CHAPTER 13 PRODUCT MANAGEMENT IN NON-STORE RETIALING

LEARNING OBJECTIVES Highlight differences between store and non- store retail product management Explore implications for assortment planning, product presentation, pricing and stock management imposed by non-store retailing appreciate the need for good customer service and an efficient infrastructure to support non-store product management Understand the concept of multi-channel retailing and its implications for RPM

NON-STORE IMPICATIONS: PRODUCT PRESENTATION CHALLENGES  product aesthetics not easily shown  sensory elements lost  not stimulating (especially websites)  incorporating web atmospherics (image) without slowing down navigation OPPORTUNTIES  showing product in use / modelled  good navigability can promote related sales  customisation of offer (internet)

NON-STORE IMPLICATIONS: PRODUCT ASSORTMENT Non store retailers can add more space relatively easily and inexpensively (especially internet) Considerations:  Who is home shopping customer and what will they buy?  Can all products be profitably delivered? Internet shoppers generally have higher socio-economic profile Kiosks in store can provide access to wider product range on company website

NON-STORE IMPLCATIONS: THE SELLING ENVIRONMENT Layout should be logical and product categories easy to locate NAVIGABILITY is an important part of web-site design Links between complementary merchandise should be built in (web-site) or clearly indicated (e.g. catalogue page number) Design of web-site incorporates customer-retailer interaction (service experience) Atmosphere not easy to create, but some targetted offers use artwork and effects to create unique image

NON STORE IMPLICATIONS: PRICING No stores - saves running costs Financing credit and stock to guarantee fast delivery adds to costs Price comparison easily carried out in home shopping (especially internet) Difficult to justify premium prices in non-store selling environment Consistency across different formats is an issue Catalogues are not very flexible on price

NON-STORE IMPLICATIONS: SERVICE Store retailing has advantage of immediacy:  product information  stock position  product retrieval Non-store retailers must provide good product information, fulfillment and delivery service Dissatisfaction with service more difficult to detect in non-store Some Internet retailers moving to availability details on-line Secure payment service is important

RETURNS SERVICE Home shopping retailers have to accept high levels of product returns (around a third on average) This needs to be accounted for in terms of  stock forecasting and financing  infrastructure for returns (reverse logistics)  flexibility across retailing formats

NON-STORE IMPLICATIONS: CONVENIENCE Home shopping avoids many inconvenient aspects of the consumer’s experience that are associated with store shopping Home shopping only provides convenience if service promise is delivered Retailer’s infrastructure must support product offer and (stated or assumed) service offer

ORDER FULFILLMENT Non-store retailing offers potential to operate a stock-free system. Supply chain can be geared to responding to customer orders In reality suppliers will need commitment from retailer in order to be willing to hold stock of e.g. seasonal and own label goods Forecasting can be improved with use of  preview catalogues  web-site trials

DELIVERY Early Internet successes were based on products that were easy to understand and easy to deliver (books, CDs etc.) Delivery of more complex product needs to be reliable and reflect retailer’s image Internet retailer’s customers are time-poor and so delivery arrangements must be customer focused and accurate Tracking and pro-active order management software can be used to manage deliveries

MULTI-CHANNEL RETAILING Challenges and opportunities:  cross-shopping  transfer of positive and negative image  price consistency  cost allocation and performance monitoring  sales cannibalisation  marketing