Blog: Li & Fung wins with Wal-Mart
Leonie Barrie | 28 January 2010
With retail sales slowing around the world, sourcing is subject to stringent cost reviews like any other business operation. And for many firms, one of the easiest ways to shave overheads – as well as generating knock-on gains like speed to market – is to offload their sourcing interests to focus on their core retail concerns.
Perhaps the biggest beneficiary of these new outsourcing opportunities has been Li & Fung, which has already gained significant market share through an accelerated flow of outsourcing deals from the likes of Timberland, Mexx, Liz Claiborne and, most recently, Hudson's Bay Trading Company (which owns the Lord & Taylor stores) and women’s wear retailer The Talbots.
But the icing on the cake must surely be its first direct sourcing deal that's just been agreed with Wal-Mart, which could buy $2bn worth of goods through the Hong Kong firm in its first year.
“When things are good, there's no need to change and there's inertia. People are very comfortable with their supply. But when things are bad, people look for alternative ways of doing things,” Li & Fung president Bruce Rockowitz told just-style last year.
Even so, more of those outsourcing deals – and more large-scale acquisitions too – will be crucial if Li & Fung is to accomplish the targets of its current three-year plan (2008-2010), which includes achieving annual turnover of US$20bn and a core operating profit of US$1bn.
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