The moral duty of brands to the traditional retail channel: grow together or not at all

The moral duty of brands to the traditional retail channel: grow together or not at all | Photo: Wu Yi

Opinion piece — RetailSets Branding Solutions

COVID-19 did not invent the direct-to-consumer model. It accelerated it brutally. When in March 2020 shops across half the world closed their doors overnight, brands that had already begun building their own digital channels and owned stores discovered that their bet suddenly made perfect sense. Those that hadn't rushed to do so.

What followed was a silent but profound transformation in the relationship between major brands and the traditional distribution channel that, for decades, had been the true engine of their growth.

The numbers don't lie: own-channel expansion has been massive

In the United States, direct-to-consumer revenues tripled between 2016 and 2021, rising from $36 billion to $128 billion, with projections exceeding $210 billion by the end of 2024. During the pandemic, DTC brands recorded growth of nearly 45% in 2020, as consumers migrated en masse to online channels.

In the luxury segment, physical own-store expansion was equally striking. LVMH, owner of Louis Vuitton, opened 108 new stores between 2021 and 2022, while the Kering Group, owner of Gucci, opened another 100 in the same period.

The most studied and most revealing case is Nike. Before the pandemic, Nike had already spent years cutting agreements with wholesale distributors and building its own store network and online channels. In just a few years, it walked away from approximately 50% of its traditional distribution accounts. If in 2018 the wholesale channel represented 69% of its sales and the direct channel 30%, by 2023 the balance had shifted dramatically: 56% wholesale and 44% direct.

Other major brands such as Adidas, Under Armour, Ralph Lauren and Canada Goose followed similar strategies, prioritising their own channels and restricting supply to traditional distributors.

Failure as a lesson: the traditional channel is not dispensable

What happened next is a lesson in corporate humility that every brand should study.

Nike's own CEO, John Donahoe, publicly acknowledged that the push towards the direct channel had gone too far. Distribution partners lost shelf prominence and strategic support from the brand, precisely as competitors moved in to fill the space. Nike's own channels — app, website, owned stores — had to carry the full weight of brand building and consumer acquisition, something that proved far harder and more expensive than anticipated. Market share eroded and brand equity softened in key segments.

After severing ties with dozens of long-standing distributors in its radical direct-to-consumer push, Nike had to go back to retailers such as Macy's and DSW, implicitly acknowledging the importance of the wholesale channel in the post-pandemic retail environment.

The conclusion is uncomfortable but necessary: without the traditional channel, many brands would have taken years longer to achieve the awareness and volume that today allows them to open their own stores. To ignore that is not just a strategic mistake. It is a failure of gratitude.

A debt that goes beyond strategy

This is where the conversation must move beyond numbers and into the territory of ethics.

The traditional distributor — the independent multi-brand shop, the specialist retailer, the long-established store — is not simply a sales channel. It is the one who placed the product on the shelf when nobody knew the brand. It is the one who trained its staff to explain the values of a new product. It is the one who took the risk of placing an order when the brand did not yet have enough traction to justify it.

For decades, those businesses were the best ambassadors of the brands that today turn over billions. They gave them visibility, introduced them to consumers and, in many cases, built a local loyalty that no algorithm or performance marketing campaign can replicate.

Abandoning them the moment the brand has enough muscle to do without them is not a neutral business decision. It is a betrayal.

The direct online model: efficiency or exclusion?

The shift to direct e-commerce has an impeccable financial logic. Higher margins, first-party consumer data, full control over the purchase experience and brand narrative. The global DTC market is projected to grow from $163 billion in 2024 to $595 billion in 2033, at a compound annual growth rate of 15.4%.

But that same efficiency carries a cost that appears in no financial report: the systematic exclusion of the partners who made growth possible, and the impoverishment of the commercial fabric of cities and towns that depended on those points of sale to survive.

When a brand decides that its future lies in its own website and its own stores in major capitals, it is choosing which consumers it wants to serve and, above all, which partners it is prepared to abandon. That choice has real consequences: the closure of businesses, the loss of local employment and the weakening of the economic fabric of entire communities.

Commitment to the traditional point of sale as a moral obligation

The brands that today have the resources to open their own stores, launch digital platforms and negotiate contracts with the world's best suppliers did not get there alone. They got there supported by a network of distributors, retailers and points of sale that believed in them before the market did.

That origin creates an obligation. Not from a sentimental standpoint, but from a genuine ethical responsibility.

Maintaining commitment to the traditional channel does not mean giving up direct growth. It means acknowledging the historical debt owed to those who opened the doors of the market. It means ensuring that those points of sale have access to products, communication materials and brand identity elements that allow them to compete with dignity in their local markets.

Because if the distributor's shop has a deteriorated image, if its signage is not up to standard, if its product presentation materials are ten years out of date — the brand loses too. Image consistency is not an exclusive privilege of flagship stores. It is a cross-cutting necessity for any distribution network that takes its own identity seriously.

Signage: the great overlooked element of the traditional channel

One of the areas where the abandonment of the historical distribution channel is most evident is precisely in signage and brand image at the point of sale.

Major brands' own stores receive million-pound investments in interior design, lighting, signage and communication elements. These are spaces designed to the millimetre to convey brand values. Yet that same level of care rarely reaches distributors with the same intensity, despite their having spent years selling those brands' products.

The result is an image inconsistency that damages both parties: the multi-brand shop tries to present a brand that does not give it the means to do so properly, and the brand sees its identity diluted at the very points of sale that generate the most volume.

Equipping traditional points of sale with professional signage, quality corporate elements and communication materials that reflect their true importance within the distribution network is not an expense. It is an investment in brand consistency and in the survival of a commercial ecosystem without which many brands would not exist as we know them today.

The question is: grow together or not at all ?

The expansion of the direct-to-consumer model is an inevitable reality and, when well managed, perfectly compatible with respect for the traditional distribution channel. These are not mutually exclusive models. They are complementary.

But that complementarity requires brands to accept a responsibility that goes beyond margin optimisation. It requires acknowledging the historical debt owed to those who opened the doors of the market. It requires investing in the image and signage of all their points of sale, not only their own. And it requires understanding that a well-equipped distributor with a coherent brand image is not competition for the owned store — it is its greatest ally.

Brands that understand this will build stronger, more loyal and more enduring distribution networks. Those that do not will learn, as Nike already has, that the traditional channel was not a dispensable middleman. It was the foundation on which everything was built.

RetailSets manufactures professional commercial signage for owned stores and brand distributors worldwide. If you want your distribution network's image to reflect the true value of your brand, contact us