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Chapter 6

Chapter 6. RETAIL MANAGEMENT: A STRATEGIC APPROACH, 9th Edition. Web, Nonstore-Based, and Other Forms of Nontraditional Retailing. BERMAN EVANS. Chapter Objectives. To contrast single-channel and multi-channel retailing

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Chapter 6

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

  2. 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

  3. 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

  4. Figure 6.1 Approaches to Retailing Channels

  5. Figure 6.2 Home Depot

  6. 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

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

  8. 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

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

  10. GENERAL offer full lines of products from clothing to housewares J.C. Penney QVC SPECIALTY offer narrow product lines L.L. Bean Franklin Mint Direct Marketing Categories

  11. Figure 6.3 Micro Warehouse

  12. 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

  13. 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

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

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

  16. 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

  17. TV Retailing

  18. Figure 6.4 Executing a Direct Marketing Strategy

  19. 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 Media Selection

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

  21. Table 6.1 Snapshot of U.S. Direct Selling Industry

  22. Table 6.1 Snapshot of U.S. Direct Selling Industry

  23. Figure 6.5 Direct Selling and Mary Kay

  24. 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

  25. 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

  26. Figure 6.6 Web-Based U.S. Retail Sales

  27. 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

  28. Figure 6.9 A Checklist of Retailer Decisions in Utilizing the Web

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

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

  31. 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

  32. Figure 6.12 Borders’ Title Sleuth Video Kiosk

  33. 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

  34. Figure 6.13 Airport Retailing and Waldenbooks

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