Contemporary Channels scenario in India

Conventional Wholesale Retail Trade Continues to Dominate the Scene: In total contrast with the Western countries, where formats supermarkets/retail chains dominate the distribution system. Conventional wholesale retail trade dominates the scene in India. Again, unlike, the West where a handful of apex distribution chains service the millions of retail shops, in India stand alone wholesalers/retailers dominate the scene. Some experts believe that before long we will see the massive growth of distributing companies/retail chains. Many others, however, feel that in India, large distribution outfits will not replace traditional distributors in the future.

Image of the Trade is changing: Till recently, the image of a stockist /distributor in India was one of a cash rich trader interested in quick profits. Such an image was related to the prevailing marketing environment. Many products enjoyed a premium. Often in black, in view of the all round shortages and the system of price controls. The distributive trade was making merry at the cost of the consumers. The situation has changed considerably in recent years. With the increased availability of products, removal of price controls, increased competition and increased choices to consumers, the environment in which the distributive trade was operating has changed significantly. The distributor of today has to put in harder effort to sell the products and has to service the customer properly. Naturally his image has undergone a change. Companies too are now keen to present to the public/consumers a cleaner image of their distributors.

Conventional wholesale retail trade continues to dominate the scene, though formats like supermarkets, retail chains and shopping malls are making a mark.

* Image of channels/distributive are undergoing a change;

* Profiles of distributors to undergo a change;

* Trade margins escalate as costs of distribution keep growing;

* Expectations of distributors in the matter of profits also change;

*The power equation among the distribution triumvirate – principals, distributors and retailers – shifts in favor of the lower levels;

* Distributors are becoming choosy;

It greatly influences the way marketing channels operate.

* Firms go in different kinds of non-traditional channel arrangements;

Outsourcing of Channel task/marketing logistics:

Exclusive retailing
Exclusive dealers without franchising arrangements
Exclusive retailing through showrooms
Exclusive retailing though shop-in-shop franchising

Firms go in for non store retailing methods:

Direct selling/home selling
Multilevel marketing/network marketing
Marketing by vending machines
Consumer fairs

Firms go in direct marketing methods:
Mail order marketing/catalogue
Direct mail marketing
Direct response marketing
Database marketing
Tele marketing
Tele shopping (Home shopping)
Online marketing /Marketing on the web.

Equally radical changes are taking place on the retailing side:

Profile of distributors has also been changing:

Not only has the image of the distributive trade as a whole undergone a change, but the profile of distributors has changed significantly. As a general rule, today’s distributors are better educated; in fact many of them are professionally qualified. They are also sophisticated and marketing savvy. They are better exposed to modern retailing. They are also more aggressive they can deal the company executives on equal terms. In many cases, they are also quite big terms of size of operations.

Distributors keep expanding and diversifying: Another factor is that distributors as a class are now taking to expansion and diversification.

Trade margins Escalate as costs of distribution keep Growing:

Escalation of trade margins has become the trend in the earlier days, it was possible for distributors to operate with modest trade margins, as their investment in the business infrastructure was low. In recent years, they have to take larger investment. Running costs of distribution outfits have also been going up. Naturally the distributors now need higher compensation.

Expectations of distributors in the matter of profits also Change:

In recent years, there has also been a major change in the expectations of distributors in the matter of returns as compared to earlier days. While distributors of earlier days as a class were content with modest profits, most new generation distributors want higher profits. This is all the more true in the case of the retailers. Manufacturers have been forced to fall in line with this end and settle for a higher outflow on distribution margins.

Power Equation among the distribution Triumvirate Shifts in favor of the Lower Level:

In the new dispensation, the retailers have become the most woeful. Earlier, in the supply led market, power rested with the manufacturers. In today’s demand led market, power is with the consumers. And retailers by virtue of their being the link that is closest to consumers in the distribution chain wield the maximum power.

Distributors are becoming choosy:

Now, in many businesses, the manufacturers do not seem the kind of choice they enjoyed yester years in selecting distributors; on the contrary, distributors/dealers have become choosy of the manufacturers whom they would represent For example, in the earlier days, distributors/dealers would consider it a privilege to be selected as a distributor for a company like HUL. These days, they are moving away from ideas. And, they certainly have more choices.