MI Market 

The retailer (brick-and-mortar) plays a very important role for very many manufacturers and brand owners. The market is changing significantly. Political and economic uncertainties pose major challenges for industries that are heavily dependent on exports. The pressure to innovate in terms of functionality, materials and manufacturing methods is increasing. Above all, however, the market is undergoing massive change due to the digitalization of sales.

To this day, many manufacturers contact end customers almost exclusively through specialist retailers and, in some cases, their own store concepts or agency programs. This model has worked very well for decades and has brought the industries good profits. The vast majority of top manufacturers still do not sell online themselves. Digitization is now bringing about profound changes in many consumer goods industries. It offers companies the opportunity to successfully redefine their own position with end customers and specialist retailers. For the first time, manufacturers have the opportunity to interact directly with their customers without the need to build a close-knit network of stores. At the same time, the new market realities are forcing manufacturers to develop their own digital strategies in order to maintain their competitiveness in the future. Nevertheless, the most important partner for manufacturers in these strategies remains the specialist retailer.

This aspect is particularly important when considering whether to offer products directly to the end consumer. While only large, multinational companies are granted the possibility to set sales prices of their own products for the public by creating their own sales channels, this is not possible for small and medium-sized manufacturers because they do not have the financial means and the contacts to the end customer to set up such sales systems. Therefore, a network of distributors (offline as well as online) is indispensable, especially for medium-sized manufacturers.

Conversely, retailers are only able to provide their services to manufacturers if they have a sufficient margin. However, this margin no longer exists due to the increasing price war, as retailers undercut each other, e.g. in the fight for customers, and offer products at knockdown prices.

The ecosystem of many industries is based on the synergy of manufacturer, distribution and trade. An entire economy is based on these rules of the market economy, which is gradually being undermined by the market power of a few monopolists. Many small and medium-sized manufacturers produce and sell highly emotional products that have to be unpacked and packaged, explained, demonstrated, advertised, touched and heard, and sometimes even subjected to a smell test. In part, these are products that cannot simply be sold over the internet. And to do all this work, an independent retailer needs sufficient space, time and people, and ultimately the profit from margins, to get the job done. If a small and
medium-sized manufacturer is no longer able to guarantee a margin to the independent dealers, the dealers will no longer be able to sell these products on behalf of the manufacturer. Manufacturers and retailers will go out of business and no longer exist in the market. As a result, fewer and fewer products and less and less product variety will be able to be presented and sold to consumers.

If this economic cosmos is disturbed, it can be assumed that consumer welfare will also suffer, as in the future services, advice and repairs, product check will no longer be provided by the specialist trade, because they will no longer exists. The loss of jobs is thereby inevitable. In the medium and long term, this may also become an ecological problem, because it will create a society that will simply dispose of products - due to the lack of repair options and contact points - and become a throwaway society. Competition and the preservation of this synergy therefore also has a responsibility towards sustainability.

One thing is certain: most manufacturers will continue to need dealers in the future, because almost no brand is so strong that it can do without a dealer network altogether. Dealers will continue to have a raison d'être with their cross-brand product range functions. They can also play an important role in after-sales service, for example. Therefore, manufacturers and dealers need not see themselves as competitors in the future. Rather, they should look for ways in which they can benefit from each other in order to move successfully into the future together.