Retail Poverty Panacea: Direct Sourcing on Steroids

Wouldn’t retail vendors cringe if Chinese suppliers could get guaranteed distribution for their products in the U.S. and in the process, retailers could increase their private label offerings and expand their product lines on a consignment basis without any inventory risk?  Oh, and wouldn’t it twice suck if retailers got a bundle of cash up-front for making the deal? 

 

Well, hold on to your hats, folks.   Fresno-based department store, Gottschalks just made all of this a reality.  In exchange for a $30 million investment from China sourcing specialist Everbright Development Overseas Ltd. Gottschalk’s will establish a direct sourcing program with Everbright’s network of Chinese manufacturers and utilize the company’s sourcing prowess to pump up its private label business . . .  And, in many cases, these manufacturers will work with Gottschalks on a consignment basis, leaving the retailer with no inventory exposure.  Everbright will have the security of an exclusive arrangement with Gottschalks; one that will have them owning roughly half of Gottschalks’ shares eventually.

 

The world of direct-to-retail branding and funding just got even more interesting.  And, with retailers struggling mightily with the downturn, I’d expect more of the this.   If “marketing weakness” is still the key weakness of Asian suppliers; it’s no longer a barrier to entry!

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