Another advantage held by large retailers

Today's New York Times has an article called "First the Markdown, Then the Showdown" which discloses that large chains force the apparel manufacturers to provide financial givebacks after the fact. The article says "...these rebates are called 'markdown money' in the trade, and the suppliers have little choice but to pay up. It they refuse, the suppliers say, they have been told that the merchants will be buying less of their fresh fall merchandise, if any at all."

More from the article

"Merchants say they have no choice but to mark merchandise down because of the weak demand. Suppliers say the stores panicked, marking down items too soon. They claim the merchants should have stuck to the sales plan, which was hammered out between the merchants and suppliers before the stores even saw the designs.

Those plans included chronological markdown schedules: after 8 to 12 weeks, for instance, the clothes might be marked down 25 percent; after 16 weeks, items that did not sell would be marked down 40 percent, and so forth. Not many stores followed the plans.

Now, the merchants are demanding the difference between what they thought they would make as profit on clothes and what they received in the end, according to financial officers at several companies.

Thus, if a sales plan called for a 42 percent profit over the wholesale price - the norm in department stores - and the merchant made, say, a 32 percent profit, the merchant asked the wholesaler to make up that extra 10 percent. The retailers call that making them "whole."
In a business where margin is calculated by the cent, that makes a big difference, both sides agree."

Being made whole sure makes it easier to make bad or uneconomic decisions, by forcing your suppliers to pay for your mistakes. What independent business proprietor in a Main Street commercial district has the ability to do that?