Chapter 66Web, Nonstore-Based, and Other Forms of Nontraditional Retailing

RETAIL MANAGEMENT:

A STRATEGICAPPROACH,

9th Edition

BERMANBERMAN EVANS EVANS

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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

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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

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Figure 6.1 Approaches to Retailing Channels

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Figure 6.2 Home Depot

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Nonstore Retailing

Retailing strategy that is not store-based

It exceeds $300 billion annually78% comes from direct marketingWeb-based retailing is fastest growing

area

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Nontraditional Retailing

Nontraditional retailing also includes formats that do not fit into the store and non-store based categories:Video kiosksAirport retailing

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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

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Characteristics of Direct Marketing Customers

• Married• Upper middle class• 36-50 years old• Desires

convenience, unique merchandise, good prices

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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

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Figure 6.3 Micro Warehouse

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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

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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

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Database Retailing

Collection, storage, and usage of relevant customer information* name* address* background* shopping interests* purchase behavior

Observation of 80-20 rule

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Emerging Trends

Evolving activitiesChanging customer lifestylesIncreasing competitionIncreasing usage of dual distribution

channelsChanging media roles, technological

advances, and global penetration

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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

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TV Retailing

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Figure 6.4 Executing a Direct Marketing Strategy

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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

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Outcome Measures

Overall Response RateAverage Purchase AmountSales Volume by Product CategoryValue of list brokers

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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

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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

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Figure 6.5 Direct Selling and Mary Kay

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The Role of the Web

Project a retail presenceEnhance imageGenerate salesReach geographically-dispersed

customersProvide information to customersPromote new productsDemonstrate new product benefits

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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

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Figure 6.6 Web-Based U.S. Retail Sales

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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

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Figure 6.9 A Checklist of

Retailer Decisions in Utilizing the

Web

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Reasons

Using the Web– information– entertainment– interactive

communications

Shopping Online– selection– prices– convenience– fun

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Reasons NOT to Shop Online

Trust

Fear

Lack of security

Lack of personal communication

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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

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Figure 6.12 Borders’ Title Sleuth Video Kiosk

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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

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Figure 6.13 Airport Retailing and Waldenbooks