The word distribution can be misleading, as it deals with all methods of distributing goods, from the factory to the final consumer. This incorporates, of course, the stores in which the products are sold, but also the systems used to take the products from Paris or Milan to everywhere in the world.
International Distribution Systems
We said earlier that the luxury businesses are worldwide activities, which may give the impression that companies such as Givenchy or Max Mara have their own fully owned subsidiaries and their own stores in which to present their products to consumers. In fact, in much the same way that manufacturing is often subcontracted, so too is international distribution often handled by others.
In Figure 9.1, we start with the original company, which distributes its goods through distribution systems that include outside distributors, joint ventures, or subsidiaries. It may also sign license contracts for products it cannot or does not want to manufacture and distribute directly. The licensees, in turn, select their own distributors around the world. (We will say more about the licensing issue in Chapter 11.) As a result, the original company has a presence in territories and in product categories that it does not directly control.
The Different Distribution Systems
We move now from ...