1.Chapter6 Web, Nonstore-Based, and Other Forms of Nontraditional Retailing RETAILMANAGEMENT: A STRATEGIC APPROACH , 10th Edition BERMAN EVANS

2. Chapter Plan

To contrast single-channel and multi-channel retailing

To look at the characteristics of the 3 major retail institutions involved with nonstore-based strategy mixes: direct marketing, direct selling, and vending machines.

To explore the emergence of e-retailing

To discuss 2 other nontraditional forms of retailing: video kiosks and airport retailing

3. 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

4. Single-channel & multi-channel

Single-channel: when retailer uses one retail format, could be store or nonstore-based.

Single-channel: usually in the beginning.

Multi-channel: when firm grows

5. Direct Marketing

Customer is first exposed to a good or service through a nonpersonal medium and then orders by mail, phone, fax, or computer

2 broad categories:general & speciality

Annual U.S. sales exceed $300 billion

Other leading countries include

• Japan, Germany, France, Great Britain, Italy

6. Characteristics of Direct Marketing Customers

Married, upper middle class, 36-50 years old

Live: far from malls or in upscale metro

Desire: convenience, unique merchandise, good prices

7. 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

8. Strategic Business Limitationsof 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

9. Data-Base Retailing

Collection, storage, and usage of relevant customer information

• name

• address

• background

• shopping interests

• purchase behavior

Observation of 80-20 rule

10. 8 Steps in direct marketing strategy (Diagram)

Business definition, generating customers, media selection, generating customers, media selection, presenting the message, customer contact, customer response, order fulfillment and measuring results & maintaining the database.

11. Business definition

A company makes two decision regarding its business definition

Is the firm going to be a pure direct marketer or is going to engage in multi channel retailing.

Is the firm going to be a general direct marketer & carry a broad product assortment., or will it specialize in one good/service category.

12. Generating customer

A firm can

Buy a printed mailing list from a broker.

Download a mailing list from the web.

Send out a blind mailing to all the residents in a particular area.

Advertise in a news paper, magazine, websites etc.

Contact consumers who have bought from the firm or requested information.

13. Media Selection &Customer Generation

Printed catalogs

Direct-mail ads and brochures

Inserts with monthly credit card and other bills (statement stuffers)

Ads in mass media

Vending m/c

Others

Purchase a list

Develop a data base

Blind mailing

Advertise

14. Measuring results

Overall response rate

Average purchase amount

Sales volume by product category

Value of list brokers- the revenues generated from various mailing lists.

15. Outcome Measures

Overall Response Rate

Average Purchase Amount

Sales Volume by Product Category

Value of List Brokers

16. Direct Selling

Includes personal contact with consumers in their homes (and other non-store locations) and phone solicitations

Strategy mix emphasizes convenient shopping & personal touch.

Lower overhead costs (for retailer).

Problems?

17. Problems in direct selling

More women work

Improved job opportunities in other fields

Market coverage is limited by size of sales force.

Sales force turnover is high

Above average prices due to compensation to sales personnel

Legal restrictions

Name of door to door selling has poor image.

18. 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

19. 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

20. 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 21. Web Strengths

Using the Web

• information

• entertainment

• interactive communications

Shopping Online

• selection

• prices

• convenience

• fun

22. Reasons NOT to Shop Online

Trust

Fear

Lack of security

Lack of personal communication

23. Recommendations forWeb 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

24. Nontraditional Retailing

Nontraditional retailing also includes formats that do not fit into the store and nonstore-based categories:

• Video kiosks

• Airport retailing

25. 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

26. Video Kiosks

Free standing interactive computer terminal for purchasing (purchase may occur onsite or offsite)

Though actual sales may be less from kiosks per se, they influence sales by providing product information

Used for greeting cards, movie tickets, book sales