CHAPTER 13

PRODUCT MANAGEMENT IN NON-STORE RETIALING

LEARNING OBJECTIVES

Highlight differences between store and non-store retail product management

Explore implications for assortment planning, product presentation, pricing and stock management imposed by non-store retailing

appreciate the need for good customer service and an efficient infrastructure to support non-store product management

Understand the concept of multi-channel retailing and its implications for RPM

Table 13.1 Principal non-store retail formats The General Catalogue GUS, Grattans, LaRedoute, Sears Roebuck The Specialist Catalogue Lands End, Joe Brown, Screwfix, Toast, Waggers. TV Retailing QVC, Home Shopping Network, Teletext Internet Retailing Amazon.com, Tesco.com, E-Bay.com Via PC, mobile device Or TV monitor

Table 13.2 Store and non-store retailing: a comparison Store Retailing Non-Store Retailing Product Presentation Real, tangible Represented by image Selling Environment Use of store environment to enhance Difficult to create atmosphere, although website better than printed media Store design can be matched to product Product can be shown ‘in use’ Pricing Flexible and highly visible, but time Easy to compare prices between consuming to make comparisons competitive non-store retail offers. Not always possible to administer price

changes immediately (especially print based media).

Customer Service Direct, personal Detached, impersonal;

product information (especially comparison price) is often easy to access;

security concerns Convenience May be low, depending on individual High (in principle) Circumstances Low for impulse purchases Product Delivery Usually immediate Not immediate; arranged, if product cannot be posted

NON-STORE IMPICATIONS:PRODUCT PRESENTATION

CHALLENGES product aesthetics not easily shown sensory elements lost not stimulating (especially websites) incorporating web atmospherics (image) without

slowing down navigation

OPPORTUNTIES showing product in use / modelled good navigability can promote related sales customisation of offer (internet)

NON-STORE IMPLICATIONS:

PRODUCT ASSORTMENT Non store retailers can add more space relatively

easily and inexpensively (especially internet) Considerations:

Who is home shopping customer and what will they buy?

Can all products be profitably delivered? Internet shoppers generally have higher socio-

economic profile Kiosks in store can provide access to wider

product range on company website

NON-STORE IMPLCATIONS:THE SELLING ENVIRONMENT

Layout should be logical and product categories easy to locate

NAVIGABILITY is an important part of web-site design Links between complementary merchandise should

be built in (web-site) or clearly indicated (e.g. catalogue page number)

Design of web-site incorporates customer-retailer interaction (service experience)

Atmosphere not easy to create, but some targetted offers use artwork and effects to create unique image

NON STORE IMPLICATIONS: PRICING

No stores - saves running costs Financing credit and stock to guarantee fast delivery

adds to costs Price comparison easily carried out in home shopping

(especially internet) Difficult to justify premium prices in non-store selling

environment Consistency across different formats is an issue Catalogues are not very flexible on price

NON-STORE IMPLICATIONS:

SERVICE

Store retailing has advantage of immediacy: product information stock position product retrieval

Non-store retailers must provide good product information, fulfillment and delivery service

Dissatisfaction with service more difficult to detect in non-store

Some Internet retailers moving to availability details on-line

Secure payment service is important

RETURNS SERVICE

Home shopping retailers have to accept high levels of product returns (around a third on average)

This needs to be accounted for in terms ofstock forecasting and financing infrastructure for returns (reverse logistics) flexibility across retailing formats

NON-STORE IMPLICATIONS:

CONVENIENCE Home shopping avoids many inconvenient

aspects of the consumer’s experience that are associated with store shopping

Home shopping only provides convenience if service promise is delivered

Retailer’s infrastructure must support product offer and (stated or assumed) service offer

ORDER FULFILLMENT

Non-store retailing offers potential to operate a stock-free system. Supply chain can be geared to responding to customer orders

In reality suppliers will need commitment from retailer in order to be willing to hold stock of e.g. seasonal and own label goods

Forecasting can be improved with use of preview catalogues web-site trials

DELIVERY

Early Internet successes were based on products that were easy to understand and easy to deliver (books, CDs etc.)

Delivery of more complex product needs to be reliable and reflect retailer’s image

Internet retailer’s customers are time-poor and so delivery arrangements must be customer focused and accurate

Tracking and pro-active order management software can be used to manage deliveries

MULTI-CHANNEL RETAILING

Challenges and opportunities:cross-shopping transfer of positive and negative imageprice consistencycost allocation and performance monitoringsales cannibalisationmarketing