Retail Distribution Channels

Most distribution channels use retailers. These are businesses that buy goods from manufacturers or other suppliers and sell them straight to consumers. Retailers provide manufacturers and other sellers with some key services. They buy large quantities from manufacturers and wholesalers and sell sm...

Most distribution channels use retailers. These are businesses that buy goods from manufacturers or other suppliers and sell them straight to consumers. Retailers provide manufacturers and other sellers with some key services. They buy large quantities from manufacturers and wholesalers and sell small quantities to customers. This is called bulk breaking. They sell in locations that are convenient to consumers. Most supermarkets, for example, are conveniently located and have good parking facilities. They may add value to products by providing other services. These might include help with packing, delivery, repair services, information about products, guarantees and gift wrapping. Businesses can choose from among a wide range of different retailers when selling their products. The main features of some common retailers are outlined below. INDEPENDENTS These tend to be relatively small outlets, although there are exceptions. Examples include newsagents, general stores, greengrocers, delicatessens and specialists, such as those selling bicycles, jewellery or toys. Many are owned by sole traders and may be found in a variety of locations such as on high streets, in shopping centres or malls, in small villages and in towns. SUPERMARKETS Supermarkets are usually large stores selling up to 20000 product lines including groceries, fresh food, greetings cards, clothes, electrical goods, books and household goods. They are usually cheaper than independents selling the same sorts of products because they can afford to buy in bulk from manufacturers. Many supermarkets are located on the outskirts of towns and cities where land may be relatively cheap and is more readily available. They usually offer free parking and meet the needs of consumers who prefer \'one-stop-shopping'. DEPARTMENT STORES These are large stores split into distinct selling departments, such as menswear, nightwear, cosmetics, food, gifts and children\'s clothing. They usually aim to provide good quality products with high levels of customer service. For example, sales staff may receive training in the different products sold in their particular department. Department stores are often found in city centres. One example of a famous department store is Harrods of London, UK. MULTIPLES OR CHAIN STORES One approach to retailing is to develop a chain of stores. This is where one owner opens multiple stores selling the same range of goods in many different locations. Each store in the chain will look very much the same and be under the control of a central office. Stores will usually have a standardised: product range pricing strategy store fronts store layout staff uniform (if appropriate) staff training, wages and conditions of work. Chain stores may specialise in all sorts of product lines such as menswear, children\'s clothes, ladies clothes, shoes, food products, domestic appliances, sportswear, books or toiletries. They bulk buy direct from manufacturers so their cost of sales are low. However, their ranges of goods are often limited and staff may be poorly motivated because they are not usually given incentives. SUPERSTORES OR HYPERMARKETS These are very large stores, usually located on the outskirts of towns and selling a wide range of goods under one roof. They sometimes feel like giant warehouses when moving around inside. Hypermarkets offer an approach to shopping without any non-essential services. Goods are not likely to be displayed attractively, there are likely to be fewer staff to help out and they tend to lack atmosphere. However, they are generally cheaper than supermarkets and have a wider product range. KIOSKS AND STREET VENDORS These are very small outlets selling a limited range of goods. They may be found in airports at bus and train stations, in streets and the cinema, for example. Many of them sell fast food, confectionery, newspapers and a limited range of clothes perhaps. They generally operate with low set-up costs and minimal overheads, but this depends on the location (for example, renting a location inside a major airport would actually be quite expensive). MARKET TRADERS These are usually small time businesses selling goods from market stalls. They are common in many parts of the world. They have low overheads and are often cheaper than other retailers. Some market traders move from one market to another and set up a stall each time they relocate. However, in other markets, such as souks, market traders may sell their goods from the same permanently located stall. ONLINE RETAILERS Businesses, such as Amazon, that buy goods from manufacturers and sell them online to customers. These are discussed in more detail below.