Berman Ch 06 11e

Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall6-1

Web, Nonstore-Based, and Other Forms of Nontraditional Retailing

RETAIL MANAGEMENT:A STRATEGICAPPROACH11th Edition11th Edition

BERMAN EVANS

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

Chapter ObjectivesTo contrast single-channel and

multi-channel retailingTo 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

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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

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Figure 6-1a: Approaches to Retailing Channels

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Figure 6-1b: Approaches to Retailing Channels

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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

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Nontraditional Retailing Nontraditional retailing also

includes formats that do not fit into store and nonstore-based categories: Video kiosks Airport retailing

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Direct MarketingCustomer 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

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* France* Italy


Characteristics of Direct Marketing Characteristics of Direct Marketing CustomersCustomers

MarriedUpper middle class35-50 years oldDesire convenience,

unique items, good prices


Strategic Business Advantages of Direct Strategic Business Advantages of Direct MarketingMarketing

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

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Strategic Business Limitations Strategic Business Limitations of Direct Marketingof 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

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Data-Base Retailing Collection, storage, and usage of

relevant customer information* name* address* background* shopping interests* purchase behavior

Observation of 80-20 rule

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Emerging Trends

Evolving activities Changing customer lifestyles Increasing competition Increasing usage of dual

distribution channels Changing media roles,

technological advances, and global penetration

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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

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Figure 6-4: Executing a Direct Marketing Figure 6-4: Executing a Direct Marketing StrategyStrategy

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Media SelectionMedia Selection

Printed catalogsDirect-mail ads

and brochuresInserts 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

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Outcome MeasuresOutcome Measures

Overall response rate Average purchase amount Sales volume by product category Value of list brokers

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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.

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


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.

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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.

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The Role of the WebThe 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

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The Role of the Web (cont.)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

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Figure 6-6: Web-Based Retail Sales Projections

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

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Figure 6-9: Checklist

of Retailer Decisions

for the Web


Web StrengthsWeb Strengths

Using the Webinformationentertainmentinteractive

communications

Shopping Onlineselectionpricesconveniencefun

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Reasons NOT to Shop OnlineReasons NOT to Shop Online

Lack of trustFear

Lack of securityLack of personal communication

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Recommendations for Recommendations for Web RetailersWeb 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

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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.

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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

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Figure 6-13: Airport Retailing and Starbucks

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Berman Ch 06 11e

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