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 multichannel 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
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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
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Figure 6.1 Approaches to
Retailing Channels
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Figure 6.2 Home Depot
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Nonstore Retailing
Retailing strategy that is not storebased
It exceeds $300 billion annually
78% comes from direct marketing
Web-based retailing is fastest growing
area
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Nontraditional Retailing
Nontraditional retailing also
includes formats that do not fit into
the store and non-store based
categories:
Video kiosks
Airport retailing
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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
*France
* Japan
* Germany
*Italy
* Great Britain
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Characteristics of Direct
Marketing Customers
•
•
•
•
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Married
Upper middle class
36-50 years old
Desires
convenience,
unique
merchandise, good
prices
Direct Marketing Categories
GENERAL
SPECIALTY
• offer full lines of
• offer narrow product
products from clothing lines
to housewares
– J.C. Penney
– QVC
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– L.L. Bean
– Franklin Mint
Figure 6.3 Micro Warehouse
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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
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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
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Database 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
 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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TV Retailing
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Figure 6.4 Executing a Direct
Marketing Strategy
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Media Selection
 Printed catalogs
 Direct-mail ads and
brochures
 Inserts with monthly
credit card and other
bills (statement
stuffers)
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 Freestanding
displays
 Ads or programs in
mass media
 Banner ads or hot
links on the Web
 Video kiosks
Outcome Measures
Overall Response Rate
Average Purchase Amount
Sales Volume by Product Category
Value of list brokers
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Table 6.1 Snapshot of
U.S. Direct Selling Industry
M a jo r P ro d u c t G ro u p s
% o f In d u s try
H o m e / fa m ily c a re p ro d u c ts
3 3 .7
P e rs o n a l c a re p ro d u c ts
2 6 .4
S e rv ic e s
1 6 .9
W e lln e s s p ro d u c ts
1 6 .5
L e is u re / e d u c a tio n a l
p ro d u c ts
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Table 6.1 Snapshot of
U.S. Direct Selling Industry
P la c e o f S a le s
% o f In d u s try
In th e h o m e
6 4 .4
O ve r th e p h o n e
1 4 .7
In a w o rk p la c e
8 .7
O ve r th e In te rn e t
5 .5
O th e r
6 .7
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Figure 6.5 Direct Selling
and Mary Kay
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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
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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
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Figure 6.6 Web-Based U.S.
Retail Sales
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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
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Figure 6.9 A
Checklist of
Retailer
Decisions in
Utilizing the
Web
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Reasons
 Using the Web
– information
– entertainment
– interactive
communications
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 Shopping Online
– selection
– prices
– convenience
– fun
Reasons NOT to Shop Online
Trust
Fear
Lack of security
Lack of personal communication
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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
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Figure 6.12 Borders’
Title Sleuth Video Kiosk
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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
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Figure 6.13 Airport Retailing
and Waldenbooks
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