including Ace Sports owner Nick Mavrides, who told the London Evening Standard that he counts on big names like Nike and adidas to bring in customers.
"What they are doing is wrong," Mavrides said during an interview with the Standard. "I have been an adidas and Reebok [owned by adidas] account holder for over 25 years and have always supported the brands. They just want to get into bed with the big chains - JD Sports, Foot Locker - and they don't care about anyone else. Their action seriously affects my ability to conduct my business. It will have a catastrophic effect and force me to close."
According to an email sent to suppliers obtained by the Standard, adidas said it would let go of smaller accounts that weren't up to snuff, adding that it wanted to cultivate "mutually beneficial partnerships with long-term trade partners."
Stores hit by the severance can reapply for an account, but must present a detailed business plan on how they will reach a 25,000 pounds-per-year sales scheme. In addition, the smaller retailers must pass a "Distribution Trading Policy Check," and be present for quarterly sports shows.
"This decision was not taken lightly, but is in line with our global commercial policy," a spokesperson for adidas told the Standard. "[It] was made to ensure our business is solid and sustainable, and operates in the most efficient way."
From Nike's camp, reps reported that yearly minimums were par for the course, and "support the necessary operational costs associated with delivering the best product presentation and consumer experience at the point of sale."
[via the London Evening Standard]