Selling to Department Stores vs. Small Boutiques

“Should I sell to department stores or boutiques?” This is a common question design entrepreneurs ask. The argument is strong for both cases. The first thing to understand is that there’s no “right” way to go about it. For one brand, the perfect fit may be specialty stores while other brands may prefer selling in volume to big box stores or a combination of both. Increasingly, startup apparel brands are opting to distribute their products entirely online.

Having sold my womenswear line to Bloomingdales, Saks Fifth Avenue, and Macy’s, I could give you several great reasons why selling to department stores is great. But, after owning a boutique in Chicago for fourteen years, and selling my line to hundreds of boutiques across the country, I could also give you numerous reasons why selling to boutiques stores is equally as smart. So how do you decide?

The decision about where to sell depends on a number of factors, including:

  1. Your product category
  2. The type of environment you thrive in
  3. Financial business goals
  4. Personal career goals
  5. Production capabilities
  6. Product margins

Let’s take a look at some of the benefits and disadvantages each retail channel presents:

Selling to Department Stores33

The Pros
  1. Bigger orders; buyers have higher purchasing power
  2. Greater brand awareness and validation
  3. More store opportunities and visibility to other buyers

macys distribution department stores

The Cons
  1. Can be difficult to reach buyer
  2. High buyer turnover – buyers in department stores change seasonably
  3. Markdown money – department stores have a certain margin they need to reach
  4. Chargebacks on shipping, i.e. incorrect labelings
  5. Invest in Electronic Data Interchange (EDI) software, a computer-to-computer exchange of business documents used to coordinate shipping
  6. Production capabilities need to be able to handle big orders
  7. Lower margins – buyer’s may request discounts based on volume
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Selling to Niche Boutiqueshab3

The Pros
  1. Consistent buyer – the owner of the boutique is often times the buyer
  2. Easier to develop a long-term ongoing relationship
  3. Relatively easy to access buyer (tip: consistent outreach can get you an appointment)
  4. Selling wholesale to boutiques can bring in bigger orders than business to consumer selling (some boutiques have several stores)

The Cons
  1. Tight shipping deadlines – Late shipping can lead to cancelled order
  2. Collecting payment may prove difficult according to terms established
  3. Finding trustworthy stores to partner with
  4. Cash flow issues – timeline, wholesale more demanding than direct to consumer
  5. Smaller orders than big box stores
  6. Need cash to produce order before payment

I recommend that you sell to smaller stores before approaching department stores. Here are 4 things you need to know before you consider selling to department stores:

  1. Department stores usually want to see a proven track record before they consider buying your line. Prove yourself with boutiques and it will be easier to get into department stores.
  2. Prove to yourself that you can ship a product that is delivered on time, high quality, and sells well at retail.
  3. Make sure your production capabilities are rock solid. Ask yourself, “Do I have a proven system to deliver on time? Are my contractors reliable?”
  4. Consider department store shipping policies before selling – EDI software, chargebacks, and markdown money.
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Whichever venue you decide to pursue, just remember, it takes time to find your fit. It could take a few seasons before you really know what works for your brand and makes a profit.

Are you currently selling wholesale? What’s your preferred retail avenue? Do you have a story about your experience selling? Share in the comments below!

Check out a full podcast on this topic here

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