6 Chapter 6 Web, Nonstore- Based, and Other Forms of Nontraditional Retailing RETAIL MANAGEMENT: A STRATEGIC APPROACH, 10th Edition BERMAN EVANS

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

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

6-4 Figure 6-1a: Approaches to Retailing Channels

6-5 Figure 6-1b: Approaches to Retailing Channels

6-6 Nonstore Retailing  Retailing strategy that is not store-based  It exceeds $375 billion annually  80% comes from direct marketing  Web-based retailing is fastest growing area

6-7 Nontraditional Retailing  Nontraditional retailing also includes formats that do not fit into the store and nonstore-based categories:  Video kiosks  Airport retailing

6-8 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 $300 billion  Other leading countries include * Japan * Germany * Great Britain * France * Italy

6-9 Characteristics of Direct Marketing Customers Married Upper middle class years old Desire convenience, unique items, good prices

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

6-11 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

6-12 Data-Base Retailing  Collection, storage, and usage of relevant customer information * name * address * background * shopping interests * purchase behavior  Observation of rule

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

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

6-15 Figure 6-4: Executing a Direct Marketing Strategy

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

6-17 Outcome Measures  Overall Response Rate  Average Purchase Amount  Sales Volume by Product Category  Value of List Brokers

6-18 Table 6-1: Snapshot of U.S. Direct Selling Industry

6-19 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

6-20 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

6-21 Figure 6-6: Web-Based Retail Sales Projections

6-22 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

6-23 Figure 6-9: A Checklist of Retailer Decisions in Utilizing the Web

6-24 Web Strengths  Using the Web –information –entertainment –interactive communications  Shopping Online –selection –prices –convenience –fun

6-25 Reasons NOT to Shop Online Trust Fear Lack of security Lack of personal communication

6-26 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

6-27 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

6-28 Figure 6-13: Airport Retailing and Borders