Another example of vertical integration would
be an apparel manufacturer that opens one or
more factory outlet stores. By doing this, the
manufacturer also becomes a retailer, 4-11. The
manufacturer has integrated forward toward the
end of the soft goods chain. Two whole segments
(manufacturing and retail) are combined. By doing
this, manufacturers can assure a timely supply of
goods into their own stores and can charge lower
prices since they have eliminated a middle-person.
However, they also compete with the retailers who
are their own customers and who usually buy that
manufacturer’s goods to sell in their stores. This
may cause bad feelings. Retailers sometimes
refuse to buy goods from manufacturers who open
their own factory outlet stores.
On the other hand, if a company takes
on activities toward the source of goods, it is
called backward integration. An example of
backward integration is when retail companies
take on manufacturing functions. They do this by
producing their own private label merchandise.
Private label goods are produced only for that
retailer and have the retailer’s special trademark
or brand name. By doing this, retailers become
their own suppliers, and can assure themselves
a certain level of quality, timely delivery, and
lower price.
Commodity, Fashion,
and Seasonal Goods
There are two main categories of
merchandise with which businesses within the
fashion channel of distribution are involved. They
are commodity products and fashion products.
Commodity products are “staple goods” that
hardly ever change in design and are in constant
demand. Their sales are quite predictable and
they are continually produced in regular amounts.
Examples of commodity goods in our industry
include cotton/polyester blend fabric, and men’s
white business shirts and dark socks, 4-12. Other
commodity items are basic types of underwear
and soft-sided luggage. They are items that are
always being mass produced and are always
stocked in retail stores for fairly dependable,
constant sales.
Fashion products, on the other hand, are
always changing. Last year’s model or style
Mac Millan / Jane McMillan, designer / Mario Nico, hair /
Make Up Forever / Great Jones Spa
4-9 This fashion model does not produce
fashion goods, but is important in the
auxiliary group. The picture was taken by a
fashion photographer, while members of the
fashion press take notes. All of these people
are part of the auxiliary group.
Shima Seiki/[TC]2, Cary, NC
4-10 Knitting mills often create fi nished
garments by knitting the shape of socks or
a sweater, rather than making fl at fabrics
that will later be cut and sewn.
Chapter04.indd 69 Chapter04.indd 69 3/20/2008 1 3/20/2008 1
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Extracted Text (may have errors)


Another example of vertical integration would
be an apparel manufacturer that opens one or
more factory outlet stores. By doing this, the
manufacturer also becomes a retailer, 4-11. The
manufacturer has integrated forward toward the
end of the soft goods chain. Two whole segments
(manufacturing and retail) are combined. By doing
this, manufacturers can assure a timely supply of
goods into their own stores and can charge lower
prices since they have eliminated a middle-person.
However, they also compete with the retailers who
are their own customers and who usually buy that
manufacturer’s goods to sell in their stores. This
may cause bad feelings. Retailers sometimes
refuse to buy goods from manufacturers who open
their own factory outlet stores.
On the other hand, if a company takes
on activities toward the source of goods, it is
called backward integration. An example of
backward integration is when retail companies
take on manufacturing functions. They do this by
producing their own private label merchandise.
Private label goods are produced only for that
retailer and have the retailer’s special trademark
or brand name. By doing this, retailers become
their own suppliers, and can assure themselves
a certain level of quality, timely delivery, and
lower price.
Commodity, Fashion,
and Seasonal Goods
There are two main categories of
merchandise with which businesses within the
fashion channel of distribution are involved. They
are commodity products and fashion products.
Commodity products are “staple goods” that
hardly ever change in design and are in constant
demand. Their sales are quite predictable and
they are continually produced in regular amounts.
Examples of commodity goods in our industry
include cotton/polyester blend fabric, and men’s
white business shirts and dark socks, 4-12. Other
commodity items are basic types of underwear
and soft-sided luggage. They are items that are
always being mass produced and are always
stocked in retail stores for fairly dependable,
constant sales.
Fashion products, on the other hand, are
always changing. Last year’s model or style
Mac Millan / Jane McMillan, designer / Mario Nico, hair /
Make Up Forever / Great Jones Spa
4-9 This fashion model does not produce
fashion goods, but is important in the
auxiliary group. The picture was taken by a
fashion photographer, while members of the
fashion press take notes. All of these people
are part of the auxiliary group.
Shima Seiki/[TC]2, Cary, NC
4-10 Knitting mills often create fi nished
garments by knitting the shape of socks or
a sweater, rather than making fl at fabrics
that will later be cut and sewn.
Chapter04.indd 69 Chapter04.indd 69 3/20/2008 1 3/20/2008 1

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