1. Non-traditional Retailing
Chapter 6
Non-traditional Retailing
RETAIL
MANAGEMENT:
A STRATEGIC
APPROACH,

2. Nontraditional Retailing
Non-store:
Direct Marketing:
Internet
Catalogue – examples?
TV (shopping networks, infomercials)
Direct Selling (phone, in-person)
Other (blurred store/non-store distinctions):
Video Kiosks
Vending Machines
Airport Retailing
Non-store exceeds $10 billion annually (less than 5%)
Web-based retailing is fastest growing area
E-commerce sales of $2.4 billion in 2002, expected to exceed $12.2 billion in 2008
Direct Marketing
Customer is first exposed to a good or service through a nonpersonal medium and then orders by mail, phone, fax, or computer
Canadian consumer spends $170 per year by mail or phone and this figure is on the rise.
How many receive catalogues? Which kinds
Sears (Wish Book, seasonal, sale)
Canadian Tire (annual)
Victoria Secret
Eddie Bauer
Hammacher Schlammer
Nontraditional retailing also includes formats that do not fit into the store and non-store based categories

3. Emerging Trends Changing customer lifestyles Increasing competition
Mounting interest in global direct marketing
Technological advances
Greater use of multi-channel retailing…
Perhaps even “channel obliteration”?
For bricks-and-mortar stores?
For catalogues?

4. Multi-channel Retailing
Uses more than one channel
Studies have shown multi-channel shoppers spend more (Sears, Canada Post) and are more loyal (Berman and Thelen 2004)
Channels synergistic (JC Williams)
Increased customer base, increased revenue, increased market share (Berman and Thelen 2004)
26% online Canadians make their online purchases from the same stores they shop offline (AC Nielsen 2010)
Different consumer benefits are derived from each channel
Successful multi-channel strategies are integrated
Achieve integration:
Protect (initiated for competitive parity)
Evolve (become more customer centric)
Transform (customer preferences integrated throughout value chain)
Internet $1
Retail $3
Catalogue
$ 5
$ 3
$ 7
Name some multi-channel retailers.
Do you shop all channels?
What benefits do you get from each channel?

5. From anywhere… to anyone Efficiency/Convenience Instant gratification
It’s really all about maximizing the buying experience
Consumers look for different experiences in the different channels
In-depth information
Resource
Personalized
Dynamic
Efficiency/Convenience
Accessible
Tactile interaction
Instant gratification
Human interaction
Service
Destination
Entertainment
Information
Longevity
Tangibility
Portability
Retail Experience
Catalogue Experience
Online Experience
Source: J.C. Williams Group

6. Airport Retailing Vancouver International Airport
Hong Kong International Airport
“Airport Authority with the Most Supportive Approach to Travel-Retail” at the DFNI Asian Awards for Travel-Retail Excellence
Airport retailing is becoming increasingly significant
Reduced in-air services
Increased waiting times
Captive audience
Impulse purchase behaviour
Reduced price sensitivity
Extended hours
Potential difficulties include:
Higher rent
Receipt of inventory (inconvenient)
Inventory storage
Airport retail characterized by higher sales per square foot

7. Vending Machines Formerly dominated by tobacco
Dominated by food in Canada
94% of $720 million in revenue
April Glavine, Saint Mary’s MBA
What items would you consider purchasing from a vending machine?
New Trends:
Hot food
Durables (clothing, souvenirs)
iPods??

8. Web Retailing Have you made a purchase online?
76% Canada’s internet users have shopped online
Compared with 98% in South Korea and 97% in Japan, Germany and Great Britain
The stat is at 94% for the US
What have you purchased and why?
Most frequent online purchases in Canada (Dec 2009)
Books
DVDs
Clothing/shoes
Electronics
Airline tickets
Resources: Stats Can data; AC Nielsen Report

9. Reasons Customers Buy Online
Convenience
Control
Choice
Communication
Customization (My Publisher, American Eagle, Future Shop, youbobble.ca)
Cost*
Convenience – in pjs, at 3am, at office, whenever they feel like it
Control - no pushy sales person; no impulse buys?
Choice – purchase from anywhere – across country or across globe
Communication – no waiting on hold, and respond (convenience)
Customization – get exactly what they want (perceived personalization); customized content
Cost* - many believe they should see cost savings (free shipping issues), this expectation may be changing slightly

10. Reasons Retailers Use Web
Competitive necessity
Generate sales
Enhance image
Reach geographically-dispersed customers
Provide information to customers
Promotion - new products, special offers
Provide customer service (e.g., , shopping assistants)
Obtain customer feedback
Employee recruitment
Present information to potential investors, franchisees, and the media

11. Figure 6.8 Five Stages of Developing Retail Web Presence
1. Brochure Web Site
2. Commerce Web Site
3. Integrated Web Site
4. The ‘Webified’ Store
Brochure site – sobeys.com; harry rosen
Commerce site – KontactSports; Toys R Us
Integrated – lego.com; old navy;
Webified store – chapters indigo
Integrated with manufacturer systems
5. Site Integrated with Manufacturer Systems

12. Connected, but not buying…
Canada most connected country in the world
Canadians were the world leader in broadband adoptions
But, online Canadians aren’t avid online purchasers relative to other countries
40% of Canadian Internet users abandoned at least one virtual shopping cart on a Canadian site. WHY?
Overall, only 5% of visitors to retail Web sites are actually buying.

13. Reasons NOT Shopping Online
Browsing
Shipping costs too high
Privacy
Inconvenience (had to register)
Poor site design
Fulfillment issues?? (eg. Red Envelope)

14. BlueNile.com

15. BlueNile.com Questions
Discuss the consumer behaviour of a traditional diamond engagement ring purchase. How does it compare to a BlueNile.com purchase?
Is channel obliteration – the destruction of traditional distribution channels – likely in jewelry retail? Why or why not?
What have been BlueNile’s KSFs to date?
Consumer behaviour
Looking for different things
Channel Obliteration possible?
It is possible and some retailers are worried, but if it occurs, it won’t be entirely as a result of online jewellers like BlueNile.
Here are two paragraphs cut from the 2007 article:
Blue Nile and other Internet jewelers are not solely responsible for smaller profits at traditional jewelers nor for the loss of more than 3,000 independent jewelry shops since Main Street jewelers, after all, have faced tough competition for decades, from the Home Shopping Network and other television creations beginning in the 1980s to, more recently, Wal-Mart, Costco and other big-box retailers that are grabbing a large share of the low-end jewelry market. A spike in the price of gold and other precious metals has also eaten into jewelry store profits.
Tiffany’s declined to make a spokesman available for this article, but in a prepared statement said its diamond sales continue to grow, despite Blue Nile, confirming “the strong appeal of Tiffany’s diamond jewelry and the Tiffany & Company shopping experience.”
BlueNile KSFs
From article:
Cost structure (overhead 13% rev v small 30-40%
Buying power
Education – that was the criteria which got Vadon’s notice
Management
Cash injections at critical times
W-o-m
From other sources:
Site aesthetics!
Redesigned site in 2009 after realizing it was frequently women browsing the site and encouraging purchase
Tonnes of info (consistent with educational philosophy) but also supported by its
Good layout
Searchability
Graphics
Large pics and zoomable too!
Where does BlueNile go from here?
Right-hand rings
Other types of jewellery
Ethnic pieces (given presence in 40 countries)
Cultural pieces

16. The Value of Multi-Channel
Using the Internet is most successful when it is part of an integrated multi-channel strategy.
Clicks-and-mortar retailers address the consumer's emerging preference to enjoy the same shopping experience and convenience in all channels (e.g., store, catalogue, Internet).
Internet retailing may not result in channel obliteration as once expected, but many retailers are planning substantial growth from this area.
Two challenges are:
converting browsers to shoppers regardless of the channel they choose.
repatriating the 45% of Canadian online shoppers who are buying from foreign sites.
Retail Interactive (