Hammacher Schlemmer is a chain of retail stores famous for introducing a steady flow of innovative new products to customers. When it negotiates for a new product, it often requires that it will get the exclusive rights to retail it for a year or two. Why is it advantageous to the supply chain for there to be an exclusive dealer and why for only a few years?

Hammacher Schlemmer is taking action to create a monopoly-type situation for the retail sales of its products. Similar to the patent rights for pharmaceutical companies to sell a drug for a set number of years, Hammacher Schlemmer is restricting the manufacturers from selling their goods elsewhere for a certain time period. This affects all the elements of the supply chain - how much is being produced, where it should be shipped and/or warehoused, and the price at which it is sold. Having only one company do the retail sales makes distribution easier, and it assures the sellers of a predetermined, not discounted, price for the term of the agreement. Like all monopolies, this lack of price competition does some harm to consumers.