<p>Many manufacturers use a dual-channel selling strategy that enables them to sell their products directly to consumers along with the conventional retail channel. In practice, several manufacturers are shifting their focus from traditional retail channels to the expansion of their direct-to-consumer sales. However, the extant literature on supplier encroachment offers little guidance to manufacturers on whether and when to shift from a dual-channel to a “direct-channel-focused” product distribution strategy. The current study bridges this gap by investigating the manufacturer’s adoption of a direct-to-consumer strategy in the face of competition from store brands. Using a game theoretic approach, our study aims to reveal the conditions under which manufacturers should shift from a dual-channel selling approach to a direct-to-consumer-only selling approach. We demonstrate that manufacturers selling products in categories where store brands are fierce competitors, including clothing and footwear, could find it advantageous to switch to a direct-only sales strategy. This result, at least in part, explains the current business trend wherein many manufacturers are severing their links with retailers to focus on generating income directly from customers. However, a dual-channel approach remains optimal for manufacturers selling products in categories where the level of store brand competition is low to moderate. Furthermore, we show that the threat of encroachment could benefit the retailer when the manufacturer considers adopting a dual-channel approach.</p>