Successful retail isn’t just a matter of sticking up a sign or a website and announcing to the world that you have products for sale. It’s also a logistical game, a matter of making sure that you have the right goods in the right place at the right time to serve your customers. The best retail professionals understand the importance of retail distribution channels and strategies meant to pair the right distribution approach to the right product.
Retail Distribution Channels are the paths goods and services take to reach the consumer from a vendor. These paths can be short, direct distribution channels from the vendor straight to the consumer. They may also be longer, involving wholesalers, distributors, or other agents who act as intermediaries. The more intermediaries involved, the higher the price of the product will be. However, these more lengthy distribution channels are needed in some areas where direct sales are infeasible or impractical.
Retail Distribution Strategies
Retail distribution strategies deal with how many and what kind of vendors companies use to get their products to consumers. In general, there are three basic retail distribution strategies:
Intensive distribution floods the market with products by selling them using any and all available outlets. For a wide variety of products where sales have a direct link to the number of outlets used, this is a winning strategy. According to business experts, intensive distribution is typically best employed where customers have a wide variety of brands to choose form and are willing to settle for another brand if their preferred brand isn’t available. Beer, soft drinks and cigarettes are common examples of products that fit in well with an intensive distribution strategy.
By using all available outlets, retailers ensure that their products are available to nearly all potential customers. Companies using this method can develop a wider distribution network than their rivals, giving them a natural sales edge.
This strategy may not be appropriate for niche products or products where part of their branding and appeal is a sense of exclusivity. Higher priced products also often fare poorly when this strategy is employed.
- Selective distribution strategies is a more targeted approach to distribution. Instead of selling to any and all outlets, companies winnow down their distribution network to a limited number of outlets in a particular geographical area. This strategy works well when consumers are willing to shop around for a particular product and are unwilling to substitute another for their preferred product.
- Many retail distribution experts consider selective distribution to be a “middle ground” strategy. There is still a pretty wide network of outlets selling the company’s products, but the strategy is not as scattershot as intensive distribution or as restrictive as exclusive distribution.
- There are two major benefits of this approach. It allows companies to select best-performing outlets and intensively train their staff how to effectively market the product. Also, selective distribution encourages companies to work closely with the vendors selling their product and develop strong relationships with them. Costs associate with selective distribution are also typically less than intensive distribution.
- Exclusive distribution is a highly targeted form of distribution. In this strategy, distribution is severely restricted to just one wholesaler, retailer or distributor in a geographic area.
- Exclusive distribution works well for products that cater to an upscale audience that’s willing to pay a premium for a specific brand, or a higher quality product than normal. Common examples of products benefiting from an exclusive distribution strategy include automobiles and major appliances.
- A key benefit of this strategy is that it allows companies to retain greater control over the price of their products and customer service agreements. For companies that keep a tight rein over their products, this strategy is essential. Exclusive distribution also allows companies to provide a high level of training and support to the staff of the outlets selling their products.
Making a Choice
When selecting a retail distribution strategy for your business, experts suggest company leaders take the following in mind:
- Consider the competition – What retail distribution strategies are your competitors using? Why are they using that strategy? Is it working? Would another retail distribution strategy work better and potentially give your company an advantage? For new companies, observing the competition and learning from their successes and missteps is key.
- Costs & Benefits – Determining whether a strategy is financially feasible for your business is important. Retail distribution plans are tough to set up and expensive to reverse if you find that the plan you’ve chosen is the wrong path for your company. Carefully weighing the costs and benefits of a retail distribution strategy before implementation is essential.
- Have a Few Choices on the Table – By ranking your options by order of preference, you give yourself a convenient reference should you decide against your most favored option or if you obtain sufficient capital to try multiple strategies.
Getting the Right People
Companies that want to be successful in getting products in the hands of consumers need to understand retail distribution and choose the strategies most appropriate for their business. Managers and decision makers with experience in choosing and implementing retail distribution strategies and working with outlets are the best retail professionals for this task.
Quality employment recruitment is key to obtaining the best people for open positions. Many companies benefit from getting professional recruiters to search for candidates, as these firms can often cast a wide net and are skilled at matching people with specific desired skill sets to companies in need of their talents.
Delrecruiters is a professional recruitment firm that helps provide clients with qualified candidates for positions in many industries, including retail distribution. Delrecruiters seeks candidates with field-specific skills to provide clients with just the right people to move their companies forward. Retail distribution enterprises would do well to consult with Delrecruiters on their next round of hires, as the company can help ensure a better pool of applicants for open positions.