When customers become competitors
Carole Sloan -- Furniture Today, March 7, 2004
The issue of direct imports is more and more on the minds of both vendors and retailers in the consumer products arena.
Witness discount powerhouse Target's publicly stated goal for 2004 of moving significantly more of its indirect importing to direct importing, at the same time the big chain acknowledged a $1.5 billion aggregate deflation rate last year. And this deflation obviously affects the couple hundred million they do in furniture.
One of the things deflation means is that Target, and every other retailer participating in the great direct importing tidal wave, will have to sell more beds, tables, sheets, sweaters, socks, underwear and so on just to keep revenues flat with last year.
As we head into the High Point market season, it's becoming clearer that the challenges facing suppliers are even greater this time around. Their customers more and more are becoming their competitors, shopping the same offshore sources and buying from the same sources.
In fact, one of the newer quips in furnitureland is that if you want to see your competitors and customers, have dinner in Shanghai. Some folks probably don't find that very funny.
Then there's a not-so-new twist, but one that is growing concurrently with the direct import wave. It's the "inspection" routine, where retailers of a certain size demand the names and locations of their domestic suppliers' offshore sources so they can "inspect" them for possible health and labor violations.
Next step: Go direct, to those very same sources.
As direct importing becomes more and more a part of the retail scene, a question comes up that we've discussed in this column more than once. When something doesn't sell or something goes wrong, who eats the resulting costs?
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