Distribution Channel in Textile Industry

Distribution channel in textile industry

One of the most important industry in India is the textile industry. This industry has taken the proximate role since independence and beyond. Earlier most of the industries under the textile umbrella were small and medium scale or cottage industries. Although they still exist immensely in our country but the are necessarily a part of the unorganised sector now. Indian textile industry largely depends upon the textile manufacturing and export. It also plays a large role in the conomy of the country. India earns about 27% of its total foreign exchange through textile exports. Further, the textile industry contributes about 14% of the total industrial production and contributes about 3% of the GDP of our country. It is also the largest industry in the world In terms of employment generation. The distribution channel in textile industry is mainly a 1 tier and 2 tier channel 1 tier Manufacturer –retailer-customer. This is basically the case of company owned and operated showrooms (raymonds, vimal, peter England, cantabile etc.) plus shops which are licenced under the company or better called as franchisees. This is basically the pattern of single brand showrooms and forms are mostly organised retailers. 2 tier Manufacturer-wholeseller-retailer-customer. This is the most common pattern of distribution amoung consumer goods in India . the channel include a wholeseller who takes possession of goods as well as the title. The wholeseller further sells the goods to retailer in limited qualities

with a margin. And finally the retailer sells the goods to the ultimate consumer Both kinds of channels have their own advantages and disadvantages depending upon the kind of product in view. While 1 tier channel has a better control and is relatively less costly, the 2 tier channel is better in reach and also the channel partners share the risk, if any during the process of distribution as they gain the title of goods which is not so in case of 1 tier distribution. The 1 and 2 teir channel has been the only channel of distribution in the apparel industry by far and it is quiet successful too. There are thousands of manufacturers, wholesalers, retailers and franchisees involved in the distribution of textile products. Since the time this industry is in form there has been a little change in the distribution pattern of goods. Although the channel members and partners have evolved over time like there is development in terms of infrastructure and other facilities like communication. The pattern has not yet changed drastically. The changes and developments have in turn helped the channel members being in a more relaxed and consolidated position. The main reason for this is the nature of the product itself. Textile is a kind of product wherein the customer likes to feel the product before buying it. The quality of the product matters a lot especially in Indian scenario. And thus there is a need of proper places (retail outlets) to sell the goods. Moreover it is a kind of product which is required by everyone , anywhere. So the demand is there at every nook and corner of the country and hence, there is a need to have large distribution network and this problem is solved by the thousands of people involved in wholesaling and retailing the goods with which textile products can reach every part of the country. Another reason could be the reason of cost, the tier 1 & 2 kind of distribution is by far successful in assimilating the cost it incurs in moving the goods from the manufacturer to the

ultimate customer. When the goods are transported in bulk at selected places (wholesalers) and then further transported to more remote locations (retailers) they incur less cost than in the case of each customer coming to the manufacturer and fulfilling his need, which in any case would not be feasible. And thus this type of distribution has been and perhaps would be the pattern in which textile products reach the customers. These days, however, with the invent and increasing usage of internet a new platform for buying textile goods have emerged. A lot of websites have started selling ladies, gents and children garments (readymade as well as fabrics) these include shirts , fabrics and all other kinds of textile products. Although the era of internet has begun earlier but the phenomenon of shopping online has started catching pace recently. The main reason for the success of this platform of shopping is the ease and convenience of shopping. A customer can see the goods sitting at one place wherever there is access to internet and he doesn’t have to bear the hassle of going places. Moreover, it gives the customer to an opportunity to compare products. However internet has just replaced the role of retailer, the channel of distribution remains the same only the channel partner has changed. This means that the website owner mostly buys goods from the wholesalers and then sell it on their websites. The channel in textile industry has not changed much over a period of time and it is believed that though internet might help companies spread their word and share information it would not be able to completely eliminate the role of middlemen.

SAAD AHMAD 10-MBA-59