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Unit 29: Understanding Retailing

M2: Compare the methods used to distribute products and services
In this document, I will compare two different distribution channels to find similarities
and differences, and explain how these channels impacts on the effectiveness of
retailers to meet consumer demand
...
The first retailer will be Tesco under their F&F clothing brand,
which is sourced as a one-level channel
...

The second retailer is a coffee shop in Bishops Stortford called Guy and Joe’s, which
sources their products at a two-level channel which means they source their
products from a wholesaler, which would be local, and the wholesaler may source
from a factory or other kind of producer, and sells the goods in bulk at a profit
...

Another would be that high
level transportation such as
lorries and vans may be used
to transport goods, as they
would be stored in bulk, so
therefore to make
transportation more
convenient, they would both
transport the goods in an HGV
...
As a result of this,
there would be some
difference in terms of
contribution to climate

terms of climate change, they
both heavily contribute, as F&F
transport their goods worldwide
using planes, and then
transport them using lorries,
and the coffee shop would
have their food initially
transported by lorry and then
van to the wholesaler, so
therefore in terms of climate
change, these retailers are
contributing, as they aren’t
having their goods produced on
a local level, so therefore by
having this level of
transportation, they are
contributing to climate change
...


Responsiveness/ The similarities between the
two would be that there would
Speed
be some delay between
needing to restock and
receiving the stock, as both
distribution channels aren't on
a direct channel, meaning they
don’t have access to an almost
infinite amount of stock, as the
products aren’t sourced directly
from them, so therefore both
retailers would have instances
when there they would be out
of stock of an item for a period
of time, until they receive the
item in stock, and therefore the
customers can buy the product
again
...

Also, in terms of speed
relating to receiving the
products, the coffee shop
would have an advantage, as
the wholesaler would be
local, so therefore they can
get the products soon after
they have run out of stock, or
they will be able to monitor
how soon a product may run

out of stock, so they can plan
in advance and buy more of
the product, whereas if F&F
completely run out of stock,
they have to wait for the ew
shipment to come, which may
take several days
...
The coffee shop
needs the wholesaler to be
local, as they will need to
access the products
conveniently, and also they
can’t transport far, as they
need to ensure freshness for
the customer so they are
satisfied
...


Cost

In terms of product price, the
price of transit, as well as the
manufacturer/wholesaler would
be taken into account, as they
retailer will need to cover this
cost in order to remain
profitable, so therefore they
need to price the clothes
according to what they were
sold for by the manufacturer
...
However, for F&F
the profit margins are much
larger, as they would be
paying a very low cost for the
clothing, and as they are in
the fashion industry, they can

charge relatively high prices
for F&F according to what the
clothing is and how it looks,
so therefore they have to
consider the manufacturer
less, as the profit margins are
larger
...


In terms of storage and
requirements, there are many
differences between the two
...
However, for the
coffee shop, this would be
different
...

Also, for clothing, they would
be able to store a larger
amount of clothes in the
warehouse, they can keep
them there fore moths, until
the stock is gone, or the
clothes are out of range,
whereas the time period for
the food is much shorter, so
therefore they would stock far
less, to ensure there is less
wastage , and so the
wholesaler doesn’t lose
money as a result of

overbuying

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