With increased outsourcing of activities, apparel retailers are gaining greater control over strategic activities, which were formerly the remit of manufacturers or which were the source of the manufacturer’s competitive advantage. The study aims to investigate the factors that determine the extent to which manufacturers depend on retailers. Resource dependency theory has been used to prove that in a typical retailer-manufacturer outsourcing relationship in close culture countries like India, manufacturer’s perception of a retailer’s power is derived from the manufacturers’ perception of its dependence on the retailer. The data was collected through in-person interviews through Likert scale-based structured questionnaire from 230 respondents of 128 apparel manufacturer units of India and its respective boundary person representing the apparel retailer. A majority of the channel behavior studies conducted in Western countries have supported the relationship of power of one, based on the dependency of the other. Our research findings also confirm the same. An implication of the research findings is that dependency may be used as a strategy in dealing with channel relationships in Indian marketing channels. Looking at the attractive apparel retail market and the manufacturers’ high product diversity, manufacturers can completely skip passive dependency and engage themselves in active dependency. Also, the retailers cannot exert coercive power sources if the dependency is active.

In 2015, the apparel sale, as per Mckinsey (2010), is expected to reach $55 bn. In India, apparel is the second largest retail category (behind food and groceries), representing approximately 10% of the total market. Given such an attractive market, a number of national as well as international players are there in apparel retail market today. Competitive forces are putting retail firms under pressure to improve quality, delivery performance and responsiveness, while reducing costs at the same time. In response, retail firms are increasingly exploring ways to leverage their supply chains by increased outsourcing of activities not considered to represent core competencies from the retailer’s side. At a strategic level, it should lead to sustainable improvements in product quality and innovation, enhanced competitiveness and increased market share, but literature review supports the view that apparel retailers are gaining greater control over strategic activities which were formerly the remit of manufacturers or which were the source of the manufacturer’s competitive advantage.

El-Ansary (1975) outlined a four-way classification of studying marketing channel, channel coordination and channel performance: the structural, behavioral, environmental and managerial perspectives. One of the more important debates to emerge from the managerial/behaviorist approach is the issue of power. Previous studies on power in a channel of distribution have contributed significantly to our understanding of interfirm relationships (El-Ansary and Stern, 1972; Hunt and Nevin, 1974; Wilkinson, 1974; Lusch, 1976; Michie, 1978; and Lusch and Brown, 1996). A very few studies of Indian supplier-buyer channel relationships have been published since economic liberalization in the 1990s. Specifically, previous channel relationship studies related to India (Kale, 1984; and Frazier et al., 1989) may no longer be applicable to the more current Indian market environment. A new study is needed to examine the changed environment. Also, given the diversities of the social cultures of the world, channel behaviors are expected to be different in different countries. It has been observed that some relationships in channel behaviors tested in the West, especially the USA, might not be the same in non-Western cultures (Kale, 1984).

Supply Chain Management Journal, Unidimensionality of Power, An Empirical Analysis, countervailing power, manufacturers, Dependency Constructs, Retailer- Manufacturer, Supply Chain Relationship, Resource Dependency Perspective.