Most Recent Articles In Retail Features
Latest Retail Features Articles
- Tokyo Gets More Salable
- Apple Pay Faces Hurdles — Including Wal-Mart
- Value Retail's Suzhou Village Arrives in Changing China
More Articles By
As retailers consolidate into multibillion-dollar giants and manufacturers become Goliaths, smaller independent vendors are feeling the pinch.
Small, moderate and better vendors boast they are more agile and can react to trends faster than their mammoth competitors, but admit that getting access to retailers is a challenge. Increasingly, retail demands — from margin guarantees to software compliance — hit them harder than they do the likes of VF Corp. or Jones Apparel Group.
"Retailers are much more demanding than ever, because there are fewer of them and they have a captive audience," said Warren Donner, president of the better line WD-NY. "The demands, in terms of margins and markdown money, are the same, but they are harder on a smaller company because we are smaller."
Adding that "Federated is one of the only games in town," Donner said retailers require margins upward of 40 percent and call in markdown money when that number is not met. Vendors equated that margin guarantee with buying real estate in stores.
"The reason so much of their floor space is occupied by their own private label and the Lizes and Joneses is that they can guarantee margins," said Lynn Ritchie, president of her eponymous label. "If our performance isn't as good as the department store would like it to be, we don't have a big kitty to come back to."
Ritchie, whose 16-year-old better label does $10 million in wholesale volume, sells to catalogues such as Neiman Marcus and Bloomingdale's, but has struggled to get floor space in either location.
"We put so much time and energy into our catalogue and mailing pieces to get corporate interest to try to get buyers in the showroom," Ritchie said. "They are very busy and they take care of their priorities first."
Access to retail executives is the biggest difference between the giant manufacturers and independent vendors, according to consultant Emanuel Weintraub. "Small companies just do not have the resources and access to the corner office," Weintraub said. "A multibillion-dollar company has access to the chief executive of every major retailer."
Cracking the so-called Federated matrix is harder in the more staid moderate or better department than it is for the booming contemporary area, most industry consultants agree.