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
*Italy
* Germany
* 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
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
products

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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

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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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