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Chapter 6

Chapter 6. RETAIL MANAGEMENT: A STRATEGIC APPROACH,. Non-traditional Retailing. Nontraditional Retailing. Non-store: Direct Marketing: Internet Catalogue – examples ? TV (shopping networks, infomercials) Direct Selling (phone, in-person)

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Chapter 6

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  1. Chapter 6 RETAIL MANAGEMENT: A STRATEGIC APPROACH, Non-traditional Retailing

  2. Nontraditional Retailing • Non-store: • Direct Marketing: • Internet • Catalogue – examples? • TV (shopping networks, infomercials) • Direct Selling (phone, in-person) • Other (blurred store/non-store distinctions): • Video Kiosks • Vending Machines • Airport Retailing

  3. Emerging Trends • Changing customer lifestyles • Increasing competition • Mounting interest in global direct marketing • Technological advances • Greater use of multi-channel retailing… • Perhaps even “channel obliteration”? • For bricks-and-mortar stores? • For catalogues?

  4. Internet $1 $ 3 $ 5 $ 7 Catalogue $1 Retail $3 $ 5 Multi-channel Retailing • Uses more than one channel • Studies have shown multi-channel shoppers spend more (Sears, Canada Post) and are more loyal (Berman and Thelen 2004) • Channels synergistic (JC Williams) • Increased customer base, increased revenue, increased market share (Berman and Thelen 2004) • 26% online Canadians make their online purchases from the same stores they shop offline (AC Nielsen 2010) • Different consumer benefits are derived from each channel • Successful multi-channel strategies are integrated • Achieve integration: • Protect (initiated for competitive parity) • Evolve (become more customer centric) • Transform (customer preferences integrated throughout value chain) Name some multi-channel retailers. Do you shop all channels? What benefits do you get from each channel?

  5. From anywhere… to anyone Online Experience Catalogue Experience Retail Experience In-depth information Resource Personalized Dynamic Efficiency/Convenience Accessible Entertainment Information Longevity Tangibility Portability Service Tactile interaction Instant gratification Human interaction Service Destination It’s really all about maximizing the buying experience Consumers look for different experiences in the different channels Source: J.C. Williams Group

  6. Airport Retailing • Vancouver International Airport • Hong Kong International Airport • “Airport Authority with the Most Supportive Approach to Travel-Retail” at the DFNI Asian Awards for Travel-Retail Excellence • Airport retailing is becoming increasingly significant • Reduced in-air services • Increased waiting times • Captive audience • Impulse purchase behaviour • Reduced price sensitivity • Extended hours • Potential difficulties include: • Higher rent • Receipt of inventory (inconvenient) • Inventory storage

  7. Vending Machines • Formerly dominated by tobacco • Dominated by food in Canada • 94% of $720 million in revenue • April Glavine, Saint Mary’s MBA • What items would you consider purchasing from a vending machine? • New Trends: • Hot food • Durables (clothing, souvenirs) • iPods??

  8. Web Retailing • Have you made a purchase online? • 76% Canada’s internet users have shopped online • Compared with 98% in South Korea and 97% in Japan, Germany and Great Britain • The stat is at 94% for the US • What have you purchased and why? • Most frequent online purchases in Canada (Dec 2009) • Books • DVDs • Clothing/shoes • Electronics • Airline tickets • Resources: Stats Can data; AC Nielsen Report

  9. Convenience Control Choice Communication Customization (My Publisher, American Eagle, Future Shop, youbobble.ca) Cost* Reasons Customers Buy Online

  10. Reasons Retailers Use Web • Competitive necessity • Generate sales • Enhance image • Reach geographically-dispersed customers • Provide information to customers • Promotion - new products, special offers • Provide customer service (e.g., e-mail, shopping assistants) • Obtain customer feedback • Employee recruitment • Present information to potential investors, franchisees, and the media

  11. Figure 6.8 Five Stages of Developing 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

  12. Connected, but not buying… 40% of Canadian Internet users abandoned at least one virtual shopping cart on a Canadian site. WHY? • Canada most connected country in the world • Canadians were the world leader in broadband adoptions • But, online Canadians aren’t avid online purchasers relative to other countries

  13. Reasons NOT Shopping Online • Browsing • Shipping costs too high • Privacy • Inconvenience (had to register) • Poor site design Fulfillment issues?? (eg. Red Envelope)

  14. BlueNile.com

  15. BlueNile.com Questions • Discuss the consumer behaviour of a traditional diamond engagement ring purchase. How does it compare to a BlueNile.com purchase? • Is channel obliteration – the destruction of traditional distribution channels – likely in jewelry retail? Why or why not? • What have been BlueNile’s KSFs to date?

  16. The Value of Multi-Channel • Using the Internet is most successful when it is part of an integrated multi-channel strategy. • Clicks-and-mortar retailers address the consumer's emerging preference to enjoy the same shopping experience and convenience in all channels (e.g., store, catalogue, Internet). • Internet retailing may not result in channel obliteration as once expected, but many retailers are planning substantial growth from this area. • http://www.businessweek.com/news/2010-10-26/u-k-retailers-boosting-online-offering-deloitte-s-geddes-says.html • Two challenges are: • converting browsers to shoppers regardless of the channel they choose. • repatriating the 45% of Canadian online shoppers who are buying from foreign sites. • Retail Interactive (http://retailinteractive.ca/SSG/ri00913e.html)

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