Cost of consolidation
December 17, 2001,
The story in last week's HTT about LifeStyle Furnishings International breaking up its business with the sale of three furniture divisions and the planned sale of its Sunbury fabrics business to the division's management once again points out that bigger is not necessarily better.
And in that very same issue, there was a story about Mohawk, and how it is targeting independent retailers with an exclusive area rug program. What a radical concept.
It's ironic how big-guy Mohawk, in looking into some of its acquisitions, actually saw that it had a built-in business opportunity as a result of the Goodwin Weavers acquisition last year. And then as a big guy, it actually is doing something about it. And if it works, just think of the opportunity that presents itself.
On the other side of the issue of size and who does business with whom, there are the stories of retailers of some substantial size that don't meet certain big suppliers' profile of a "customer." They're allowed to walk the showroom floor but are given virtually as much courtesy as the guy who delivers the lunches during market.
Few of the many small specialty stores don't even bother shopping the big guys anymore because it is a waste of time to look when they won't be invited to buy.
As the market mentality continues to grow to the big get bigger, the number of players shrinks dramatically.
And if in that roster of shrinking players one or more gets shaky or falls out, watch out.
The big guys on both sides of the equation will be scrambling even more than they are now: the retailers to find immediate sources of supply; the manufacturers to find new retailers to absorb their substantial production quantities.
Some think this time is not far off. If it happens, it looks like the remaining big-guy retailers will be the winners. They'll be able to call the shots on pricing, logistics and the way of doing business so the big-guy suppliers can survive. If a supplier goes down, the retailers will be able to do virtually the same thing in the name of helping the suppliers.
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