Calling all the retail soldiers! We have reached the middle of 2024, and it’s time to slay the sales goals. This blog contains three tips for retail shop owners to gain new customers and make their business empire climb new ladders of success.
Introduction
Retail distribution is one of the most effective techniques for business owners to sell their products directly to customers for more revenue. The sale of products depends upon the distribution strategy of the businesses. Generally, a company with good standing in the market knows what distribution channels are working for them and employs them to achieve more success and sales goals.
For example, Nike uses multiple distribution channels that have taken its businesses to record heights. Wholesalers and retailers are essential to Nike’s distribution channel, but the D2C or direct-to-customer approach steals the show. In 2023, a whopping 43% of Nike’s total revenue came straight from their D2C stores. This is instrumental in building a loyal customer community. Nike has created an exclusive experience for its customers by delivering the products directly to customers and cutting the middle man.
What is retail Distribution?
Retail distribution is the process of getting the products to the customers from the manufacturers or producers for use. Many entities, such as producers, manufacturers, distributors, wholesalers, and retailers, join hands in the whole distribution process to efficiently deliver goods to customers using suitable channels.
Four types of distribution channels
A business can use multiple ways to increase the sale of its product and expand its customer base based on its role in the supply chain. A few examples/ways of supply chain are:
Direct to customer
In this channel, the manufacturers or producers directly sell their products to potential customers through an e-commerce store or retail store. This channel does not involve intermediaries and gives producers direct customer access. The producers control the customer experience and distribution activities entirely. Also, this method is effective for small and big businesses. Furthermore, any company can use this method to increase customer trust and loyalty by spending less money.
Direct distribution also means that companies must have their sales, marketing, online facilities, customer care, etc, to market, sell and look after grievances. Another problem with depending only on this channel is that it is difficult for the business to widen its reach across geographical locations and market segments.
One of the best examples of a D2C channel is Uniqlo, a Japanese clothing brand. It has an online website store that sells them directly to customers. However, they also have retail stores in various countries across the globe. Online and retail stores give Uniqlo complete control over its brand image and customer experience.
Retailers
Apart from directly selling the products to the customers, the manufacturers can sell its products through retail stores. Retail stores include supermarkets, department stores, and retail chains. These retailers purchase products directly from the manufacturers or other intermediaries and then sell them to the consumers through physical stores or websites.
Businesses can use the retailer’s large customer base to create brand awareness and awareness about their new product lines. They can also collaborate with retailers to develop effective marketing schemes like giving gifts on purchase or offering festive offers. These marketing schemes can help attract new customers and boost sales through product promotions and placements.
Reliance Digital is one of India’s largest electronics retail store chains, with over 8,7000 stores. It has more than 200 national and international brands. It offers various electronic products like Audio & Video, Digital Cameras, and Durables like Air Conditioners, Refrigerators and Washing Machines.
Wholesalers
Wholesalers act as mediators between the manufacturer and retailers. Wholesalers buy goods and products directly from manufacturers and producers at lower costs and resell them to retail stores in large quantities at lower prices to earn profits. Some wholesalers also have online stores or warehouses to sell directly to the people.
Wholesalers are popular distribution channels and benefit from manufacturers and customers. This method allows businesses to reach more customers in different geographical locations without additional costs for warehouses, market research or employee payroll.
Sysco is a famous American company wholesaling fresh produce, seafood, meat, and imported foods. The company purchases fresh products from growers, farmers and producers and then distributes them to restaurants and other establishments.
Distributors
Retail distributors are authorised to sell manufacturers’ products to wholesalers or retailers. Retail distributors execute promotional activities to boost sales and manage distribution logistics by taking the role of sales executives. They manage the logistics and execution of sales and distribution on behalf of the manufacturer.
Manufacturers partner with different distributors across various locations to expand their market coverage and increase their customer base by leveraging their existing retail networks. Having retail distributors strategically placed near the target customer base can reduce the delivery time and decrease the delivery cost while expanding the market coverage. This also reduces the storage fee for businesses as the retail distributors store the product themselves.
MSC Industrial Supply is the one-stop shop for all metalwork and industrial products, from razor-sharp saw blades, safety glasses and hand tools. MSC gets its products from manufacturers to resell and offers extra services like on-site vending support and vendor-managed inventory.
Choosing the Right Distribution Channel
Choosing the right distribution channel is essential as it affects the pricing and promotions of any business’s products. Many distribution channels are available, but choosing the right one is necessary.
Target Markets
Identifying and defining the target markets, such as location, customer preference, and behaviours, is critical before choosing the distribution channel. A business can efficiently deliver and allow access to their products to their customers by understanding how, what, and where your target customer prefers to buy.
Product Types
The product’s properties, like size, weight and shelf life, are essential to determine a business’s distribution channel. For example, fruits and vegetables have a low shelf life and perish very easily, so they must reach customers quickly. So, the direct or short distribution channels ensure that the customer gets the product without delay while ensuring product quality is good and the product is fresh.
Warehouse and logistics facilities
The capacity of manufacturers to store the products, inventory, manage orders and supply chain helps determine which tasks to process in-house and which to outsource. This helps determine which retail channel is suitable for the businesses.
3 Tips for Retail Shops in 2024!
Personalising the Customer Experience
Different customers have different preferences, but businesses can personalise the experience of other customers-
Complementary Gifts
Businesses can always offer complimentary services or goods to regular customers or customers who make big purchases. This may include discounts, points or other perks that make customers feel unique and valued, making them return, thus increasing the footfall in the retail store.
Customise with customer feedback.
Create a way to collect customer feedback for products, services, and the retail store’s environment. The feedback will help the business identify areas for improvement and customise the experience according to the input. This makes the customer feel valued and heard.
Using technology
Billing Management Software
Good billing management software can be used for invoice billing, managing expenses, organising accounts and ledgers and creating e-invoices and e-waybills. Billing software can also manage inventory with low-stock alters and more. They can be used to track stock levels, prevent shortage and streamline ordering, thus making it easy to manage the retail shop.
Point-of-sale system
The POS systems can streamline the checkout and payment process, speed up customer service and provide valuable data insights and patterns in customer purchases. POS can automate and simplify many tasks across retail shops, like calculating sales tax and generating receipts, which saves and reduces errors.
Sustainability
Customers are increasingly becoming more mindful of the environment and making changes in day-to-day life to become more sustainable. Sustainability is a growing trend, and retail shops can adopt many ways to give a more sustainable experience for customers.
Reducing packaging waste:
Retail stores should use minimal product packaging and encourage customers to bring their bags. Starting a small reward system for the customers who bring their bags can promote sustainability and help create a sustainable brand image, thus attracting more customers.
Using energy-efficient lighting
Retail stores should invest in energy-efficient lighting and appliances that give an aesthetic look to the store and make customers feel homely and cheerful in a well-lit environment.
Also Read: Mastering Retail Management With The Role Of Billing Software
Conclusion
This blog gives valuable insights and tips for businesses to grow their retail business by using new technologies like data-driven decision-making and POS systems so companies can grow by tapping into new customer bases and increasing market coverage. So go forth and conquer the world of retail business.
Frequently Asked Questions(FAQs)
What are the different types of distribution channels?
Manufacturers, distributors, wholesalers and retailers are the different distribution channels. A business should choose the distribution channel by carefully evaluating its product’s properties, target audience and ability to manage the supply chain.
What is a retail distribution channel?
A retail distributor acts as an intermediary between the manufacturer and the customer.
What is a POS system?
The POS or point-of-sale system is a device used to manage and process retail transactions. It is used in the checkout system in retail stores.
What is an example of retail distribution?
Gilette is a famous brand for men’s personal care products like shaving cream, gel and razors. They sell their product through retail stores like Reliance Smart, D-Mart, etc.
What is the impact of distribution channels on sales and marketing?
A good distribution channel ensures that customers get the products in time, and it also helps businesses target specific customers and create a more personalised marketing approach.
