Retail News Middle East Monthly Update August 1

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By  David Ingham Published  August 1, 2005

What role for distributors?|~|comment-L.jpg|~||~|What exactly is a distributor? In days gone by, he owned a warehouse, dumped a batch of products there, delivered them when customers asked for them and then ordered another container-full when the previous one ran out. Put in the simplest terms, he was a box mover. Critics of distributors contend that they add little value and take a chunk of money out of the revenue chain that could be much better used elsewhere. If you’re a manufacturer, you may well feel that a distributor’s fee would be better spent on marketing. If you’re a retailer, the money paid to a distributor might seem like it should be passed on to the consumer in the form of lower prices and in-store improvements. Own labels are nothing if not a response to middlemen and their fees. By sourcing products directly from manufacturers, retailers like Spinneys, Carrefour and Geant are trimming down the supply chain and using the money saved to reduce shelf prices. As competition between retailers intensifies further, the role of distributors and wholesalers is likely to be called into further question. With price an ever more important factor for regional consumers, even at the higher end of the income scale, direct sourcing and own labels are likely to become even more common in the Middle East. The pressure is now on distributors to show their value and, as with so many other things, it is those who see the threat and change their way of doing business accordingly that will survive the upheaval. In this month’s issue we hear from Imtiaz Hydari, CEO of HBG Holdings, who makes the case for distributors and outlines the steps his company has taken to remain relevant. Distributors are under the microscope like never before and the industry is waiting to see how they respond to the challenges facing them. What is your view? How can distributors remain relevant in an age of own labels and direct sourcing? E-mail me on: David Ingham, Group Editor||**||

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