The retail channel definition is quite complex because of the many nuances that exist between the different parties involved. These parties can be retailers, wholesalers, suppliers, importers or dropshippers. The retailers are the entities directly involved in the retailing of products or services, while the others play an intermediary role. This helps explain the difference in understanding.
The retail channel definition usually revolves around the idea that the retail market is defined as the sale of goods and services for an economic value. IT can be anything even something virtual such as a website that allows customers to buy Youtube subscribers. This means both the consumer and the retailer have to be able to interact regularly on a daily basis in order for both the industry and the consumer to define the retail market as a worthwhile entity. This is also a very difficult market to manage and even more difficult to penetrate because of the high barriers to entry and high levels of competition. This is why it is so important for businesses to adopt a strategy which will help them develop a solid niche or sub-niche within the current marketplace and increase their level of competitiveness and sales by focusing on a particular geography or segment within the industry.
One such definition is provided by the American Retail Energy Association (AREA). Their retail channel definition states that this energy efficient retail service should include: “A broad range of products including refrigerators, dishwashers, washing machines, dryers, electrical equipment, and other technologies designed to reduce operating costs and increase productivity, while reducing greenhouse gas emissions.” They further define the strategy by saying that a strong channel service will allow customers to find and purchase energy-saving appliances and equipment at reduced prices, which will in turn, increase overall demand for these goods and services. The main aim of the energy saving industry is to demonstrate to consumers that reducing energy consumption can save a significant amount of money in the long term. Another group which falls into the retail channel strategy definition is the New Economy Alliance which aims to provide information on energy saving technology, introduce government policy and promote business activities aimed at improving the economy and balancing the distribution of energy portfolios.
An additional definition is from the Retail Solutions Provider Association of America (RSPA – RSI – US), which provides further criteria to help businesses determine whether their marketing campaigns are helping to meet their objectives. This definition focuses on five strategies which they say are critical to any retail channel strategy: Develop a competitive strategy, create a visibility and favorable customer perception, create a need, and support and enhance the performance of suppliers. The RSI also defines these strategies as: “a set of specific actions that, if properly executed, will improve a company’s ability to sell its products”. They further stated that these actions should be in line with the company’s own internal goals and objectives and the goals and objectives of other partners”. The other main criteria from this Retail Solutions Provider Association of America definition is that a successful retail strategy must be flexible to work with any business environment.
The second most significant criteria from the Retail Solutions Provider Association of America’s retail channel definition is defining what is called a commerce runtime. They defined it as a “set of business rules that drive business rules”. These business rules are dependent on the existing architecture of your business. The architecture of the application and how you have defined the requirements are two key factors in defining the commerce Runtime. Your architecture will determine the requirements of your application to run both smoothly and securely and to define and measure your business’s success.
The third important criteria from the retail channel definition is defining what is called an identity provider solution. They explained it as: “an on-demand service, which streamlines the process of acquiring, creating, managing, and billing sales and inventory data. An identity provider solution also takes care of the technical infrastructure required for running retail channels and maintains channel relationships with channel partners so that all of the business logic is located in an integrated system, the applications, and data are standardized across multiple channels so that there is minimal duplication of services, data, or logic”. This will eliminate a lot of problems that may arise in implementing your retail channel program.
The fourth most significant criteria from the RCA definition is defining an omnichannel program. Omnichannel is “an application which has both digital and physical elements”. Digital elements can include an AMP (application performance management) gateway, a payment gateway, an AMP broker, and a retail automation platform. The combination of these three will ensure success in the retail channel by taking care of both sales and inventory, accounting and reporting, and order and sales follow up. It will also help in establishing an automated sales process, a reduction of cost, and higher rate of return on investments.
The fifth most important factor is defining your metrics. Metrics are defined as “a numerical value that is a proven way to track and analyze the performance of a distribution system”. This will allow your company to establish how it is performing against a defined goal. Metrics can come from many different places including your actual expenses being spent in retailing, an indicator of current spending trends, or even an indicator of your company’s overall sales performance.
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