The perspective of this course is to build skills to enable you to make managerial decisions and evaluations concerning
the retail industry. In addition, you will have the knowledge and skills to act as a retail consultant.

We will consider many changes in the retail industry, and some of the shopping trends in today's market. Many new ideas introduced at the 2005 National Retail Federation Conference (NRF) will be discussed.

What’s Changing Today in Retailing and E-Commerce?
In the past:

• aging population
• new household forms
• gender roles
• mobility of households
• electronic banking
• location of stores
• two career couples
• more spending by children and teens
• poverty of time

• Too many stores
• Fickle Consumers
• Difficult Economy
• Need  to meet consumer needs through service
• Need clear definitions of consumers
• Streamlining inventory - RFID
• Shopping is boring, time consuming, poor service
• The right mix of bricks and mortar with e-commerce
• Multichannel retailing

Past Casualties

• W.T. Grants
• Wanamakers
• Robert Hall
• A&P
• Sneaker Stadium
• Today's Man
• Caldor
• Ames
• Dot-com's

• Traditional Department Stores
• Sears and KMart
• Toys R Us
• Krispy Kreme

Marketing Functions and Channels of Distribution

Traditional members of marketing channel

• Manufacturers
• Wholesalers,
• Retailers
• Consumers

Functions within marketing channel

• Collection of assortments
• Sorting, storing
• Breaking bulk
• Information
• Adding Value
• Customer service
• Place convenience
• Time convenience
• Pricing convenience

• Exclusive
• Selective
• Intensive

• Customer orientation, coordinated effort, value driven, and goal orientation.
• What does being customer-focused mean? Lands’ End is a good example. How can retailers create customer value?
• What about customer complaints?  Does e-tailing correct some of the complaints? Or create new ones?
• Having the right product in the right place at the right time.
• Making the product available in the way that the consumer wants to buy
• Starbucks example – exceed customer expectations

Multichannel Retailing
Firms analyze sales from one medium in order to support sales in another
Many customers use multiple media for shopping
Do you think that people use web sites together with catalogs and store visits?????

NRF:  Generally, a substantial proportion of a company’s catalog shoppers have also shopped at stores
Among online shoppers, many purchase in-store, and also from catalogs
Track customer data across channels
 

One concern about online buying is how to return products

• Best Buy uses the multichannel approach
• Store Returns - Avoid shipping charges and receive a refund more quickly by returning online orders at any Best Buy store.
• Your packing list/receipt and ID are required.
• Include all original packing materials, manuals and accessories with the product to avoid any additional fees.
• Returns of gift with purchase items, quantity discounts and bundle purchases have specific guidelines for what your return price will be.

Growth of Ecommerce

• As many as 605.60 million people are online throughout the world (Nua Ltd. Online estimate)
• What do we understand about their shopping behavior? Do they browse? Do they buy?
• What about other types of non-store shopping?
• How much do Internet users browse and purchase on:
• The Web?
• Traditional mail-order catalogs?
• Advertising during regular television programming?
• Television infomercials?
• Television shopping channels?

Background

• Shopping has changed. Look at the new options:
• Shopping from home via multiple methods
• Shopping using price comparison web sites
• Shopping using merchandise aggregator web sites
• Shopping using virtual “malls”
• Shopping using combinations of print catalogs and web sites
• Shopping using web sites to lead customers to bricks and mortar stores
• Shopping via web auctions:  C2c buying
• Shopping directly from manufacturers:  B2C
• How does the customer choose which to use?

Time-compressed Shoppers and Responses to Their Needs

• In the 1980’s, convenience products and quick services were innovations:
• Microwave foods and disposable dishes
• Drive-in auto services and eye care
• In the 1990’s, information technology gave “power” to consumers:
• Product attribute information
• Comparison of multiple sellers
• Price and barter deals
• In the 2000’s, new options emerge:

A Comparison from 2005 NRF Super Session – 90% of grocery home delivery has failed
Web Van

• Web site all about them – the vans that they have, the convenient delivery
• Does not discuss food
• No consumer benefit
• Filed for bankruptcy in 2002

Fresh Direct

• Took 3 years to plan
• Not just convenience
• “It’s All About the Food”
• Convenience is not enough to satisfy the customer
• http://www.freshdirect.com/index.jsp

• Face-to-face interactions with salespersons
• The ability to touch and feel merchandise in “real time”
• Enjoyment of the social aspects of browsing and purchasing
• Security of credit information
• Ability to ask questions in “real time”
• Immediate acquisition of the product
• Ability to correct problems in person with a “real” person

Conversion from Browsers to Purchasers

• Conversion rate is approximately 2 percent
• “Almost two-thirds of all Internet ‘shopping carts’ are abandoned before the transaction is complete.”  (Forrester Research)
• Desire for more “human” interaction”?
• A new possibility is that people become confused when buying and going back and forth to checkouts – one firm is redesigning their site technology to track and eliminate this confusion.

Problems with E-shopping

• Customers report frustration and confusion
• Inability to access desired information
• Lack of service support
• Lack of response to e-mail queries on the web
• Inoperative or broken web links
• Inability to find desired merchandise
• Delay in merchandise delivery
• Security fears

Who Uses the Web?
Varied descriptions of Web users:

1.  Male, well-educated, middle income, and middle-aged or younger (Korgaonkar and Wolin (1999)

2.  Since 1999, the number of teen girls online has more than doubled to 4.4 million (Media Metrix and Jupiter Communications)

3.  For the first time in the U.S., more women are logging on than men (Time Magazine, August 21, 2000).
 

What Can and Can’t be sold on the web?
Think about products that analysts have said could never be sold on the web . . . Such as groceries, cars, and high end goods

Why have consumers been responsive to these types of sales?