Brands having a channel strategy is nothing new. To put it simply, channel strategy defines what avenues a brand will sell through in order to reach their consumer. What is somewhat new is how intensely retailers care about brands’ channel strategies. “Show me your channel strategy” is really asking, “who else are you selling to?”--and there’s usually only a few players of concern.
Channel strategy has always been an important component of building your brand. You need to be in the right channels to reach your targeted consumer groups and find channels that will align with your desired brand perception. It’s why you don’t see Gucci at Walmart. It's also why Target gets so much street cred with limited time offers for high-end designers like Lilly Pullitzer and Missoni.
However, this latest evolution of retailers demanding channel strategies is a slight twist on the classic. Sure, part of the concern for the retailer is creating differentiation within the marketplace. But the perceived big bad wolf of a poor channel strategy is retail price degradation.
That thing called the internet has made pricing incredibly transparent. As retailers fight for mindshare, a quick way to the consumer’s heart is by offering the lowest price. Brands that don’t develop a sound channel strategy could find their market value slipping double-digit percentages. For the retailer not slashing price to gain the sale, concerns quickly arise about trading off consumer perception of overall retailer price competitiveness vs. poor margins.
It’s up to each brand to determine what channel strategy is right for them. There is no “right” answer, you just need to make sure you have a good one.