In retail business, distribution plays a key role, as it decides the where, how, whom and when for products to reach their ultimate destination. Manufacturers and retailers need a number of distribution models, channels and intermediaries at varying degrees of importance and priority, depending on the consumer, product or region. Retailers have to zero down on a right mix of distribution model and network that can enact the balancing act to the fullest, profiting everyone involved in the entire chain. There are no textbook solutions or standard procedure to facilitate a flawless distribution in the retail sector; however, the parties involved can give serious thought to essential general parameters that can help them move ahead in the right direction.
Retailers have to plan more than one distribution model for different segments or regions. The supply chain network may vary according to the requirements of either the product or the consumer. A distribution structure that is perfect for home furnishing may turn out to be a failure when it is used for food and beverage category. Likewise, what works in Maharashtra might not have the same effect when it is implemented in Himachal Pradesh. Retail market in India is as varied in nature as the demographics of the country; each market has to be dealt locally to gain a competitive advantage.
Identification of the right consumer is of paramount importance in distribution. Not every company needs distribution networks that have a pan-India presence. Some products or services may have consumers throughout the country, while certain products may sell only in select regions. Woolens would have no buyers in southern cities like Chennai, that don't have the privilege of experiencing a cold winter. You have to decide on a supply chain network keeping in mind your consumer base.
Indian Retail companies should also be ready to work with multiple networks, given the very disjointed and fragmented nature of distribution channels in India. Companies sometimes use hundreds of distributors and stockists to ensure that their products reach millions of consumers in every nook and corner of the country. Of course, the number of channel partners or distributors is commensurate of your target consumers and segments. It is also important to invest on training or coaching the people involved in your retail network, as they can give you very high returns in the long run.
Targeting a consumer segment that fits the bill for your business, identifying the areas and regions where you can get your target consumers and then picking the right mix of distribution model(s) would keep you ahead of your competitors in the business.
Mark Stepen is a Consultant with a wide range of experience in the Indian Retail Industry, specialized in Retail Brand Management, Supply Chain Management, Franchising, Visual Merchandising, Mall Management and other niche areas.