DISTRIBUTORS WANTED!

When walking the aisles of tradeshows, when browsing through trade magazines, one can not help but being repeatedly confronted with the sign or announcement: "distributors wanted!"

This phenomenon looks to be the continuation of a business-model that has been developped in the dim-and-distant past; i.e. the manufacturer's thinking that the next station to be reached was (and is) their wholesale relations to whom the worries of getting product to the end-buyer could be delegated at a profit for both.

The distributors were supposed to be the external sales and logistics arm for companies that were not in a position to build their own structures. In the cooperation it was essential that the distributors had an asset that the manufacturers lacked: knowledge of and contacts in the market in which they operated. This applied (and still does apply) much more to the flow of products through the specialty trade than through mass markets.

This business-model proved to be a worthwhile one and in a growing pet market there was plenty of room for those who were dedicated to play their role in a professional way.

For manufacturers and distributors alike, the key questions today are: how likely is it that this business-model can and will be continued and if the role of the distributor will have to change, in which directions will this change take place?

Distribution is changing and will continue to do so because of its inherent dynamics. The main change that influences the way to market for quite a number of manufacturers is the formation of chains of petshops/stores – franchised or integrated – with their apparent or proven buying-capacity and their own logistics infrastructure. Granted, not all continents and/or countries are equally evolved with regard to pet chain formation but the overall trend seems to be in the direction less "independent" outlets in favour of pet chains.

The consequences of this continuous development seem to be clear: the role of the traditional distributor is changing and diminishing.

Changing because the manufacturers wish to have a direct influence in the negociations with the pet chains and diminishing because many of these chains have their own logistic infrastructures.

In fact, powerblocks are being built, both on the manufacturers' side and the retail-side. Through further consolidation and otherwise. With the objective to maintain the balance of power between them!

So, where does this put the traditional distributor?

In a position of being squeezed between the 2 powerblocks or at best in a follower's position without any genuine influence in the process. In fact, the distributors' strategies are increasingly going to be dictated by suppliers on the one hand and retailers on the other.

In this scenario, a substantial number of distributors will disappear because the room that was originally there for all of them, is shrinking.

To continue to make a contribution to the pet market, distributors will have to change course! So far, most of them have been active to help and build manufacturers' brands. Implicitely the brand-equity has always been for the manufacturer; the distributor was and is an executor of strategy without being in a position to build his own portfolio of meaningful and potentially valuable brands.

In most cases distributor-sizes are not such that they have the resources to build brands. International alliances will have to be sought if the "branded-scenario" is the chosen one. Because market-opportunities will thus multiply and the investments in the brands can be spread to make them bearable for the individual alliance-partners.

Having a small basket of own brands that can be developped into a sustainable position in the market will make the distributor less dependent upon manufacturers' strategies and will revitalise the trading-relationships between the distributor and his retail-partners.

There continues to be room for the distributor, assuming that the latter is prepared and in a position to adapt his business-model and approach to market to today's and tomorrow's requirements and opportunities

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