LAS VEGAS — Most retailers will consolidate their sourcing operations as they head into 2005, when textile and apparel quotas are lifted, Peter McGrath, chairman of the purchasing corporation at J.C. Penney Co., said during a seminar at WWDMAGIC.

“I may have 25 suppliers today for my knits and in the future, I’ll need five,’’ he said. “So if you fall off the truck now, it may be on a permanent basis.”

Wholesale prices are expected to decline 8 percent to 18 percent in the next year, but that savings isn’t likely to be passed on to consumers, McGrath said. Instead, shoppers will benefit from improved products, he said.

“We’re starting to see enhanced materials that we can offer consumers,” he said. “For instance, years ago, we had 220-thread-count sheets and now we can offer 350-thread-count sheets at the same price.”

He encouraged importers and factories to reassess their specialties, predicting that importers will face pressure as bigger retail chains continue to source directly with foreign companies. “Factories will need to specialize in order to meet customer needs,” he said.

— N.S.M.

This story first appeared in the September 8, 2004 issue of WWD. Subscribe Today.