Things to do  Midterm details Thursday, Feb. 16 th, during regular class time (2:15 and 3:45) SCHW AUDITORIUM Scenario based discussion questions  Finish Chapter 5 concepts Wheel of retailing, retail life cycle, scrambled merchandising  Retail Institutions Assignment questions  Begin chapter 6 discussion of non-traditional retail  Distribute case for Tuesday’s class

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

Nontraditional Retailing  Non-store:  Direct Marketing:  Internet  Catalogue – examples?examples  TV (shopping networks, infomercials)  Direct Selling (phone, in-person)  Other (blurred store/non-store distinctions):  Video Kiosks  Vending Machines  Airport Retailing

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?

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 $1 $ 5 $ 3 $ 5 $ 7 Name some multi-channel retailers. Do you shop all channels? What benefits do you get from each channel? Name some multi-channel retailers. Do you shop all channels? What benefits do you get from each channel?

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

Airport Retailing  Vancouver International Airport Vancouver International Airport  Hong Kong 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

Vending Machines Formerly dominated by tobacco Dominated by food in Canada 94% of $720 million in revenue Lean Machine 2005Lean Machine April Glavine, Saint Mary’s MBA Urban Vendor What items would you consider purchasing from a vending machine? New Trends: Hot food Durables (clothing, souvenirs)clothing iPods??

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 And 94% in 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 ReportStats Can data; AC Nielsen Report

Reasons Customers Buy Online  Convenience  Control  Choice  Communication  Customization (My Publisher, American Eagle, Future Shop, youbobble.ca)My Publisher  Cost*

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

Figure 6.8 Five Stages of Developing Retail Web Presence 1. Brochure Web Site Brochure Web Site 2. Commerce Web Site Commerce Web Site 3. Integrated Web Site Integrated Web Site 4. The ‘Webified’ Store The ‘Webified’ Store 5. Site Integrated with Manufacturer Systems

The State of Online Retailing Online sales Global Trends Canada: $3.3 billion in 2009* 0.79% retail sales (2009) * Electronic Shopping and mail-order houses Statistics Canada United States: 5.7% retail sales from Jan-Oct % retail sales from Nov-Dec 2010 US Dept of Commerce United Kingdom: 17% retail sales 2011 IMRG Capgemini’s Retail Sales Index Online sales Global Trends Canada: $3.3 billion in 2009* 0.79% retail sales (2009) * Electronic Shopping and mail-order houses Statistics Canada United States: 5.7% retail sales from Jan-Oct % retail sales from Nov-Dec 2010 US Dept of Commerce United Kingdom: 17% retail sales 2011 IMRG Capgemini’s Retail Sales Index Global E-Commerce Report

Connected, but not buying… 40% of Canadian Internet users abandoned at least one virtual shopping cart on a Canadian site. WHY? 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

Reasons NOT Shopping Online 1. Browsing 2. Shipping costs too high 3. Privacy 4. Inconvenience (had to register) 5. Poor site design Fulfillment issues?? (eg. Red Envelope)Red Envelope

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. deloitte-s-geddes-says.html deloitte-s-geddes-says.html  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 (

BlueNile.com

BlueNile.com Questions 1. Discuss the consumer behaviour of a traditional diamond engagement ring purchase. How does it compare to a BlueNile.com purchase? 2. Is channel obliteration – the destruction of traditional distribution channels – likely in jewelry retail? Why or why not? 3. What have been BlueNile’s KSFs to date?