Retail/manufacturer lines are blurring

VF Corp plans to open 400 new stores in the next five years, and increase the share of its sales represented by retail from 13% to 18% -- which would make it a $1.4b retailer.

"What's been happening with retailers developing their own private-label lines and going for direct sourcing, as well as apparel manufacturers also expanding their own retail lines, is that there has been a blurring of distinctions between what is an apparel retailer and what is an apparel manufacturer," said Peter Kilduff, associate professor of strategic management and marketing in the Textile Design & Marketing Department at UNC-Greensboro.

Carter's, the kidswear manufacturer makes 14% margins when it sells through retailers, but 22% selling through its own stores.

The potential for channel conflict is obvious, if a manufacturer reaches some point of critical mass as a retailer. By the same token, manufacturers and retailers are also competitors when retailers reach critical mass as private labelers -- Wal-Mart's Old Roy dog food is, I have read, the #1 dog food brand on a volume basis.