More than half of the companies within the apparel and home goods industries have failed to diversify their customer base in the light of recent retail collapses, resulting in 20 percent or more of their business being concentrated with just one customer, according to a recent survey on sales concentration levels by CIT Commercial Services, a unit of CIT Group Inc. (NYSE: CIT) and Home Furnishings News (HFN).
Companies with high customer concentration levels are susceptible to severe financial loss if key customer(s) default on debt payments.
The survey is the first in-depth look at suppliers' sales concentration levels -- the percentage of sales to each retail customer -- as well as the strategies suppliers use to protect against bad debt losses. Conducted during the fourth quarter of 2002, the survey results are based on the responses of more than 300 manufacturers and importers in the apparel and home goods industries.
