The retail channel is a huge profit generator. As the name indicates, it provides services and products to customers in an organized channel. Products are displayed, prices are pre-set, the staff is ready to serve, and all transactions are completed on credit and debit cards. In a retail or wholesale channel, purchases are made by the consumer, and they are then sold to a store that holds the product.
Chain Stores Are Dependant On Strong Distribution Channels
Chain stores have many outlets, which add up to a very high number. The chains include department stores, super-chains such as Wal-Mart and Home Depot, as well as independent shops and malls. They offer retail outlets to consumers who want convenience, price, and selection. Chains have a retail outlet, which is the head office, main warehouse, and delivery depot; plus, a distribution center that offers the products to the retail outlet store from the manufacturing plant.
What Is Retail Distribution
Distribution involves the trucking of goods from the manufacturing plant through the distribution centers and to the retail outlet stores. It includes the transport of finished goods and raw materials and the packing and shipment of finished goods. This is the most obvious advantage of distribution centers over retail stores; however, the distribution can also be quite profitable, depending on how it is done.
Distribution requires a lot of trucks, drivers, and storage spaces, not to mention racks and shelves. Plus, inventory must be kept current. With distribution centers, the chain stores do not have to keep inventory; the store at the distribution facility does that. A retail outlet using this type of system has a much smaller building with limited floor space and less inventory, making it easier to keep costs down.
Discount Outlets Do Not Need An Extensive Distribution Channel
The discount outlet is another type of retail outlet. These are usually small retail stores offering merchandise at major discounts. This store will usually sell directly to the consumer, eliminating the need for a distribution center. Because they are located in or near a large shopping area, they tend to draw a crowd of shoppers. In addition, because they are not owned by a chain store, they may offer a better price than their co-op counterparts.
Another Type Of Distribution Channel: Freight Forwarding
Freight forwarding happens when goods are delivered to an outlet by a company other than the original manufacturer or seller. In this case, the goods are delivered to the outlet on the same day that they are purchased. This type of retail outlet, also known as an off-brand retail outlet, tends to be smaller than other types of retail outlets. Some freight forwarders deliver within an hour or two. Freight forwarders do charge more for delivery times, but it is generally less than it would cost to ship directly to the customer.
Another type of retail outlet is the mall retail outlet. This type of retail outlet is similar to discount chain stores, except that it carries many name brand names. A mall retail outlet is a place where shoppers can shop for the name-brand name products that they want without driving too far away from their home. There are many malls with this type of retail outlet, and they tend to be popular with families. This is because they give parents a place to shop for their children without them having to drive too far away.
Lastly, there are government-operated warehouses. These warehouses are very popular with retailers because they provide a very cheap place to store excess inventory. They also provide the opportunity to purchase large quantities of goods at a time. Most government warehouses offer the same quality as a retail outlet while costing a few cents per item. Government warehouse retailers are very popular among small businesses that have large inventories but low-profit margins.