PPT 3-1 5 th Edition. PPT 3-2 Chapter 3 Multi-Channel Retailing McGraw-Hill/Irwin Levy/Weitz: Retailing Management, 5/e Copyright © 2004 by The McGraw-Hill.
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PPT 3-1
5th Edition5th Edition
PPT 3-2
Chapter 3
Multi-Channel RetailingMulti-Channel Retailing
McGraw-Hill/IrwinLevy/Weitz: Retailing Management, 5/e Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved.
PPT 3-3
The World of Retailing
Introduction to Retailing Types of Retailers
Multi-Channel Retailing
Customer Buying Behavior
PPT 3-4
The Multi-Channel Retailer
Retailer
PPT 3-5
Customer
Today’s empowered consumers live in a multi-channel world -- Research products online, buy offline, and demand service everywhere
Web & Email • 24x7 • Visual
Call Center • Convenient • Immediate
Kiosks • Visual • Convenient
Pervasive • Immediate • 24x7
Brick & Mortar • Touch/Feel • Experience driven
Consumers buy what they want, when they want, wherever they want
PPT 3-6
Why are Retailers Using Multiple Channels to Interact with Customers?
• Customer Want to interact in different ways
• Each channel offers a unique set of benefits for Customers
PPT 3-7
Unique Benefits Provided by Store Channel
• Browsing
• Touch and feel products
• Personal service
• Cash payment
• Immediate gratification
• Entertainment and social interaction
PPT 3-8
Benefits Provided by Catalog Channel
Convenience
Portability, easily accessible
Visual presentation
Safety
PPT 3-9
Unique Benefits Provided by Internet Channel
• Convenience
• Safety
• Broad selection
• Detailed information
• Personalization
• Problem-solving information
PPT 3-10
Will Consumers Shop
Electronically from Home
or
Go to the Mall?
PPT 3-11
What’s the Big Deal About Shopping on the Internet?
$2.5 Trillion US Retail Sales
$200 Billion Catalog and Direct Sales
$ 4 Billion TV Home Shopping
$ 50 Billion Internet Retailing
Just a Drop in the Bucket, But Growing Fast!
PPT 3-12
Electronic Channel Influences Shopping Behavior
0102030405060708090
100
In-StoreVisit
Internetfrom Home
Mail-OrderCatalog
Television Kiosk Pervasive
Findout about newproductsSearch for productinformationCompare and EvaluateProductsPurchase and Pay
Even though the electronic channel accounts for less than 2% of retail sales, the Internet is used extensively in the buying process
PPT 3-13
Positive Outlook for Future
Younger people are growing up with computers view them as an appliance
55% of U.S. households have Internet access now and more have access at work
Women use the Internet almost as much as men now
40% of people buying cars go to the Internet for info before seeing a dealer
PPT 3-14
Impediments to Shopping On-Line
Technological concerns are becoming less important
– Access to Internet
– Bandwidth
– Privacy, Security concerns
Are the benefits of shopping on-line greater
than the benefits of going to a store?
PPT 3-15
Factors Affecting the Diffusion of an Innovation
• Ease with which the innovation can be tried out
On-line access
• Perceived risks of adoption
Security, Privacy
• Perceived benefits compared to present alternatives (going to store or buying from catalogs)
PPT 3-16
Internet Users Across the Globe
PPT 3-17
Illustration - Judy Jamison - Part 1
Judy Jamison sits in front of her home electronic center reviewing her engagement calendar displayed on her TV screen. She sees that she has accepted an invitation to a formal cocktail party on Friday night and decides to buy a new dress for the occasion. She switches to her personal electronic shopper, FRED, and initiates the following exchange:
FRED: Do you wish to browse, go to a specific store, or buy a specific item?
Judy: Specific item.
FRED: Type of item?
Judy: Black dress.
FRED: Occasion? (menu appears on screen)
Judy: Formal cocktail party
PPT 3-18
Illustration - Judy Jamison - Part 2
FRED: Price range? (menu appears)
Judy: $300 $500
FRED: 497 items have been identified. How many do you want to review?
Judy: 5
Five pictures of Judy in each dress appear on the screen with the price, brand name, and the IHS retailer selling it listed beneath each one. Judy clicks on one of the dresses and it is enlarged on the screen. Another click and Judy views the dress from different angles. Another click and specifications such as fabric and laundering instructions appear. Judy repeats this routine with each dress. She selects the one she finds most appealing. FRED knows her measurements and picks the size that fits her best.
PPT 3-19
Illustration - Judy Jamison - Part 3
FRED: How would you like to pay for this? (menu appears)
Judy: American Express
FRED: Nieman Marcus [the firm selling the dress Judy selected] suggests a Xie scarf and Koslow belt to compliment the
dress.
[Judy clicks on the items and they appear on the screen. Judy inspects these items as she inspected the dresses. She decides to purchase both accessories. FRED then asks Judy about delivery. Judy selects two day delivery at a cost of $5.00]
FRED: Just a reminder. You have not purchased hosiery in 30 days. Do you wish to reorder at this time?
Judy: Yes
FRED: Same shades?
Judy: Yes
PPT 3-20
Why Do People Patronize a Retailer?
Merchandise Assortments
Service
Convenience
Information to make good selections
Price - Total cost to customer
Go to store, find right merchandise, return merchandise
Entertainment
Social interaction
PPT 3-21
Benefits of Electronic Channel
Increased Assortment
More Information to Evaluate Merchandise
Drill Down as Much as You Want
Full motion Video
Personalization
Fred, the Super Sales Associate
Try It On Virtually
Information for Solving Problems, Not Just Merchandise Characteristics
Virtual Communities
PPT 3-22
Using an Agent to Locate Merchandise
PPT 3-23
Virtual Communities
• John Hagel III and Arthur G. Armstrong, Net Gain: Expanding Markets Through Virtual Communities. Boston: Harvard Business School Press, 1998
• Definition: Virtual community is a network of members sharing common interests that interact with each other electronically.
PPT 3-24
Virtual Communities
Virtual community is a network of members sharing common interests that interact with each other electronically.
Examples:
IVillage - Women
Garden.Com - Gardeners
Ibelieve.com
PPT 3-25
The Knot -- Solving Your Wedding Problems
PPT 3-26
Value Proposition to Members
Full range of resources available to solve problem or satisfy from one source.
Integrate content and communication maximizing value of the available resources
Generation and dissemination of member generated information -- increases quality, breadth and depth of information.
PPT 3-27
Value Proposition for Members
Meaningful personal relationships -- Opportunity to interaction with other people with common interests draws people to community.
Fantasy and Entertainment
Access to competing vendors and publishers
PPT 3-28
Value Proposition for Commercial Organizer
• Reduce cost of locating and targeting customers
• Reduce cost of motivating customers to make purchase decisions
• Opportunity for tailoring products, services,
• Lower capital investment – don’t have to build store fronts.
• Broader geographic reach
PPT 3-29
Benefits for Community Manager
• Strengthen Brand Name, Reputation
• Build Customer Relationships
• Extend Database of Potential Customers
• Revenue Generation– Sell Merchandise
– Sell Services to Members
• Membership fees (Annual Charge for Access)
• Usage fee (Downloads, Time of Access)
• Advertising (Charge Advertisers)
PPT 3-30
Sources of Revenue
Subscription fees – fixed monthly charge
Usage fee – charge based on usage
Membership fees
Content delivery fees – charge to download information
Service fee – notification fee
Advertising
Transaction commissions
Sales of membership list or access to members
PPT 3-31
Who Is Best Suited to Organize a Virtual Community?
Concerned Consumers
Content Providers - Vertical Publications
Suppliers
Retailers
Offering Competing Products
Unbiased, Good Reputation
Know How to Run a Business Selling to Consumers -- Primary Revenue Source
PPT 3-32
What Merchandise Will Be Sold Successfully Over the Internet
“Look and See” attributes vs. “Touch and Feel” attributes (?)
Degree to which information can be used to predict satisfaction prior to purchase
Gifts
Services
Might not need to “Touch and Feel”
“Touch and Feel” not useful - Gifts
Superior presentation of “Touch and Feel”
Branding
PPT 3-33
Why Did So Many e-tailers Fail?
Pure E-Tailer
Catalog Retailers
Store-Based Retailers
Vendors
Assortments Limited Limited Excellent Poor
Fulfillment Poor Excellent Good Poor
Customer Information
Poor Excellent Good Poor
Unique Merchandise
Poor Good Good Excellent
Brand Name Poor Some Excellent
Some Excellent
Some Excellent
PPT 3-34
Store-based Retailers vs. Electronic Retail Entrepreneurs
Knowledge of Retailing
Assortment Planning
Distribution Systems
Reputation
Customer Database
Convenient Location for Picking Up, Returning Merchandise, Warranty Service and Installation
Vendor Relationships
PPT 3-35
Advantages of Retailers vs. Manufacturers
Distribute Merchandise Directly to Customers
Provide Assortments
Collect and Use Information about Customers
Widespread Disintermediation Unlikely
PPT 3-36
Summary
• Present Electronic Retailing Does Not Reflect the Future Potential -- Electronic Retailing Will Attract a Significant Segment --Much More than Catalogs
• Penetration of Electronic Retailing Will Be A Function of the Degree To Which Retailers Take Advantage of the Unique Properties of the Internet -Personalization and Interactivity
• Search Agents Are Critical to Provide Consumer Benefits
• Store-Based Retailers Are Well Positioned to Exploit This Opportunity But Might Not
PPT 3-37
Reasons for Becoming a Multi-Channel Retailer
-Increase Share of Wallet
-Overcome Limitations of Existing Format
-Expand Market
-Leverage Existing Assets
-Brand Name, Inventory, Customer Database
-Develop Insights in Customer Shopping Behavior
PPT 3-38
Issues Confronting a Multi-Channel Retailer
Maintaining Brand Image Across Channels
Merchandise Assortment Offered in Each Channel
Pricing Across Channels
PPT 3-39
Shopping in the Future
PPT 3-40
Customers Want to Recognized No Matter What Channel they Use
Kiosk
Internet
Pervasive
Call Center
CustomerRelationshipBrick & Mortar
Customers
PPT 3-41
Integration – Key to Multi-Channel Retailing
•Create a Seamless •Experience
•Make it Easy •Provide Support
•Know thy •Customer
••• Ordering ••• Returns••• Refunds
•• •Call Center•• •Shopping
•Advice•• •Customer
•Service
•• •Needs and•preferences
•• •One to One•Marketing
•• •Synchronized &•consistent service•regardless•of channel
PPT 3-42
Source: Progressive Grocer, 01 Feb 00; Grocery Headquarters, 01 Feb 00.
Consumer does not find desired item in the store.
Consumer goes to kiosk to search for product
Kiosk links to chain’s web-site allowing consumers to find and purchase item
Consumer places order online for home delivery or store pick-up at a later time
Illustration of Multi-Channel Integration
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