Chapter 66Web, Nonstore-Based, and Other Forms of Nontraditional Retailing
RETAIL MANAGEMENT:
A STRATEGICAPPROACH,
9th Edition
BERMANBERMAN EVANS EVANS
6-2
Chapter Objectives
To contrast single-channel and multi-channel retailing
To look at the characteristics of the three major retail institutions involved with nonstore-based strategy mixes: direct marketing, direct selling, and vending machines – with an emphasis on direct marketing
6-3
Chapter Objectives_2
To explore the emergence of electronic retailing through the World Wide Web
To discuss two other nontraditional forms of retailing: video kiosks and airport retailing
6-6
Nonstore Retailing
Retailing strategy that is not store-based
It exceeds $300 billion annually78% comes from direct marketingWeb-based retailing is fastest growing
area
6-7
Nontraditional Retailing
Nontraditional retailing also includes formats that do not fit into the store and non-store based categories:Video kiosksAirport retailing
6-8
Direct Marketing
Customer is first exposed to a good or service through a nonpersonal medium and then orders by mail, phone, fax, or computer
Annual U.S. sales exceed $235 billionOther leading countries include
* Japan* Germany* Great Britain
*France
*Italy
6-9
Characteristics of Direct Marketing Customers
• Married• Upper middle class• 36-50 years old• Desires
convenience, unique merchandise, good prices
6-10
Direct Marketing Categories
GENERAL
• offer full lines of products from clothing to housewares
– J.C. Penney– QVC
SPECIALTY
• offer narrow product lines
– L.L. Bean– Franklin Mint
6-12
Strategic Business Advantages of Direct Marketing
Reduced costsLower pricesLarge geographic coverageConvenient to customersAbility to pinpoint customer segmentsAbility to eliminate sales tax for someAbility to supplement regular business
without additional outlets
6-13
Strategic Business Limitations of Direct Marketing
Products cannot be examined prior to purchase
Costs may be underestimatedResponse rates to catalogs under 10%Clutter existsLong lead time requiredIndustry reputation sometimes negative
6-14
Database Retailing
Collection, storage, and usage of relevant customer information* name* address* background* shopping interests* purchase behavior
Observation of 80-20 rule
6-15
Emerging Trends
Evolving activitiesChanging customer lifestylesIncreasing competitionIncreasing usage of dual distribution
channelsChanging media roles, technological
advances, and global penetration
6-16
Selection Factors
Company reputation and image Ability to shop whenever consumer wants Types of goods and services Availability of toll-free phone number or Web site
for ordering Credit card acceptance Speed of promised delivery time Competitive prices Satisfaction with past purchases and good return
policy
6-19
Media Selection
Printed catalogs Direct-mail ads and
brochures Inserts with monthly
credit card and other bills (statement stuffers)
Freestanding displays
Ads or programs in mass media
Banner ads or hot links on the Web
Video kiosks
6-20
Outcome Measures
Overall Response RateAverage Purchase AmountSales Volume by Product CategoryValue of list brokers
6-21
Table 6.1 Snapshot of U.S. Direct Selling Industry
Major Product Groups % of Industry
Home/ family care products 33.7
Personal care products 26.4
Services 16.9
Wellness products 16.5
Leisure/ educationalproducts
6.5
6-22
Table 6.1 Snapshot of U.S. Direct Selling Industry
Place of Sales % of Industry
In the home 64.4
Over the phone 14.7
In a workplace 8.7
Over the Internet 5.5
Other 6.7
6-24
The Role of the Web
Project a retail presenceEnhance imageGenerate salesReach geographically-dispersed
customersProvide information to customersPromote new productsDemonstrate new product benefits
6-25
The Role of the Web_2
Provide customer service (e.g., e-mail)Be more “personal” with consumersConduct a retail business efficientlyObtain customer feedbackPromote special offersDescribe employment opportunitiesPresent information to potential
investors, franchisees, and the media
6-27
Figure 6.8 Five Stages of Developing a Retail Web Presence
1. Brochure Web Site
2. Commerce Web Site
3. Integrated Web Site
4. The ‘Webified’ Store
5. Site Integrated with Manufacturer Systems
6-29
Reasons
Using the Web– information– entertainment– interactive
communications
Shopping Online– selection– prices– convenience– fun
6-31
Recommendations for Web Retailers
Develop or exploit a well-known, trustworthy retailer name
Tailor the product assortment for Web shoppers
Enable the shopper to click as little as possible
Provide a solid search engineUse customer information
6-33
Features of Airport Retailing
Large group of prospective shoppersCaptive audienceStrong sales per square foot of retail
spaceStrong sales of gift and travel itemsDifficulty in replenishmentLonger operating hoursDuty-free shopping possible