Retail Functions in Distribution

Retailers collect an assortment of goods and services from various sources, buy them in large quantity, and
sell in small amounts. This is called sorting process.

Retailers communicate with their customers and suppliers.

For small suppliers, retailers can help them by transporting, storing, marketing and advertising for products.

Retailers complete transactions with their customers

Many retailers now engage in omni-channel retailing, whereby they sell to consumers through multiple
retail formats.

Omni-channel Retailing

A retailer sells to consumers through multiple retail formats:

Websites

Physical stores

Smartphone apps

Social media

Also there are advantages of it:

Cross-selling across channels (in-store product availability info on Web site)

Consistent pricing in all channels (credibility)

Can buy, and return product regardless of channel

Introduction to Retailing 3
 The Relationships Among Retailers and Their Suppliers
Relationships among retailers and suppliers can be complex.

Retailers and their suppliers can have different priorities, such as control over the distribution channel, profit
allocation etc.

Due to the growth of large chains, retailers have more power than ever. So they can choose suppliers.

Disagreements may occur in the following areas (channel conflict):

control over channel (private label)

profit allocation (resale price control)

number of competing retailers (exclusive, selective or intensive distribution)

product displays

promotional support (cooperative advertising funds and restrictions)

payment terms (payment on time)

operating flexibility

gray market sales

markdown monies, chargebacks by dominant retailers

Distribution Types (from suppliers perspective)

Exclusive: Suppliers make agreements with one or few retailers, and assign those retailers as the only ones to
carry certain brands.

Intensive: Suppliers sell through as many retailers as possible

Selective: Suppliers sell through a moderate number of retailers

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