Sign up to access the complete lesson and track your progress!
Unlock This CourseWhen you buy a chocolate bar from your local shop or pick up trainers from a sports store, you're experiencing distribution through retailers. This is one of the most common ways businesses get their products to customers and it's a crucial part of the marketing mix's 'Place' element.
Distribution through retailers means using shops, stores and other retail businesses as middlemen to sell products to the final customer. Instead of selling directly to consumers, manufacturers work with retailers who then sell to the public.
Key Definitions:
Retailers provide valuable services that many manufacturers can't offer alone. They have established customer bases, prime locations and expertise in selling to consumers. For a small chocolate manufacturer, getting their products into major supermarkets means instant access to millions of potential customers.
Not all retailers are the same. Understanding different types helps businesses choose the right partners for their products. Each type has unique characteristics that suit different products and customer needs.
These are small, locally-owned shops that operate independently. Think of your local corner shop, independent bookstore, or family-run restaurant. They're often very connected to their local community and can provide personalised service.
Personal relationships, local knowledge, flexible ordering, quick decision-making, community trust
Limited reach, smaller order quantities, may lack marketing resources, higher costs per unit
Specialist products, local goods, premium items, products needing explanation
These are multiple shops owned by the same company, like WHSmith, Boots, or McDonald's. They operate under the same brand name and usually follow similar layouts and procedures across all locations.
Wide geographic coverage, bulk buying power, consistent brand experience, established supply chains
Less flexibility, standardised approach, longer decision-making process, may focus on popular items only
Mass market products, branded goods, items with proven demand, standardised products
Large self-service stores selling food, household goods and increasingly, clothing and electronics. Hypermarkets like ASDA or Tesco Extra are even bigger, offering an enormous range of products under one roof.
Innocent Smoothies started by selling their drinks at music festivals and farmers' markets. However, their big break came when they secured distribution through major supermarkets like Sainsbury's and Tesco. This partnership allowed them to reach millions of customers nationwide and grow from a small startup to a major brand. The supermarkets provided the scale and reach that Innocent needed, while Innocent offered an innovative, healthy product that helped supermarkets attract health-conscious customers.
Selecting the right retailers is crucial for business success. Companies must consider several factors to ensure their products reach the right customers in the right way.
The retailer's customers should match the product's target market. A luxury watch brand wouldn't suit a discount store, just as budget cleaning products might not work in an upmarket boutique.
Successful distribution requires retailers and manufacturers to share similar customer bases. John Lewis attracts customers seeking quality and service, making it perfect for premium brands but unsuitable for basic, low-cost items.
Businesses need to consider where their customers are located. A surf equipment manufacturer might focus on coastal retailers, while a winter clothing brand needs nationwide coverage to reach customers in colder regions.
The retailer's reputation affects how customers perceive the product. Being sold in prestigious stores can enhance a brand's image, while association with poor-quality retailers can damage it.
Using retailers brings both benefits and challenges that businesses must carefully consider when planning their distribution strategy.
Wider Reach: Access to established customer bases
Reduced Costs: Retailers handle storage, display and sales
Local Expertise: Retailers understand their local markets
Cash Flow: Immediate payment from retailers rather than waiting for consumer sales
Reduced Margins: Retailers take a percentage of profits
Less Control: Limited influence over how products are presented
Competition: Products compete with rivals on the same shelves
Dependence: Reliance on retailer relationships
Stock Management: Ensuring adequate supply without overstocking
Relationship Building: Maintaining good partnerships
Pricing Coordination: Balancing manufacturer and retailer needs
Technology is revolutionising how manufacturers work with retailers, creating new opportunities and challenges in distribution.
E-commerce platforms like Amazon have become major retail partners for many businesses. These online retailers offer global reach and sophisticated logistics, but also intense competition and pricing pressure.
Warby Parker, an eyewear company, started as an online-only business but later partnered with physical retailers and opened their own stores. They use a combination of online sales, partnerships with opticians and their own retail locations to reach different customer segments. This shows how modern businesses often use multiple retail channels rather than relying on just one type.
Modern retail partnerships often involve sharing sales data and customer insights. This helps both manufacturers and retailers understand customer behaviour and optimise their strategies.
Advanced systems now track products from manufacturer to final sale, helping retailers manage stock levels and manufacturers plan production more effectively.
Success in retail distribution depends on building strong, mutually beneficial relationships with retail partners.
Successful manufacturer-retailer relationships require clear communication, reliable supply, competitive pricing, marketing support and mutual respect. Both parties must benefit for the partnership to thrive long-term.
Manufacturers can support their retail partners through staff training, marketing materials, promotional support and reliable delivery schedules. This support helps retailers sell more effectively and builds stronger partnerships.
Most successful businesses work with multiple retailers to maximise their market coverage. This requires careful management to ensure all partners receive appropriate support while avoiding conflicts between competing retailers.
Coca-Cola works with virtually every type of retailer, from small corner shops to massive supermarket chains. They provide different levels of support based on the retailer's size and importance, offering everything from branded fridges and signage to staff training and promotional materials. This comprehensive approach helps ensure their products are available wherever customers want to buy them, demonstrating the importance of flexible retail distribution strategies.