Web, NonstoreBased, and Other Forms of Nontraditional Retailing

1
Chapter 6

• Web, Nonstore-Based, and Other Forms of
  Nontraditional Retailing

RETAIL MANAGEMENT A STRATEGIC APPROACH, 10th
Edition
BERMAN EVANS
2
Chapter Plan

• To contrast single-channel and multi-channel
  retailing
• To look at the characteristics of the 3 major
  retail institutions involved with nonstore-based
  strategy mixes direct marketing, direct selling,
  and vending machines.
• To explore the emergence of e-retailing
• To discuss 2 other nontraditional forms of
  retailing video kiosks and airport retailing

3
Nonstore Retailing

• Retailing strategy that is not store-based
• It exceeds 375 billion annually
• 80 comes from direct marketing
• Web-based retailing is fastest growing area

4
Single-channel multi-channel

• Single-channel when retailer uses one retail
  format, could be store or nonstore-based.
• Single-channel usually in the beginning.
• Multi-channel when firm grows

5
Direct Marketing

• Customer is first exposed to a good or service
  through a nonpersonal medium and then orders by
  mail, phone, fax, or computer
• 2 broad categories general speciality
• Annual U.S. sales exceed 300 billion
• Other leading countries include
• Japan, Germany, France, Great Britain, Italy

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Characteristics of Direct Marketing Customers

• Married, upper middle class, 36-50 years old
• Live far from malls or in upscale metro
• Desire convenience, unique merchandise, good
  prices

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Strategic Business Advantages of Direct Marketing

• Reduced costs
• Lower prices
• Large geographic coverage
• Convenient to customers
• Ability to pinpoint customer segments
• Ability to eliminate sales tax for some
• Ability 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 underestimated
• Response rates to catalogs under 10
• Clutter exists
• Long lead time required
• Industry reputation sometimes negative

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Data-Base Retailing

• Collection, storage, and usage of relevant
  customer information
• name
• address
• background
• shopping interests
• purchase behavior
• Observation of 80-20 rule

10
Media Selection Customer Generation

• Printed catalogs
• Direct-mail ads and brochures
• Inserts with monthly credit card and other bills
  (statement stuffers)
• Ads in mass media
• Vending m/c
• Others

• Purchase a list
• Develop a data base
• Blind mailing
• Advertise

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Outcome Measures

• Overall Response Rate
• Average Purchase Amount
• Sales Volume by Product Category
• Value of List Brokers

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Direct Selling

• Includes personal contact with consumers in their
  homes (and other non-store locations) and phone
  solicitations
• Strategy mix emphasizes convenient shopping
  personal touch.
• Lower overhead costs (for retailer).
• Problems?

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Table 6-1 Snapshot of U.S. Direct Selling
Industry
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The Role of the Web

• Project a retail presence
• Enhance image
• Generate sales
• Reach geographically-dispersed customers
• Provide information to customers
• Promote new products
• Demonstrate new product benefits

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The Role of the Web (cont.)

• Provide customer service (e.g., e-mail)
• Be more personal with consumers
• Conduct a retail business efficiently
• Obtain customer feedback
• Promote special offers
• Describe employment opportunities
• Present information to potential investors,
  franchisees, and the media

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Figure 6-6 Web-Based Retail Sales Projections
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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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Web Strengths

• 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 engine
• Use customer information

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Nontraditional Retailing

• Nontraditional retailing also includes formats
  that do not fit into the store and nonstore-based
  categories
• Video kiosks
• Airport retailing

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Features of Airport Retailing

• Large group of prospective shoppers
• Captive audience
• Strong sales per square foot of retail space
• Strong sales of gift and travel items
• Difficulty in replenishment
• Longer operating hours
• Duty-free shopping possible

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Video Kiosks

• Free standing interactive computer terminal for
  purchasing (purchase may occur onsite or offsite)
• Though actual sales may be less from kiosks per
  se, they influence sales by providing product
  information
• Used for greeting cards, movie tickets, book
  sales