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Cutting out middle man can leave you in a hole

First, the demise of local manufacturing. Next, the end of the import agency? By buying direct, many retailers will claim they can cut out the middle man, avoid punitive agency commissions and gain more control over the supply chain. The reality is somewhat different.

In most cases, the retailer will merely replace a UK-based importer with a Far East trading house or its local office, both of which will incur substantial costs. These offices may place business in whatever factory will give them the best deal, with little control of quality or social responsibility. This model may work on bulk, core lines but less so on short-run, multi-style production.

Furthermore, some retailers have found that whereas buying direct may work better on garments, footwear is much more complex. To put a new footwear programme together with confidence requires a level of technical management not normally available in the source factory or at the retailer (with a few exceptions).

Finally, by dealing direct, retailers may lose external design input and crucial market information. They may also end up buying the wrong product at the wrong time. The trend to buy lower volumes over more styles makes product selection key. Import agencies are well placed to provide accurate market intelligence. This, linked with good relationships with factories, has enabled quick turnarounds and closely monitored production.

As a result, retailers are still using importers as prime sources of product, but this is working most effectively only where those importers have invested in a range of specialist services – from design, range development, technical input and an infrastructure in the Far East. The partnership between retailer and the design/import house is a solid one and is continuing to flourish.

Richard Kottler is chief executive of the British Footwear Association

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