Transnational Distribution Channel in Fashion Industry
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GD/PI for NIFT

Transnational Distribution Channel in Fashion Industry

Fashion supply chain has seen severe impact due to COVID-19. What is the solution?

Producers produce and consumers consume. Such a well-defined activity. However, there are some questions that need answers : -

  1. What about the connecting link between producers and consumers?
  2. How do the products actually reach the consumers?
  3. What are the missing links of the supply chain?
  4. How are the goods distributed to the end-users?

Most of us are aware of the distribution strategy. There are two major distribution channels:

  1. Wholesale channel
  2. Retail channel

But are these two traditional channels enough in this age of globalisation?

The answer is NO.

Businesses dependent on only these two channels have the risk of lagging behind their competitors in this era of consumerism.

To cover this risk the retail industry has seen the development of another channel called transnational distribution channel. As the name suggests, the a company’s operations span multiple nations. Transnational distribution channel involves merging of all the channels viz offline, online, wholesale and retail into one channel.

It is also called Omnichannel.

The evolution of transnational distribution channel format dates back to 1980s when the home market of the manufacturers and retailers got saturated. American and European retailers sought expansion of their market in East and came at loggerheads with complexities due to the differences in culture , demography, and regulations.

However, acceleration in FDI promoted the emergence of transnational firms in the 1990s and vice versa.

There are various considerations when it comes to transnational retailing. The important ones are creating a proper product mix, selecting the store locations, optimising the supply chain and planning a good marketing strategy.

Examples of transnational firms :

  1. Tesco (UK)
  2. Carrefour(France)
  3. Walmart(US)
  4. Metro(Germany)
  5. IKEA(Sweden)

Two formats under this channel are:

  1. Duty-Free
  2. Travel Retail Stores

Duty-free and travel retail are retail outlets for international travelers.

The products in this format are exempted from local taxes and duties. These stores are usually found in the airports, seaports or the international railway stations.

Online Stores and Online business has revolutionized the retail industry by erasing the boundaries and making the world a global village.

In fact, Online retail has seen exponential growth, especially in the time of the pandemic. The most significant consumer demand in the world is the e-retail market with the fastest growing e-commerce market of all time.

In a situation when the world is confined to their homes, the shopping appetite is being fulfilled by the e-retail platforms like Amazon, AJio, Myntra, and similar other ones. Moreover, several brands such as H&M, Abercrombie, and Fitch have independent online stores and separate shopping apps. These separate online stores help them manage their consumer needs and demands. Other existing and emerging brands need to follow these trends and facilitate buying and purchasing their products online.

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