Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall 6-1 Web, Nonstore- Based, and Other Forms of Nontraditional Retailing RETAIL MANAGEMENT: A STRATEGIC APPROACH 11th Edition BERMAN EVANS 1

Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall 6-2 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 2

Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall 6-3 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 3

Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall 6-4 Figure 6-1a: Approaches to Retailing Channels 4

Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall 6-5 Figure 6-1b: Approaches to Retailing Channels 5

Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall 6-6 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

Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall 6-7 Nontraditional Retailing  Nontraditional retailing also includes formats that do not fit into store and nonstore-based categories:  Video kiosks  Airport retailing 7

Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall 6-8 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 8 *France *Italy

Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall 6-9 Characteristics of Direct Marketing Customers Married Upper middle class years old Desire convenience, unique items, good prices

Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall 6-10 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 10

Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall 6-11 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 11

Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall 6-12 Data-Base Retailing  Collection, storage, and usage of relevant customer information * name * address * background * shopping interests * purchase behavior  Observation of rule 12

Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall 6-13 Emerging Trends  Evolving activities  Changing customer lifestyles  Increasing competition  Increasing usage of dual distribution channels  Changing media roles, technological advances, and global penetration 13

Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall 6-14 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 14

Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall 6-15 Figure 6-4: Executing a Direct Marketing Strategy 15

Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall 6-16 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 16

Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall 6-17 Outcome Measures  Overall response rate  Average purchase amount  Sales volume by product category  Value of list brokers 17

Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall 6-18 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. 18

Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall 6-19 Table 6-1: U.S. Direct Selling Industry

Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall 6-20 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. 20

Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall 6-21 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. 21

Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall 6-22 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 22

Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall 6-23 The Role of the Web (cont.)  Provide customer service (e.g. )  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 23

Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall 6-24 Figure 6-6: Web-Based Retail Sales Projections 24

Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall 6-25 Figure 6-8: Five Stages of Developing a Retail Web Presence 25

Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall Figure 6-9: Checklist of Retailer Decisions for the Web

Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall 6-27 Web Strengths  Using the Web information entertainment interactive communications  Shopping Online selection prices convenience fun 27

Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall 6-28 Reasons NOT to Shop Online Lack of trust Fear Lack of security Lack of personal communication 28

Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall 6-29 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 29

Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall 6-30 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. 30

Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall 6-31 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 31

Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall 6-32 Figure 6-13: Airport Retailing and Starbucks 32

Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall 6-33 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.