Hardly a week passes where not two or three or even more internationally active manufacturers of consumer goods announce the development or consolidation of their sales network through the opening of their own stores. Certainly, not always emerge actually as many stores as announced. It is easier said than done to open 60 stores in Russia, 200 in China and 40 in Germany. Or to open up 1,000 branches globally, till the year 2010. Nevertheless, what is going on in the markets lets some concerns emerge that this development bears risks.

The independent retail trade especially large-scale enterprises, department stores, discounters and chains, just to name a few typical forms of retail, have removed themselves way to far from the brand offer and have pushed them back, to some extent due to private labels and aggressive price-oriented marketing concepts. A life at the edge of the retail market is the consequence.

The relationship between retail and industry is troubled. Retail, even though not blessed with very good earnings in many branches, often acts arrogantly. All the while they are under the erroneous assumption, that they possess the market power. The market power, however, rests with the consumer as a final consequence. The industry in turn has to literally buy access to the retail trade. Retail is thus turning more and more into a supplier of storage areas and exhibition space and is losing considerably in business performance.

Brands need a living space that allows them to unfold their aura, to give to the people what they expect, when they set out to fulfill their wants or needs. Consumers are ambitious and make clever purchasing decisions.

In our function as consultants, we want to act as intermediaries between industry and retail in order to campaign for circumstances which give consideration to all market participants. We see, that brands are suffering from present behavior of retail and that retails in not a trustworthy intermediary between brands and the consumer.

It is time that industry and retail come to a consensus for the design of the life of brands. Retail would be well-advised to give to the brands what they are entitled to, namely an adequate living space for them. Without brands, the market loses the powers that move it, because they serve the satisfaction of wants people might have and they are a measure for the satisfaction of demand in regards to an economical price-performance ratio. Without brands, markets lose vitality. The vertical distribution destroys a healthy market organism. And at the end of the day neither serves the consumer, nor the industry and least of all retail.

Let’s look for the ideal path, where the independent retail as partner of the industry does justice to its responsibility as distributor and the path of the vertical distribution receives communicative character for the brand. In this context, the vertical distribution is a promotional measure and loses the character of a destructive competition towards an independent retail.

Saturated markets, and this is what we are dealing with in the First World in the area of consumer goods, generally need an honest cooperation of industry and retail and no conflicts.

If it should not come to cooperation, all market participants would eventually be losers: The industry, because in the long run and area-wide it could not finance the availability of its brands. Retail, because it could not work profitably without a noteworthy share of turnover of classic brands. And the consumer, because brands offer a solid orientation at purchasing and thus can be of help during fulfillment of wants and needs.

It is time to weigh positive and negative aspects against each other and to avert damage from the markets and the market participants. And after all this, let me say that we are not in principle against vertical distribution. We would just like to see it reduced back to the originally intended tasks.