Final Exam Flashcards
What is Distribution ?
Distribution is a management system within the supply chain focused on order fulfillment throughout distribution channels
3 R of Distribution
- Right Place
- Right Time
- Right quantities
How a brand can reach the consumer?
Wholesale : sell in
Retailers : sell out
What is retail ?
Retail is the sale of goods and services to the end-users to make the profit by adding value
Retail activities
- Purchase in bulk
- Keep and show assortment
- Sell in small quantities
- Offer services
- payment facilities
- possibility to touch and fit
- professional advice
Adding value process through service
- convenience
- speed
- education and training
- risk-free ans safe
Key players
- LVMH (64.2B)
- Kering (17.6B)
- Richemont (17.9B)
- Ester Lauder (17.09B)
- Inditex - ZARA (28.3B)
- H&M (187M)
- Fast retailing (2.28T)
- Capri (5.1B)
- Tapestry (6.4B)
- Prada Group (3.2B)
- Burberry (2.3B)
- Ralph lauren (7.3B)
Why is it happening
- Digital transformation - shift to e-commerce, access to data and tech
- global expansion - emerging market, portfolio diversification, competitive pressure, niche player advantage, financial efficiency.
- shifting consumer preferences - sustanability, gen Z influence
- consolidation pf power - market dominance, control of distribution channels, post-pandemic recovery.
example of innovation in distribution
Chanel : exclusivity and direct control
Louis Vuitton : Integrating Omnichannel strategies
Gucci : collaborating with multi-brand platforms
Prada : new formats in distribution
Hermès : ultrapersonalized experience
balenciaga : digital innovation
Burberry : sustainable omnichannel strategy
Bottega Veneta : sudden close of all SM accounts
What is distribution channels ?
- The innovative examples shared by the groups, such as pop-up shops, direct-to-consumer (DTC) models, or digital-first strategies (e.g., social media marketplaces), will help contextualize the fundamental types of distribution channels.
- For instance, some groups may have discussed e-commerce platforms or online luxury boutiques, which directly tie into the understanding of digital distribution channels. This will offer a segue into exploring both traditional and emerging channels like physical retail, wholesale partnerships, and e-commerce
What is Distribution formats
- The innovative distribution examples will also offer a practical lens through which to discuss the different formats through which products reach the consumer. Traditional formats include flagship stores and department stores, while modern formats might include pop-up stores, brand collaborations, or exclusive online platforms.
- These innovations can be analyzed to see if they fit into or disrupt existing formats and how these formats influence customer experience, brand positioning, and sales strategies.
What is a strategic alignment?
- By evaluating innovative distribution methods, students will gain a deeper understanding of how brands choose their distribution channels and formats based on their business model, target market, and value proposition. For example, luxury brands may choose exclusive distribution formats to maintain brand prestige, while fast fashion might prioritize accessibility and convenience.
Explain the concept of Place in Distribution (Definition, keys element, importance, type and trends)
Definition : Place refers to the set of activities a company uses to ensure its product is accessible to the target audience. It answers the “where” and “how” questions in delivering value.
Key elements : Companies must choose the right distribution channels (e.g., retailers, wholesalers, or direct online sales), determine coverage (intensive, selective, or exclusive), and ensure proper logistics and inventory to avoid stockouts or overstock.
Importance : A great product won’t succeed if customers can’t find or buy it conveniently. Strategic placement increases customer satisfaction and sales potential.
Type : Selling directly to the customer (e.g., company websites, stores). Indirect Channels: Using intermediaries like retailers or wholesalers (e.g., supermarkets).
Trends :Modern businesses increasingly adopt e-commerce, creating seamless shopping experiences through omnichannel strategies (combining online and offline) and using digital platforms to reach global audiences effectively.
Distribution channels
which consists in directly managing each tier of their supply chain, from garment production to customer service and retail.
Most fashion brands work through an established network ofintermediaries, withlower investment costsbutlower profit margins.
How can your brand reach your customer?
Direct sale
- Door to door sale
- Sale through mail order
- Online sale
Indirect sales
- Manufacturer - retailer - consumer
- Manufacturer - wholesaler - retailer
- Manufacturer - distributor - wholesaler - retailer - consumer
3 type of distribution channels
Direct : retail
Indirect : wholesale
Transnational : retail and wholesale
wholesale vs retail. Why companies opt between B2B and B2C format
in the high segment, for example as haute couture brands or pret-a-porter brands may need to directly manage distribution to provide their customers with the guarantee ofTotal Quality Management, at the same time, lower-tier brands such asdiffusion brandsandwork through intermediaries.
In any case, there is no set rule to establish the most effective and reliable form of distribution for your brand, so it may be helpful toassess all of the variables that you should consider while making this decision
Benefits of direct distribution
- Capture the retail margin
- Collect relevant information about the customer and the sellout
- Better control of the brand image and customer experience.
B2C distribution (retail)
Tangible values : store operations supply chain challenges showrooming/webrooming
Intangible values : brand consistency and delivery
- atmosphere
- experience
- association
In B2C distributiona company will pursue asell-out approachwhereby a company will own and manage THEIR OWN retail locations.
Formats in retail channel
Flagship store : A flagship store is a retail location that serves as the primary representation of a brand. It is typically the brand’s largest and most prominent store, strategically located in a high-traffic area or a prestigious shopping district.Free-standing store
shop in shop
franchise
e-commerce
company outlet
What is a flagship store
Goal - to bring customers into the brand
- prestigious and expensive location
- unique and curated assortment
- capable and motivated staff to provide a quality experience
- introduces, reinforces and enhances the retailer’s position and status as a credible luxury brand
- provides the retailer with a unique retail space and opportunity to develop new business propositions
Free standing store/ brand store
- Representation of the Brand: A brand store is a retail outlet operated by a specific brand, and it represents that brand’s image and product range.
- Size Variability: Brand stores can vary in size. They may include flagship stores, but they can also encompass smaller boutique-style stores or even pop-up stores, depending on the brand’s strategy.
- Focused Product Offerings: While a brand store aims to represent the brand, it may focus on specific product categories or themes. It might not offer the entire range of products that the brand produces.
- Location Flexibility: Brand stores can be located in a variety of settings, including urban centers, shopping malls, or specific neighborhoods. The location may be chosen based on the brand’s target demographic and marketing strategy.
- Customer Engagement: Like flagship stores, brand stores aim to engage customers and reinforce brand loyalty. However, the level of immersion and experience may vary based on the specific objectives of each brand store.
Shop in shop
Every square foot counts, so if a space isn’t attracting customers on its own, a partnership is a chance to enhance the offering.As retailers integrate more of these small-scale spaces, though, flexibility and thoughtful design are essential.
The department store has been staffed the showrooms with its own in-house menswear specialists and has leveraged its tailoring network to offer free alterations at any of its stores.
Franchise
Gucci’s franchise in Saudi Arabia is one of the most famous fashion franchises in the Middle East. The brand has gained immense popularity due to its high-end products, designer clothing lines, and luxurious accessories, all made with a distinctive Italian style. The main goal of the Gucci company is to provide an unparalleled shopping experience for consumers from all over the world.
