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Another trend forcing manufacturers to consider selling online is the consolidation in retailing. In some segments one or two large chains, such as Wal-Mart Stores Inc. (No. 6) in mass merchandise and Best Buy Co. Inc. (No. 11) in consumer electronics, can increasingly dictate terms, including pricing and inventory levels, to manufacturers, says Lobaugh. Meanwhile, the fact that more retailers such as J.C. Penney Co. (No. 20) are expanding their private-label brands represents a threat to brand-name consumer goods manufacturers. "There is going to be significantly more pressure on consumer brand manufacturers because many of their markets and distribution channels are undergoing radical change," says Lobaugh. "One area where they do have a chance to grow, protect their brand and deal directly with consumers is online."
One consumer brand manufacturer that set up shop on the web in 2010 was Carter's Inc. (No. 459), a manufacturer of children's apparel brands, including Carter's and OshKosh B'gosh. After deciding that the web was a good way to reach new and repeat shoppers, Carter's, which also operates a network of 400 stores, launched Carters.com and OshkoshBgosh.com on an e-commerce platform from Demandware Inc. with additional e-commerce processing and fulfillment services from PFSweb in April 2010.
In its first year of e-commerce, web sales for Carter's exceeded $14 million. The new web channel also helps Carter's to attract a new and more diverse customer base. "This past year, over 230,000 people have purchased from us online, 60% of whom had not previously shopped with us in our retail stores," Carter's says in its recently released annual report. "Those who shop both online and in our stores are among our best customers, spending 2.8 times more per year than store-only or online-only customers. The new sites have quickly become important sales channels and marketing tools for our brands."