Berman CH 06 11e

Web, NonstoreBased, and Other Forms of Nontraditional Retailing
RETAIL MANAGEMENT: A STRATEGIC APPROACH

11th Edition BERMAN EVANS
Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall
6-1 1
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
6-2 2
Chapter Objectives (cont.)

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
6-3 3
Figure 6-1a: Approaches to Retailing Channels
6-4 4
Figure 6-1b: Approaches to Retailing Channels
6-5 5
Nonstore Retailing
Retailing strategy that is not store-based Exceeds $410 billion annually
80% comes from direct marketing

Web-based retailing is the fastest-
growing area Web retailing expected to reach $180 annually as of 2012
6-6 6
Nontraditional Retailing
Nontraditional retailing also includes
formats that do not fit into store and nonstore-based categories: Video kiosks Airport retailing
6-7 7
Direct Marketing
Customer is initially exposed to a good or
service through a non-personal medium and then orders by mail, phone, fax, or computer Annual U.S. sales exceed $325 billion (including the Web) Other leading countries include
* Japan
* Germany
* Great Britain
* France * Italy
6-8 8
Characteristics of Direct Marketing Customers

Married Upper middle class
35-50 years old

Desire convenience,
unique items, 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

6-10 10
Strategic Business Limitations of Direct Marketing

Products often 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
6-11 11
Data-Base Retailing
Collection, storage, and usage of relevant
customer information
* name
* address
* background * shopping interests
* purchase behavior
Observation of 80-20 rule

6-12 12
Emerging Trends
Evolving activities Changing customer lifestyles Increasing competition Increasing usage of dual distribution
channels Changing media roles, technological advances, and global penetration
6-13 13
Selection Factors by Customers

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
6-14 14
Figure 6-4: Executing a Direct Marketing Strategy
6-15 15
Media Selection
Printed catalogs Direct-mail ads and Freestanding displays Ads or programs in
brochures Inserts with monthly credit card and other bills (statement stuffers)
mass media Banner ads or hot links on the Web Video kiosks
6-16 16
Outcome Measures
Overall response rate Average purchase amount
Sales volume by product category

Value of list brokers
6-17 17
Direct Selling
Direct selling includes personal contact
with consumers in their homes (and other nonstore locations such as offices) and phone solicitations initiated by retailer. Annual sales of $31 billion in the U.S., where 15 million people are employed (more than 80 percent part-time). Annual foreign revenues of $85 billion, generated by 48 million salespeople.
6-18 18
Table 6-1: U.S. Direct Selling Industry
6-19
Vending Machines
Vending machines are a cash- or card-
operated retailing format that sells goods and services. Eliminates the use of sales personnel and allows 24-hour sales. Machines placed wherever convenient for consumers. 95 percent of the $50 billion in annual U.S. vending machine sales involve hot/cold beverages and food items.
6-20 20
Emergence of World Wide Web

The World Wide Web (Web) is a way to access
information on the Internet. People work with easy-to-use Web addresses (sites) and pages. Web users see words, charts, pictures, and video while hearing audio. Both Internet and World Wide Web convey the same central theme: online interactive retailing.
6-21 21
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
6-22 22
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

6-23 23
Figure 6-6: Web-Based Retail Sales Projections
6-24 24
Figure 6-8: Five Stages of Developing a Retail Web Presence
6-25 25
Figure 6-9: Checklist of Retailer Decisions for the Web
6-26 26
Web Strengths
Using the Web
information entertainment interactive
Shopping Online
selection prices convenience fun
communications
6-27 27
Reasons NOT to Shop Online

Lack of trust Fear Lack of security Lack of personal communication
6-28 28
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
6-29 29
Video Kiosks
A video kiosk is a freestanding, interactive,
electronic computer terminal that displays products and related information. Some kiosks are located in stores to enhance customer service; others let consumers place orders. There are 2.2 million video kiosks in use throughout the world, nearly 1 million of which are Internet-connected.
6-30 30
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
6-31 31
Figure 6-13: Airport Retailing and Starbucks
6-32 32
All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America.
6-33

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Web, NonstoreBased, and Other Forms of Nontraditional Retailing

RETAIL MANAGEMENT: A STRATEGIC APPROACH

Chapter Objectives (cont.)

Figure 6-1a: Approaches to Retailing Channels

Figure 6-1b: Approaches to Retailing Channels

80% comes from direct marketing

growing area Web retailing expected to reach $180 annually as of 2012

Characteristics of Direct Marketing Customers

35-50 years old

unique items, good prices

Strategic Business Advantages of Direct Marketing

Ability to supplement regular business

without additional outlets

Strategic Business Limitations of Direct Marketing

Observation of 80-20 rule

channels Changing media roles, technological advances, and global penetration

Selection Factors by Customers

Availability of toll-free phone number or Web site

Figure 6-4: Executing a Direct Marketing Strategy

Sales volume by product category

Table 6-1: U.S. Direct Selling Industry

Emergence of World Wide Web

The Role of the Web

The Role of the Web (cont.)

investors, franchisees, and the media

Figure 6-6: Web-Based Retail Sales Projections

Figure 6-8: Five Stages of Developing a Retail Web Presence

Figure 6-9: Checklist of Retailer Decisions for the Web

Reasons NOT to Shop Online

Recommendations for Web Retailers

Figure 6-13: Airport Retailing and Starbucks

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