Alternate Channels Breed New Concerns

By Carole Sloan -- Home Textiles Today, 8/5/2006 12:00:00 AM

This could well turn out to be an interesting home textiles market — well beyond the usual retail contingents looking around at product, talking exclusives and getting inspiration for their own direct imports.

Increasingly we are having conversations with suppliers about alternative distribution channels. For some, it is a defensive measure based on the corporate goals of a growing number of major players to increase their direct import business.

And for some, these avenues of opportunity already are being pursued, and — even though they are just a beginning — with some measure of success.

Most interesting of the departures from the norm is the growing use of the Internet. Some of this activity is being done surreptitiously by the suppliers; others are straightforward with their full corporate name used up front. Direct-to-consumer definitely is on the increase. It is not a matter of selling for a lower price, but more to get exposure of the product to the ones who ultimately make the decisions to buy.

Another avenue that shows signs of becoming competition to conventional retailers is their very own in-house Internet businesses. Often we're seeing an assortment of merchandise dramatically different online from what is sold in the stores — from a fashion perspective, quality level and price point. Typically, the online program is heads and shoulders above that of the in-store department!

It's not unreasonable to project this trend into vertical retailing from supplier to consumer on an in-store basis. Ralph Lauren certainly has shown that it can be done well. Others are beginning to see the potential — either as the direct marquee name or as the proprietary supplier of goods to another vertical home furnishings company.

While the talk among the major retailers is still focused on direct imports, there are rumbles about the lack of the “bennies” aka un-official profit centers, like store opening discounts, chargebacks, markdown monies and the like that are not available with direct imports.

Some major players today are pushing their direct suppliers to house replenishment goods in this country — at the same prices they pay direct. It will be interesting to see how much longer this goes on, as the suppliers add up the immense costs that come with doing this kind of business here. Obviously, it will have to be built into the price.

Will that happen? Only time will tell.