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6 Examples of a Channel Check

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A channel check is the practice of directly investigating the operations and performance of a company as part of investment analysis. This can involve conversations with suppliers, customers and employees of a firm. The following are common examples of a channel check.

Sales Volumes

Speaking to staff or managers in stores to get a sense of sales volumes. In some cases, analysts will observe consumer behavior on a particularly important shopping day such as a product release day. This can become quite aggressive whereby firms are monitoring parking lots use big data sources such as satellite images of parking lots.

Pricing

Speaking to customers to determine recent prices. Industry market intelligence services may provide up-to-date benchmark prices for an industry that can be used to estimate profit margins.

Brand

Observing shops and speaking with front-end staff and customers to consider the state of a brand. For example, luxury shops filled with discounted items may be a sign that sales are being achieved at a cost to brand image.

Technology

Speaking to suppliers to try to guess the technology direction of a firm. This can be pushing things too far if the firm carefully hides such information with non-disclosure agreements such that it is material to the stock price.

Assets

Viewing the assets of a firm to see if they may be overvalued or undervalued. For example, a property that a firm claims to be a world class medical facility that looks more like a run down building.

Operations

Investigating the operations of a firm by talking to people in the supply chain or distribution channels. For example, a retailer that fails to stock shelves properly in a peak season such that stores look disorderly with empty shelves.
Overview: Channel Check
Type
Definition
The practice of directly investigating the operations and performance of a company as part of investment analysis.
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