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Chapter 6. RETAIL MANAGEMENT: A STRATEGIC APPROACH, 9th Edition. Web, Nonstore-Based, and Other Forms of Nontraditional Retailing. BERMAN EVANS. Chapter Objectives. To contrast single-channel and multi-channel retailing

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chapter 6

Chapter 6





9th Edition

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


chapter objectives
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
chapter objectives 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
nonstore retailing
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
nontraditional retailing
Nontraditional Retailing
  • Nontraditional retailing also includes formats that do not fit into the store and non-store based categories:
    • Video kiosks
    • Airport retailing
direct marketing
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
    • Germany
    • Great Britain
  • France
  • Italy
characteristics of direct marketing customers
Characteristics of Direct Marketing Customers
  • Married
  • Upper middle class
  • 36-50 years old
  • Desires convenience, unique merchandise, good prices
direct marketing categories

offer full lines of products from clothing to housewares

J.C. Penney



offer narrow product lines

L.L. Bean

Franklin Mint

Direct Marketing Categories
strategic business advantages of direct marketing
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
strategic business limitations of direct marketing
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
database retailing
Database Retailing
  • Collection, storage, and usage of relevant customer information
    • name
    • address
    • background
    • shopping interests
    • purchase behavior
  • Observation of 80-20 rule
emerging trends
Emerging Trends
  • Evolving activities
  • Changing customer lifestyles
  • Increasing competition
  • Increasing usage of dual distribution channels
  • Changing media roles, technological advances, and global penetration
selection factors
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
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

Media Selection
outcome measures
Outcome Measures
  • Overall Response Rate
  • Average Purchase Amount
  • Sales Volume by Product Category
  • Value of list brokers
the role of the web
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
the role of the web 2
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
figure 6 8 five stages of developing a retail web presence
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

Using the Web



interactive communications

Shopping Online





reasons not to shop online
Reasons NOT to Shop Online



Lack of security

Lack of personal communication

recommendations for web retailers
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
features of airport retailing
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