Web, Nonstore-Based, and Other Forms of Nontraditional Retailing Chapter 6 Web, Nonstore-Based, and Other Forms of Nontraditional Retailing RETAIL MANAGEMENT: A STRATEGIC APPROACH, 9th Edition BERMAN EVANS

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

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

Figure 6.1 Approaches to Retailing Channels

Figure 6.2 Home Depot

Nonstore Retailing Retailing strategy that is not store-based It exceeds $300 billion annually 78% comes from direct marketing Web-based retailing is fastest growing area

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

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 billion Other leading countries include Japan Germany Great Britain France Italy

Characteristics of Direct Marketing Customers Married Upper middle class 36-50 years old Desires convenience, unique merchandise, good prices

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

Figure 6.3 Micro Warehouse

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

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

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

Emerging Trends Evolving activities Changing customer lifestyles Increasing competition Increasing usage of dual distribution channels Changing media roles, technological advances, and global penetration

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

TV Retailing

Figure 6.4 Executing a Direct Marketing Strategy

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

Outcome Measures Overall Response Rate Average Purchase Amount Sales Volume by Product Category Value of list brokers

Table 6.1 Snapshot of U.S. Direct Selling Industry

Table 6.1 Snapshot of U.S. Direct Selling Industry

Figure 6.5 Direct Selling and Mary Kay

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

The Role of the Web_2 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

Figure 6.6 Web-Based U.S. Retail Sales

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

Figure 6.9 A Checklist of Retailer Decisions in Utilizing the Web

Reasons Using the Web information entertainment interactive communications Shopping Online selection prices convenience fun

Reasons NOT to Shop Online Trust Fear Lack of security Lack of personal communication

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

Figure 6.12 Borders’ Title Sleuth Video Kiosk

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

Figure 6.13 Airport Retailing and Waldenbooks