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Are Wholesalers in trouble?
Wal-mart, Target and K-mart (and a few other large
retailers), have obviously changed the
over the past several years. It is certainly sobering to count the
number of Mom & Pop stores that the mammoth retailers have driven into
submission. Although this in itself is very depressing, it is
only the beginning of the story
The fact that family managed retailers are nearly extinct
is quite honestly old
news. The current and more critical
question is, Who is NEXT on the path of destruction?
In my humble opinion, the apparel
Wholesaler is the next victim for the stampede. The giants have
turned direction and pointed their horns in an entirely new direction.
Have you stopped to consider where the herd is headed? Unfortunately,
if you are a Wholesaler, it is headed toward you. In fact, I am sure
you already feel the sharp sting.
Knocking small clothing retailers on their heels
was an obvious first step in the quest to reduce competition. Now
the focus must change from the reduction of competition to a systematic
focus on cost saving activities. Let me think
The manufacturer produces a garment for $5 and sells
it to the Wholesaler for $10. The Wholesaler will then sell the garment
to the Retailer for $15. Note: This is how it worked in the past.
We all know that Retailers now squeeze the Wholesaler harder and the Wholesaler
will squeeze the Manufacturer harder (it is now hard for anyone to make
Now, if we follow the general example from above,
what is the logical next step for the retailer??? You guessed it a
fairly large cost saving activity would be the reduction or complete removal
of the middleman.
Why do large retailers focus
more and more on Private Label?
Reduces the dependency on the Wholesaler. Retailers are better off
building brand awareness for labels that they own instead of labels that
you own. In the long run, does this sound good for Wholesalers???
I don't think so
Why does Target Corporation
have a subsidiary called Associated Merchandising Corporation (AMC)?
AMC sources high quality apparel for the company. AMC also provides
international sourcing for a number of other retailers. Currently,
they have 53 international locations.
Well, I think the answer is fairly obvious (they are
smart...). If they produce their own garments, the corporation
will profit on the Wholesale & Retail side of the spectrum.
On the positive side for wholesalers,
it will be difficult for large Retailers to completely eliminate the Wholesaler.
Retailers have too much fun (and profit) giving Charge Backs to Wholesalers
Anyway, it is very possible that I am 100% wrong.
This is just a thought.
Apparel Search 1/29/02
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