It's different, and I think I know why

I'm not much on epiphanies--maybe it's because I'm not sure I've ever had a real one, or maybe because it's just so rare that we ever get a moment of clarity so pure that we have awareness at the moment it happens.

But I had something the other day. It hit me with a certainty that I've not had all that often. It came to me when I was speaking with a rep about suppliers and how many were exiting, or altering their distribution to our channel.

It was that word--channel--that triggered the epiphany. I'm old enough to remember how companies used to sell retailers. There were lots of them and they divided themselves into several categories. We called them channels.

The Department Store Channel. The Specialty Retailer Channel. The Catalog Showroom Channel. The Wholesale Club Channel. Inside of each channel were several (sometimes dozens) of competitors.

The business was managed by "channel specialists" who understood the mechanics of their particular channel. I know--I used to be one--I managed the Catalog Showroom Channel for a consumer electronics brand.

But in the last 10 years or so the "channels" are being replaced by "customers". There is really only one Department Store of size anymore (Macy's), and the two main Wholesale Clubs are dominant to the point of exclusion. And everyone knows about Wal-Mart.

At this moment it became obvious to me that the lack of "channels" meant the brands managed their business very differently. You catered to the needs of a few super-large customers and ignored any strategy for a "channel".

And it also flashed into my brain that if my channel was a single customer--instead of the 380 customers that comprise my business--that we would probably be treated very differently than we are today. More important--more deserving of attention. Less like the Red-Headed Stepchild we often perceive we are.

This has potentially serious portent for our "channel". Brands may seek to find a "customer" to handle this business instead of working through a "channel specialist". Resellers will have fewer direct relationships and more ties to master distributors, or (God forbid) a "reverse auction" of many smaller distributors vying for business.

It changes the fundamentals of the channel--and makes those suppliers that value the business (like my company) stronger. This gives me hope for the future of this hysterically dynamic market.

But if a brand seeks to make our business a "customer" instead of a "channel" it will bode poorly for a lot of us who make our living in this market.

I see it now. Clearly. Time will tell...


Pete