In 1997, I had the chance to visit the Porcelanosa plant in Castellón. Guided by one of the shareholders José Soriano, I dared asking which was the criteria used to choose between owning a shop and having an authorized distributor. Soriano replied that if Porcelanosa had a market goal of, let’s say, a 7%, in each Spanish city, and the distributor at Segovia achieved that share of the market with their brand it was not their desire to open a shop there. What a market vision!
In distribution, I know two very different types of companies:
- Companies whose objective is met when the order is separated at their warehouse in Castellón, Reggio Emilia, Morbi or Foshan (although it is not declared in their mission, that is what they do).
- Companies focused on distribution, such as: Porcelanosa, Interceramic, Portobello. They support this statement with a strong investment in their own stores and franchises.
A strategy focused on the final consumer is vital to develop a Brand, with or without its own stores. In an indirect distribution, who promotes a brand?
perceptual map: direct and indirect distribution
The third group (“hundreds of brands”) aims to develop a brand with indirect distribution, without investment in own stores, many of them committed to professional clients and large projects.
I don’t think companies need to run stores, but to be strongly involved in distribution.
Distribution is arduous, expensive, it does not bear fruit in the short term and companies run for the «end of the month», the quarter, the year. The factory has a three-year investment budget. Is that the maximum horizon?
In the distribution the times are longer.
News from elpais.com: «Porcelanosa increases its production by 25% and plans to open 15 stores (Sep 20, 2019).» They invest in the factory and in stores. And it started with one store.
How long does it take to develop a good distribution in a country?
It is difficult to build trust in a distribution channel, with permanent changes in collections. Too many factories working for professional clients and special projects. Is the distribution channel a top priority?
A kiln industry is not very compatible with the fashion industry, although some get away with it. Too many SKUs. I believe that greater stability in the product lines and reliability in delivery are required, no matter they have direct or indirect distribution. What product is in stock, in each store? share of market? share of exhibition? etc. for taking decisions.
Opportunity in the ceramic industry
Saint Gobain’s CEO, Pierre-André de Chalendar, says: «Internet entry barriers allow e-commerce to be launched with very low investment.»
If everyone is online, you have to find the buyer and consumer with more than just an institutional site and social media. The opportunity is on the web.
Porcelanosa is the first factory (I think the only one) that sells through e-commerce, see: porcelanosa.com/uk
The industry is full of prejudices: «porcelain tile must be touched», «not for the Internet», «requires …», the new generations that were born with the smart phone are destroying these mental barriers.
Julio Sol
references: porcelanato.com estrategia.com.ar