A Cautionary Tale for Small Vendors -- Retailers too

In this difficult business climate, smaller vendors might be well advised to be careful about choosing the retailers with whom they do business. Over the past several years, as I have gone through the market, I have often heard an awed exhibitor enthuse about how some large prestigious-name retailer had just taken an interest in their line. Such business can be a boost for a smaller manufacturer and can help them grow. However, as we are seeing now, not all retail giants are financially stable. And a smaller vendor whose business is largely dependent on filling orders for such large retailers may find themselves badly hurt when that retailer goes into Chapter 11. 

Learn a lesson from what happened to several small jewelers who are being burned the bankruptcy of Fortunoff. Their story was reported this morning in my newspaper, The Star-Ledger (New Jersey). Shortly before Fortunoff declared Chapter 11 bankruptcy, these smaller jewelry manufacturers made and "shipped hundreds of thousands of dollars worth of wedding bands and engagement rings" to the store. The orders for these goods were placed even at a time when the company knew that it was failing and was struggling to improve sales. Now these jewelers cannot recover their goods, which are tied up in the store’s inventory that begins liquidation on Thursday, and may not recoup their losses.

And this is not solely a lesson for small vendors. Small retailers too should take care to not be too dependent on one large supplier for all their merchandise. Diversification these days may be one of the keys to survival.