Traps for vertical players

 

There have been few winter openings to compare in horror to the current one. Odd pockets have come through on small runs of exceptional stories but the premium middle market, the middle market and the two budget levels below those are bleeding big time.

I know this industry loves to wallow in public misery and then go back to the office quietly sniggering that things are not all that bad. But not this time.

The reasons are pretty obvious. Summer weather dragged on so that by the time we snatched a few days of cold, summer garments are ready to fill the racks again. Added to this, Mr Rudd’s handout, much of which went on buying apparel, has dried up.

Interest rates are rising so that household spending is being reappraised. Consumers, looking at their wardrobes, see that they can go for quite a time into the future without buying anything and avoid being charged with indecency.

All these factors are outside the industry’s control but how we deal with the financial strain is very much in our hands and must be addressed. This brings me to one of my favourite arguments: that vertical supply retailing has some major drawbacks.

Ever since the import stampede really got going, so did the accountants in the big retail groups. Saving huge amounts on diminishing duty and suppliers being able to roam the world in search of the lowest prices for quality approved merchandise was not enough for the beancounters. They wanted to stamp out wholesale suppliers and gobble up their margins as well.

Now the nasty chickens have come a-roosting with this winter season. The big retailers are suffering an awful bout of indigestion – some would say constipation. They can’t move what’s in store and their Chinese suppliers are trigger-happy to load containers to send them more. These Chinese suppliers are not like Australian suppliers.

Australia is not vitally important to them but storage space is. Even if garments can be paid for, storing them presents a huge problem.

One importer told me that once goods go into storage in China they seldom come out in good condition. Sometimes they are totally destroyed. The Chinese are simply not set up to play the storage game.

If the same goods were ordered from an Australian importer, thereby angering the accountants, there would be gnashing of teeth but, in the end, they would be held in Australia until the castor oil had finished its job or the weather had improved.

In tough times, Australian wholesalers are far more sympathetic than Chinese factories. In addition, Australian wholesalers provide logistical services, tailored payment terms and styling advice. The list goes on.

Yet so many big retailers want to cut out this middle man because they think it saves money. That’s twaddle. The big retailers have to provide the same services internally that are more efficiently built into the wholesale’s slender margin.

You can’t tell me that the Asian buying offices of major Australian retailers operate as efficiently or cleverly as a wholesaler who must live by his wits to feed his family. The same reasoning applied, in reverse, to governments who have privatised services to make them more efficient.  

The resistance big retailers have to using Australian wholesale services is about as sensible as you painting your own two-storey house.

Johnny Was is

This is not a typo. Johnny Was is worth seeing if you like the way Americans work a given theme every which way. Maybe we could learn from them the art of leaving no combination untried when it comes to a ‘look’.

Johnny Was is designed in the US and made in China and India, but don’t expect price to be the main attraction. The fabrics and the prints do the work.

Currently being distributed by Sydney-based D Division Distributors, dresses and tops wholesale from around $130  in silk, rayon and cotton. It is mostly a print story, happily team-able with denim.

The prints are certainly colourful along with prominent panels of embroidery and appliqué.
The man behind D Division is so shy he doesn’t want his name mentioned, but I can reveal that the D stands for David.

He says that boutiques and department stores are clamouring for Johnny – and well they might be – but then he is known to be biased. I’ll say this for him: he has courage because he’s going to stock a certain amount of it. Deliveries start in July.

If you happen to find yourself in D’s McEvoy showrooms (opposite the now extinct site of the John Kaldor Sydney showroom and warehouse) and you pop in for a look, remember to ask about the printed scarves from Johnny Was. At $60 wholesale I like them even more than the dresses and tops.