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Facing the weakest holiday season in nearly two decades, retailers and the vendors who keep their shelves stocked are walking a fine line between helping each other stay afloat and protecting their profits.
As the credit crisis has dried up financing, and with store closings and liquidations on the rise, stores and suppliers are torn between trying to ride out the storm together, and looking out for their own survival first.
"It's a pretty difficult cat-and-mouse game. This next three months is when retailers can make or break their year," said Stacy Janiak, vice chairman of Deloitte & Touche's retail practice. "Vendors could have a very significant impact on what ends up flowing through to the bottom line of the retailer."
For example, Circuit City Stores said Monday that suppliers, pinched by the financial crisis, have tightened terms and in some cases are requiring up-front payments for inventory before they will make shipments.
Analysts forecast the struggling electronics chain, which just announced plans to close 155 stores, may still seek bankruptcy protection in the next few months.
Likewise, retailers can have a big influence on vendors, as when Jones Apparel Group , the maker of Anne Klein clothes and Nine West shoes, slashed its 2008 earnings outlook four days after one of its customers, Macy's , did.
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