How to Create a Retail Distribution Strategy

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by Stephen Gould
August 20, 2021
By Stephen Gould
August 20, 2021

Stephen Gould handles every aspect of distribution for manufacturers including Inventory Management, Order Fulfillment, Freight Management, and Returns Processing.

Retail distribution is more complex than ever before. As more consumer purchasing shifts to online platforms, manufacturers and retailers must procure goods from multiple sources around the world and rely on a network of intermediaries to ship orders to their customers.

With the massive growth of ecommerce, drop shipping, and omni-channel distribution, businesses need flexible distribution strategies to stay competitive. Stephen Gould’s experienced team knows what it takes to create a dynamic, modern retail distribution strategy that reliably delivers products to their point of sale.

We developed this guide to help you understand how to create a modern retail distribution strategy that will grow your business.

What is Retail Distribution?

Retail distribution is the process of getting a product to a point of purchase. Successful retail distribution strategies ensure that you have the right goods in the right place at the right time to reach your customers.

Retail Distribution Channels

Retail distribution channels are the paths that goods take to from the manufacturer to the consumer. Along that path, there are often a number of intermediaries that package, house, and deliver products. The more intermediaries are involved, the higher the price a product will be.

There are two types of retail distribution channels:

  • Direct Channels

    The producer controls the point of sale with no intermediaries involved (e.g. a company’s own brick and mortar store or ecommerce site).

  • Indirect Channels

    The producer relies on a range of intermediaries—wholesalers, agents, brokers—to reach their customer (e.g. big box retail or third party ecommerce).

The Different Types of Retail Distribution

Retail distribution strategies are tailored to the product’s level of complexity and the producer’s goals for growth. The most common retail distribution strategies can be broken down into three categories.

  • Intensive Distribution

    Intensive distribution targets as many outlets as possible to saturate the market. The key to this strategy is developing a wide distribution network that ensures inventory will be readily available. This strategy works best for lower-priced, mass consumer products.

  • Selective Distribution

    Selective distribution is used to get goods into specific retail outlets that reach the manufacturer’s desired customers. This allows manufacturers more control over product availability and price point. Luxury brands, for example, tend to selectively distribute to retailers that align with their brand image.

  • Exclusive Distribution

    Exclusive distribution is when manufacturers elect to make their products available only through their own branded storefronts or through an exclusive partnership with a retailer. This has been a successful strategy for many direct-to-consumer online brands. It’s an approach that also lends itself well to highly coveted or limited edition products.

Key Players in Retail Distribution

As distribution chains grow in size and complexity, it becomes more difficult to understand the roles of various players within the process. Here is an overview of the common intermediaries in retail distribution.

  • Distributors

    Distributors sell products on behalf of the producer. Depending on the distribution chain, they may sell to retailers, other sellers, or even directly to consumers or businesses. They take on greater responsibilities than the typical middleman, such as fulfilling orders, managing returns, and sometimes even acting as sales representatives. Distributors usually focus on a specific market and have strong relationships with retailers, making them a vital partner in reaching customers.

  • Retailers

    Retailers are the outlets that consumers purchase products from. This includes everything from your local grocery store or big box retailer to online stores and marketplaces. Retailers purchase their products from distributors or wholesalers.

  • Agents and Brokers

    Agents and brokers handle sales logistics. They manage customer relationships and coordinate the flow of goods. Manufacturers use agents and brokers to take ownership of products throughout the distribution process and represent the producer.

How to Find the Right Retail Distributor

Finding experienced partners is crucial to building a retail distribution strategy that reliably gets your products into stores. Company leaders should consider the following factors when creating a retail distribution strategy:

  • Knowing Your Competitors

    Understanding competitors and how they’ve succeeded and failed is an essential part of a distribution strategy, especially when launching a new brand or product.

  • Understanding Costs and Benefits

    Retail distribution plans can be expensive and challenging to set up. The right partner will understand the hidden costs and potential benefits so you can create a financially feasible strategy.

  • Building in Flexibility

    Sometimes unforeseen obstacles arise that make your preferred strategy unviable. It’s important to research all your options and have alternatives available if you need to pivot.

  • Tracking and Analytics

    An effective distributor will give you access to real-time insights that make it possible to address supply chain issues quickly and efficiently. Distributors should be able to help you understand patterns in ordering and set up systems to predict demand and ensure retailers are receiving the amount of product at the right time.

  • Communication and Trust

    As distribution chains become more complex, communication becomes even more important. An experienced distributor excels at program management and knows how to set up clear protocols and regular checkpoints for communication between managers, sales teams, and customers.

Retail Distribution with Stephen Gould

Stephen Gould handles every aspect of retail distribution and leverages advanced technology that makes it easy for you to build a reliable and cost-effective distribution network for your products. Our experienced team will work with you to set up new supply chains and re-evaluate existing ones to discover opportunities for greater efficiency and value generation.

We offer a robust array of services, including Inventory Management, Order Fulfillment, Freight Management, and Returns Processing, that give our clients unparalleled flexibility and customization. We also design and manufacture point-of-purchase displays, signage, and kitting that meet the extensive guidelines and specifications of world’s largest retailers.

Let us handle every last detail of your distribution process so that your customers can have confidence that your products will be there for them, every time. Contact us today to learn more.