Chapter 6

Web, Nonstore-Based, and Other Forms of

Nontraditional Retailing

RETAIL
MANAGEMENT:
A STRATEGIC
APPROACH,
9th Edition

BERMAN EVANS
 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

6-2
 Chapter Objectives_2
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

6-3
 Figure 6.1 Approaches to
Retailing Channels

6-4
 Figure 6.2 Home Depot

6-5
 Nonstore Retailing
 Retailing strategy that is not store-
based
 It exceeds $300 billion annually
 78% comes from direct marketing
 Web-based retailing is fastest growing
area

6-6
 Nontraditional Retailing

Nontraditional retailing also

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

6-7
 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 $235 billion
 Other leading countries include
* Japan *France
* Germany *Italy
* Great Britain

6-8
 Characteristics of Direct
Marketing Customers
• Married
• Upper middle class
• 36-50 years old
• Desires
convenience,
unique
merchandise, good
prices

6-9
 Direct Marketing Categories
GENERAL SPECIALTY

• offer full lines of • offer narrow product

products from clothing lines
to housewares

– J.C. Penney – L.L. Bean

– QVC – Franklin Mint

6-10
 Figure 6.3 Micro Warehouse

6-11
 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

6-12
 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

6-13
 Database Retailing
 Collection, storage, and usage of
relevant customer information
* name
* address
* background
* shopping interests
* purchase behavior
 Observation of 80-20 rule

6-14
 Emerging Trends
 Evolving activities
 Changing customer lifestyles
 Increasing competition
 Increasing usage of dual distribution
channels
 Changing media roles, technological
advances, and global penetration

6-15
 Selection Factors
 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

6-16
 TV Retailing

6-17
 Figure 6.4 Executing a Direct
Marketing Strategy

6-18
 Media Selection
 Printed catalogs  Freestanding
 Direct-mail ads and displays
brochures  Ads or programs in
 Inserts with monthly mass media
credit card and other  Banner ads or hot
bills (statement links on the Web
stuffers)  Video kiosks

6-19
 Outcome Measures
 Overall Response Rate
 Average Purchase Amount
 Sales Volume by Product Category
 Value of list brokers

6-20
 Table 6.1 Snapshot of
U.S. Direct Selling Industry
Major Product Groups % of Industry
Home/ family care products 33.7
Personal care products 26.4
Services 16.9
Wellness products 16.5
Leisure/ educational 6.5
products

6-21
 Table 6.1 Snapshot of
U.S. Direct Selling Industry
Place of Sales % of Industry
In the home 64.4
Over the phone 14.7
In a workplace 8.7
Over the Internet 5.5
Other 6.7

6-22
 Figure 6.5 Direct Selling
and Mary Kay

6-23
 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

6-24
 The Role of the Web_2
 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

6-25
 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

6-26
 Reasons

 Using the Web  Shopping Online

– information – selection
– entertainment – prices
– interactive – convenience
communications – fun

6-27
 Reasons NOT to Shop Online

Trust
Fear
Lack of security
Lack of personal communication

6-28
 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

6-29
 Figure 6.12 Borders’
Title Sleuth Video Kiosk

6-30
 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

6-31
 Figure 6.13 Airport Retailing
and Waldenbooks

6-32