The Retail Channel and Its Effect on Your Business

The retail channel is the sales channel in a distribution chain. It consists of retail shops, wholesalers, suppliers and companies that work together to provide retail merchandise to retail buyers. Basically, when a product is sold to the customer, it goes through one of the six channels before reaching the ultimate retailer. These channels include:

Outlet – The outlet is the front-of-the-store retailer. 

This is the store where the product is displayed on a display. Outlets usually sell goods that have been ordered from suppliers and delivered to them for processing and production. The retail channel outlets can be located in malls, supermalls or chain stores.

Chain Store – The chain store is a retailer at a very large scale. 

Like a superstore, it has many stores under it selling similar products. Unlike a superstore, chain stores have sales people that work to replenish all of the stores in the chain by stocking their shelves with the products from the newest releases. This is also a retail outlet.

Wholesale Channel – The wholesale channel refers to items that are sold in bulk. 

Common products offered in this channel are electronics, food items, clothes and furniture. It can either be purchased directly from the manufacturer, like Sony or Apple, or from a wholesaler, like Amazon or Wal-mart. This retail outlet is popular among franchisees because of the low overhead costs.

Direct Wholesaler – A direct wholesaler is a retailer that sells goods directly to the public. 

It is similar to a factory outlet but instead of coming off the conveyor belt, items are being sold directly to the customer. This type of the retail channel outlet is popular with retailers looking to cut costs. Many people who work in a direct wholesaler position are able to start their own business with very little start-up cost.

Outlet Chain – The outlet chain is another important factor to consider when selling retail. 

Each store in the chain represents an item from the main product. For example, a Disney outlet will carry Disney toys, but the Mattel outlet will carry only Barbie toys. An example of an outlet chain would be the Lego store. Legos are often sold in a brick and mortar store or via the internet.

The last thing to consider is the overall appearance of the retail outlet. 

The layout and overall design of the store, as well as its placement are extremely important factors. If the retail channel looks completely disorganized, consumers will not find it inviting and will most likely leave the store. Similarly, if the layout is bad, consumers will more than likely give up trying to find what they are looking for and will move on to a competitor’s store.

There are many factors that go into deciding which retail outlet is best for a specific product or market. 

brown wooden shelf with bottles
Photo by Sigmund

These factors include the type of product, the type of market, and the layout of the store. There are many great retail chain coupons and rebates available today. Outlet locations can be found in all kinds of places, including the internet. Some coupons can be purchased online and applied at the retail location, and others can be obtained by visiting local stores.

One factor that is often overlooked is the actual placement of a retail outlet. Many retail chains place their outlets in highly-targeted areas. These areas are generally the high traffic areas of the shopping center. This may be the checkout area or lobby of the store. Although these areas may look fine on a random visit, there is no guarantee that a consumer will find what they are searching for in this location.

Other factors that can greatly affect the retail outlet’s placement include marketing strategy and brand name recognition. In recent years, Wal-mart made major investments into their superstore concept. If the retail outlet location is in an appropriate place, such as an elementary school, it may attract customers from the public school that is located nearby.

Many retailers also use their advertising budget to promote their store locations. 

Many television commercials for different products are produced and used in the retail channel. Radio and print ads are often used as well. As you can see, there are a lot of ways that retailers use their advertising budget. In order to improve your chances of attracting more customers, you should ask the help of an experienced local commercial real estate agent. They will be able to give you a better perspective of the current real estate market in your area and what type of advertising you should be focusing on.

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