Happy caterpillars and dead butterflies

I've never been a great advocate of vertical retailers, although Cue would prove me wrong. Other giants like Noni B, Sussans, Portmans, K Mart and Target are trying to do as much of their own sourcing as they can because of the low price/high margin it enables.

I'd love to know, and so would a lot of other people, what is the percentage breakdown between in-house resourcing and buying from external suppliers among the big volume retailers where brands do not equate to margin. As far as I know they don't share such juicy information unless it can be used to shine up the annual report. But I'd bet my now loved Target jeans that the trend would be overwhelmingly towards in-house resourcing, and most of that would be imports.
This is what segregates the volume fashion retailers from the boutiques and it is why I've been rattling on lately about boutiques avoiding brands, prints and styling that can be found in the volume stores. It is the only way boutiques can make a reasonable profit.
Having said that, there is another wholesale/retail vessel that I think poses danger to all who sail in her. The scenario goes thus:
A manufacturer begins his business and builds a retail account list that gives him a nice turnover and a comfortable, if stressful, living. He then thinks he would like to avoid the nasty losses on samples, leftovers and mistakes by opening a factory shop. Only one, he vows. But goodness, how successful his one factory shop is! It gobbles up the distressed goods and burps for more - this time regular garments. Our manufacturer then breaks his vows and opens another shop. He bathes in the joy of a double profit: wholesale and retail. More shop openings follow until he forgets that he once was a brand manufacturer and, with a sigh of relief, gives up selling to tiresome other retailers - who are susWhile the transformation from manufacturer to retailer occasionally produces a beautiful butterfly from the cocoon, more often the butterfly has its days in the sun and then dies. Examples: the original incarnations of Table Eight and Discovery. There are currently some others who are leaving caterpillarhood behind and should take a look at where they are headed as a giddy butterfly. It's okay to dabble in retail but any more than that can prove deadly.

Frank loathes DFOs
In his vast organisational Westfield labyrinth, Frank Lowey must have installed a DFO-watch office ready to throw its muscular shoulder to the wheel of any moves to veto the establishment of direct factory outlets (DFOs). Last year's debacle in Sydney where the Orange Grove DFO was closed down by the NSW Government after the local council had approved it had Westfield as one of the back-rowers in the scrum. If one could trace the failures of other DFO establishment attempts around Australia I'm sure you'd find Westfield in there somewhere.
Westfield was certainly a key player in the latest DFO clobbering exercise against the jewel in Australia's DFO crown at Sydney's Homebush Bay. Having failed as a home-makers' centre, Homebush gave 60 DFO shops a try and hit pay dirt. In good times or bad, Homebush always pulls the money, people out there tell me. Just why, remains a bit of a mystery.
As soon as its magnetic attraction was established, Homebush tenants loved paying their rents and the operator found he had a long, impatient waiting list. The best solution seemed to be to take another floor in the building, currently used for warehousing, throw in 15 mill and open another 60 shops. But Strathfield Council, with Westfield again well in the scrum, knocked back the proposal. Predictably, the dispute went to the Land and Environment Court for a series decider and Strath-West won again.
The court's senior commissioner, John Roseth, expressed the view that DFOs should not be located in industrial zones under various state and local planning policies. In other words, they should be subject to the same regulations and costs as regular retailers. Based on the court's findings, the existing Homebush DFO shouldn't really be there.
Although I'm not always a fan of Westfield I can see its point here - along with other regular retail developers like Walker, Centro and AMP who oppose DFOs. If manufacturers want to indulge in clearance shops that's their business, but to further lower their costs by allowing them cheap industrial locations is tipping the scales too far.
I recall my DFO guru saying he thought Australia had virtually reached saturation point for profitable, sustainable DFOs. After all, the consumer dollar is finite and there is only so much you can gain by leapfrogging regular prices and locations.