Comment: Retailers should market brands through wholesale channels

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All the talk about omnichannel, and the restructuring of retail fulfilment processes, implies a serial decoupling of the classic chain of distribution.

But the chain that binds suppliers and consumers to each other remains unbroken; the links are simply being redistributed.

Producers have always sold in bulk to wholesalers who have then sold on - maybe through jobbers, resellers or even other wholesalers - to retailers, who would re-tailler (resize) the bulk to suit end-users’ requirements.

In recent decades the retailers have become the dominating link in the chain; if not its padlock. Be it the supermarkets listing (or delisting) the brands they offer, or the fashion retailers offering nothing but their private labels, customers could only be fulfilled within the four walls of a retail store.

But customer fulfilment can now be as much the prerogative of the producers or wholesalers as the retailers - whose four walls can be blown apart by the four winds of the internet.

For all our talk of etailing, pure-plays and bricks-and-clicks (to say nothing of omnichannel), the internet is the great wholesaler in the sky - www should stand for wholesale, wholesale, wholesale.

Amazon is but a virtual cash and carry, although nowadays we pay online and have purchases delivered to our door instead of us trucking to the depot with a wad of dosh.

The recent deal agreed with Asos by Primark is not so much the latter becoming a vicarious digital distributor but rather it acting like a wholesaler that is supplying a highly edited range of its private-label products for another retailer to sell. Examples of this trend are rife: Waitrose, for example, is now wholesaling selected products on Eurostar trains.

Retailers need to understand how to market their brands through wholesale channels, as all successful brand owners do. Most retailers are fixated on how best to balance their portfolios of directly owned and franchised stores alongside concessions and transactional websites. The missing link in the chain, for all too many, is the good old-fashioned wholesale channel.

Ted Baker puts them all to shame. Wholesale revenues (£46.5m) equated to 22.5% of retail revenues (£208.0m) in the year to January.

And in the most recent 20-week reporting period even the excellent retail sales growth of 30.7% was eclipsed by wholesale revenues growing by 41%.

This should be the acid test for branded retailers. If FMCG brand owners, or those in the electronic or sportswear sectors for example, have developed such strength of equity in their brands they can be sold with success, in competition with their peers (rival manufacturer brands as well as retail private labels) in other people’s stores, then retail brand owners should not be afeard of going along the same channel.

Many fashion retail businesses, especially those deeming themselves to be lifestyle brands, wrongly believe that store fit is integral to their DNA and must never be side-stepped. The truest stars can shine in other firmaments.