Byline: Sharon Edelson, New York, and Rusty Williamson, Dallas

In this age of retail consolidation, corporate buying offices are narrowing their supplier lists, becoming increasingly reliant on matrix systems and chipping away at the vendor community.
Some vendors that were dropped by department stores due to mergers have begun knocking on the doors of specialty stores, creating opportunities for these retailers to be more exclusive. However, small stores believe the current climate bodes poorly for the industry in general.
“There are fewer people out there creating,” said A.F. Dawahare, president of Dawahare’s Garden Side, based in Kentucky. “It’s bad for everybody, including the consumer.”
WWD asked four specialty stores how mergers in the department store sector have affected their business.
Reynolds Bros. Inc., Lakewood, N.J. Upper moderate to better. Key vendors: Liz Claiborne, Jones New York, Chaus and Michelle. Operates 27 stores under the names Reynolds and Rafters, in New Jersey, Delaware and Maryland. Charles H. Reynolds Jr. chairman and chief executive officer:
“As the department stores do more of their own private label merchandise there’s less dollars being spent on SA and more being spent overseas. That’s been putting pressure on manufacturers and we’re seeing them disappear. This could be accelerated by Federated and Macy’s targeting a greater portion of what they sell for their own product development.
“Although we discount 20 percent, price is no longer that much of a differentiating factor. Department stores are banging away with one-day sales that give consumers the impression the whole store is on sale. We don’t have that kind of advertising muscle. We sell for less every day, but our price has been watered down by department stores very significantly.
“Department stores make a very tough deal on price going in with vendors, and if they don’t end up with enough profitability, they go back to the vendor and ask for a check for a markdown allowance. We don’t get the upfront deal or the check. We have to sell to the consumer on the same playing field. They have an edge by being able to sell at a lower price than we can. As that cycle continues there may be fewer and fewer specialty stores that can pay the freight for department stores.”
Dawahare’s Garden Side, Lexington, Ky. Contemporary to better family clothing store. Key vendors: Guess, Liz Claiborne, Union Bay, Levi’s,Platinum. Operates 20 stores, mainly in Kentucky. A. F. Dawahare, president:
“What’s happening now is not good for the industry because there are fewer people out there creating. But there is some good, because when the department stores merge they’re less sensitive to local issues.
Somebody doing business with me appreciates my business more if they’re shut out by the big companies, and that has happened to some extent. But most vendors try very hard to do business with Federated. A lot of stores are tougher on pricing and are getting more favorable treatment from vendors. I’m not kidding myself. It’s very difficult to get the same price the department stores are getting. It’s also hard to carry different merchandise because the vendor structure is getting too narrow. It’s bad for everybody, including the consumer.
“We’ve always been niche marketers. Our company is item-driven. We hope we can be faster with the items. Liz Claiborne is our biggest resource, and we do a big Guess business. From there it’s jumping from one item to another. If jog suits are hot, we sell a lot of jog suits. Last year, we did a lot of leather business. We’re having a hard winter with leather coats this year. They’re marked down 50 percent. On the other hand, knit sweaters are strong.”
Bodytalk, Westport, Conn. Contemporary. Key vendors: Leon Max, C.P. Shades and David Dart. Operates two stores in Westport and Avon, Conn.; seeking a third location. Noel Davidson, chairman:
“The consolidations will make department stores less area-specific. They have cut their prices, but they lose a little bit of the localized flavor. In Westport, we are near J. Crew, The Gap and Banana Republic. Our customer wants more fashion than they offer.
“We carry some department store vendors, but for the most part we specialize in small, unique manufacturers, like Blue Fish handpainted cotton knit dresses and T-shirts. We carry a very small group of resources that can’t always cater to the department stores because they don’t have the manufacturing capability. We also carry Eileen Fisher, Donna Jessica and Flax. A lot of these vendors like to sell to specialty stores because they get a much faster read. They ship to us and the merchandise is in our stores the next day.”
Amy’s, Dallas. Contemporary and bridge merchandise. Key vendors: A Line Anne Klein and David Dart. Terri Bumgarner, general manager:
“We are finding it’s easier to get lines because the vendors are more eager for business because there are fewer stores. Some lines are opening up that normally we wouldn’t have. I may try them and see how they perform. But if they don’t sell, regardless of the name, I won’t go forward.
“We’ve noticed an increase in cold calling. Manufacturers have slowly become more attentive to specialty stores. As their business has shrunk, they’ve realized who their customers really are.
“In addition, more manufacturers are giving us discounts — even before they ship the merchandise. This is another enticement to get your dollars away from somebody else. This is something we’ve needed for a long time. As a retailer we still have to discount the merchandise to the customers because they expect it.”