Product distribution strategy varies according to the characteristics and goals of the company. In general, three main types of distribution can be identified: intensive, selective and exclusive.
What distinguishes the strategies is the coverage of the target market and the type of product being distributed. Focusing on the fashion industry, what are the limitations and advantages of different types of distribution? Which one is best suited for the world of luxury fashion? Let's look at everything in detail!
The term intensive distribution refers to a type of distribution that aims to increase the availability of high-fashion products as much as possible through distribution in multiple outlets and in different countries.
The purpose of this strategy is to maximize market penetration by offering potential customers many opportunities to connect with the brand and purchase products.
If intensive distribution is particularly effective for consumer goods (because it ensures the immediate availability of the desired product), the it's a different matter when it comes to the world of high fashion.
Intensive distribution is often an inappropriate choice for luxury: distributing collections to multiple markets and channels can depreciate the brand's luxury image and exclusivity, compromising its reputation.
This strategy can make it difficult for the company to maintain control over product quality and adapt to changes in the market and trends in a flexible way.
Not to mention that the wide availability of goods can reduce demand and allow retailers to sell at lower prices (thus reducing profits for the brand), while at the same time distribution costs (transportation, logistics and marketing) may increase.
As the name implies, the strategy of selective distribution involves a carefully selected choice of outlets to sell high-end products. The goal is to maintain the brand image and ensure a high quality of customer service to the customer.
Since this involves intermediate distribution coverage, customers will have less chance of finding the product they are looking for, and market penetration will be lower than with the intensive strategy.
Qualitative selective distribution carefully selectsthe dealer networkand is therefore suitable for more "complex" products that are not normally purchased on impulse.
As for the luxury apparel sector, selective distribution proves to be a more appropriate choice than intensive distribution for several reasons.
First of all, this strategy helps to preserve brand image by avoiding diluting brand exclusivity through overly broad distribution. It also allows the company to develop targeted marketing strategies and maintain stronger control over the quality of the product and the way it is presented.
A selective distribution contract can help set higher prices for products, increasing profit margins and limiting distribution costs.
The last strategy we will explore is that of exclusive distribution: in this case, products are given to only one retailer per geographic area. Thus, there are only a few distributors and they are even more carefully chosen than with selective distribution.
With this kind of strategy, the prestigious image of the products is kept high, which is why exclusive distribution is especially suitable for luxury goods.
Customers who want to buy these products recognize the symbolic value of the brand and are willing to look for a retailer located further away and spend more to get what they want.
Compared with selective distribution, exclusivity further enhances the luxury character of the brand and allows control over the quality of service provided and the prices.
Given the small number of retailers, the company can focus on promoting products and implementing the most effective marketing strategies, resulting in higher profits.
One of the limitations of exclusive distribution is the close "dependence" on the individual retailer to access a given market; in the event of problems or disputes, relying on a single distributor may entail some risk.
Given the three main distribution strategies, which one is best for the world of high fashion? There is no one-size-fits-all answer, because there are several factors to consider: companies can use some of these strategies to achieve their international distribution goals or choose to adopt a specific strategy. It all depends on the needs of the brand and the market situation.
At Alexys Agency, experience in the luxury fashion industry has enabled us to identify selective distribution as the best option for distributing luxury Made in Italy items and more. This way, we can ensure that the brands we manage have an exclusive image while being able to respond flexibly to changes in the market, making the most of opportunities.