Considering that brands need always manage their distribution strategy, historically there are two main different distribution channels to follow:
- Wholesale channel
- Retail channel
Wholesale channel – distribution channel where fashion or luxury brands give to a distributor or retailer rights and tools to distribute their products. So far, it has been Business-to-Business (B2B) logic, with a Sell-In perspective, with the customer being the trade. The brand, usually an industrial company, works with intermediates. It doesn’t control retail activity but it interacts with distributors and retailers.
Retail channel – distribution channel where the brand directly manages his distribution channel with a Business-to-Consumer (BTC) logic and a Sell-Out perspective. The final customer is an exact person, a client and company acts as a retailer.
In the past, the Wholesale channel was the main channel for distributing fashion and luxury brands, in particular in Europe.
Today, most of fashion and luxury companies in all market segments, from luxury to mass, have become retailers. They want directly manage their stores and engage with the customers in order to control the brands image better.
Advantages to be a Retailer:
- Ability to capture retail margin
- Ability to have relevant info about the customer and the Sell-out
- Setting of store concept/format
- Set pricing
- Set the selection
- Set the visual merchandising
Recently, a new channel has developed, where geographical boundaries have been overcome, – Transnational channel, which includes E-commerce and Travel related distribution.
An actual trend is called Omnichannel where offline, wholesale, retail and online channels are converging to deliver a seamless customer experience. It is a strong link between Wholesale and Retail activities that includes important principles in:
- must-buy definition
- distribution and retail criteria
Why Omnichannel is needed? Because nowadays customers are:
The Omnichannel supply chain improves on the traditional supply chain:
Benefits with Omnichannel:
- Increasing quality of customer experience
- Giving the reason to go to physical stores
- Differentiation from other brands
- Build customer loyalty