By  on December 8, 2004

NEW YORK — Facing tepid organic growth in their core businesses, big-name vendors such as Liz Claiborne Inc., Jones Apparel Group and Kellwood Co. can be expected to continue their acquisitive ways next year.

“Consolidation will continue,” predicted consultant Emanuel Weintraub. “It is an absolute necessity for both retailers and manufacturers because their destinies are controlled by Wall Street.”

The vendors will be pressured to continue snatching up new businesses not only by their investors, but also by the retail marketplace, which is continuing its own consolidation track.

This year has seen May Department Stores Co. grow with the addition of Marshall Field’s, acquired from Target Corp. for $3.24 billion in July. On a grander scale, Kmart Holding Corp. last month revealed plans to buy Sears Roebuck & Co. to create a mammoth retailer with $55 billion in sales.

It benefits vendors to keep pace with growing retailers, as it enables them to maintain pricing power.

Going through what could be described as an “if you can’t beat ’em, join ’em” phase, vendors are emphasizing their own retail operations — in some cases, buying retailers, while stores increase their role as manufacturers of their private label offerings.

In one of the most dramatic examples of this trend, Jones last month inked a $400 million deal to acquire Barneys New York, a move that has raised eyebrows in some quarters of the fashion world and applause in others. Some of the concern came from the fact that, even though the company operates approximately 900 stores, many of them specializing in footwear, Jones is primarily a manufacturer. Also, none of the lines Jones produces, from Jones New York to Nine West, are sold in the luxury market.

“We simply won’t Jones-ize Barneys,” assured Jones’ chief executive officer Peter Boneparth. The retailer will continue to be run by ceo Howard Socol, but will have the benefit of Jones’ financial muscle.

“What this business is about is diversification, by brand, by channel, by demographic,” Boneparth said. “When you first put your toe in that demographic, whether it be moderate or luxury, it looks like somehow you’re going far afield.”

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