Retail Management: A Strategic Approach: Web, Nonstore-Based, and Other Forms of Nontraditional Retailing

Retail Management: A Strategic Approach
Thirteenth Edition
Chapter 6
Web, Nonstore-
based, And Other
Forms Of
Nontraditional
Retailing
Copyright © 2018, 2014, 2012 by Pearson Education, Inc. All Rights Reserved
Learning Objectives
6.1 To contrast single-channel and multi-channel retailing
6.2 To look at the characteristics of the three major retail
institutions involved with non store-based strategy
mixes: direct marketing, direct selling, and vending
machines – with an emphasis on direct marketing
6.3 To explore the emergence of electronic retailing through
the World Wide Web
6.4 To discuss two other nontraditional forms of retailing:
video kiosks and airport retailing

Approaches to Retailing Channels
Direct Marketing
• Customer is initially exposed to a good or service through a non-
personal medium and then orders by mail, phone, fax, smart
phone, or computer.
• It may also be viewed as a data-driven, cross media, interactive,
multichannel process for building and cultivating mutually
beneficial relationships between companies and their customers
and prospects.
• Direct selling and conventional vending machines are not
included as a form 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
• 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

Emerging Trends
• Evolving activities
• Changing customer lifestyles
• Increasing competition
• Increasing usage of dual distribution channels
• Changing media roles
• Technological advances
• Global penetration

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.
• A direct-selling strategy emphasises convenient shopping
and a personal touch, and detailed demonstrations can be
made.
• Eg: Amway, Mary Kay, Tupperware

Electronic Retailing: The Emergence of

www
• The role of web: https://www.machines.com.my
Key Factors for Continued Patronage
• Decoupled ordering, payment, and delivery
• Website design/interaction – drives retailer image
• Fulfillment/reliability: 24/7/365. Buy, pay, pick-up anywhere,
anytime
• Customer service – info from retailer, must also provide peer-
reviews
• Security/privacy – personalize for “me only when I need it”

Reasons NOT to Shop Online

• Online shopping accounts for only 8% overall retail spend!
• Lack of trust in retailer
• Fear of fraud
• Lack of security (credit card access)
• Lack of personal communication
• High shipping costs

Omni Channel Retailing

• Seeks synergies among formats (get product information
on Web, order through catalog, pick-up in store, use kiosks
for out-of-stock merchandise)
• Retailer views each channel as creating value (immediacy
of store, 24/7 of Web, long lasting impression of catalog)
• Channels are viewed as complementary, not competitive
(Costco Web site vs. store)

Principles of Omni Channel Retailing

• Use same product identification in all channels
• Price goods the same in all channels
• Assess infrastructure economies. Direct marketer data
base and delivery system.
• Cross promote goods across channels.
• Use suitable partners (Amazon to sell, Fedex to deliver)

Nontraditional Retailing
• Nontraditional retailing includes hybrid formats that do not
fit into store and nonstore-based categories to extend
retailers’ footprint :
– Vending machines
– Video kiosks
– Airport retailing

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. Lowers costs and risks.
• Machines placed wherever convenient for consumers, but
not for store.
• 95 percent of the $50 billion in annual U.S. vending
machine sales involve hot/cold beverages and food items.

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.

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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Retail Management: A Strategic Approach

Approaches to Retailing Channels

Strategic Business Advantages of Direct

Strategic Business Limitations of Direct

Electronic Retailing: The Emergence of

Reasons NOT to Shop Online

Omni Channel Retailing

Principles of Omni Channel Retailing

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