Apparel Sourcing Intelligence - Worldwide

Is retailing really the option for vendors with a problem?

If there’s one class of business Western observers are less happy about than automobile companies or travel agents, it has to be Western clothing and textile retailers.

Yet they seem never to lose their attraction. In the March edition of The Source, we look at three manufacturers, from very different backgrounds, happily getting involved in the risky business of running western textile shops.

Germany’s Van Lack is buying an Australian formal menswear retailer – and one which, apparently specialised in selling to the financial services industry. China’s Bosideng wants to set up a chain of formal menswear shops in the UK. And India’s GHCL, having turned a moderately underperforming UK household textiles chain into a lossmaker, now wants to go back to he UK and reopen some of the same stores.

Now if getting out of household textile retailing in mid-2008 was a good idea, getting back in nine months later sounds on the face of it extraordinary folly. But since GHCL are reported to be blaming falling rents for the failure of their UK shops – and the report is accurate they really must be the first retailers in history to complain of rents coming down – then there’s obviously a great deal of seriously counter-intuitive thinking going on at GCHL GHQ.

In each case, it’s a heroic decision. But it’s one underpinned by a common assumption – that a retailer able to buy from anyone he wanted to will do better when owned by a supplier, whose main motive is going to be to restrict the retailer’s choice of suppliers. The supplier might bring other competitive strengths – like cash, or a better credit reference. But it’s often difficult to see what that competitive advantage might be in a business that’s not just struggled because credit was tight, but because it didn’t – as Roseby’s and Bosideng purchase Greenwoods didn’t – respond adequately to fundamental market changes.

Buying a customer is a risky business in a recession, especially for a supplier with limited retail experience. We’d be delighted to be proved wrong