NEW STRATEGIES IN RETAIL THROUGH ADDITIONAL DISTRIBUTION CHANNEL

Abstract

Retail companies on the Croatian market are confronted with fierce competition, forcing them to find new forms of distribution channels. The development of information technology and broadly available access to Internet has created preconditions for new distribution channels. Multichannel marketing offers customers more than one option for buying something - for example, they can buy the same product on a Web site as well as in retail stores. The fact that more than 38% Croatian citizens are using Internet has set up conditions for creating a new retail distribution channel on Croatian market too. According to these presumptions, the level of presence of Internet retailing on Croatian Fast Moving Consumer Goods (FMCG) market in total sales was explored, using examples of market leaders in Croatian market. Observed and analysed were Konzum and Tisak Internet shops. Konzum is a national groceries chain retailer and Tisak is a national kiosk chain retailer, active in newspapers market. They both hold over 30 percent of their respective markets, which enables them to influence the total markets. The presumption states that the new distribution channel increases the overall sales revenues and it does not avert the demand away from existing distribution channels. After a brief description of main retail strategies, Internet penetration and using habits, as well as Croatian FMCG market overview, several demographic elements and Konzum web shop consumer preferences were described. It was found that 45 percent of items sold in web-shop are from middle segment, 34 percent from higher middle segment and 11 percent are premium items. This composition showed that online customers come from higher buying power segments, usually have little time for FMCG shopping, appreciate the Internet channel and at the same time prefer higher middle and premium items and are willing to pay more fore top quality merchandise. Descriptive statistics analysis was used to examine Internet and total sales in Konzum and Tisak, for the 2005 – 2007 period, at a quarter level. Absolute values of Internet sales were found to be very low, barely 0, 09 percent of total sales in 2007 quarter 4. Due to that fact, planned formal statistical tests were not conducted. Introduction of Internet channel did not contribute to total sales by sales realized online. Its main contribution is in enhanced promotion of the extensive store network, Konzum private label (K plus) and in attracting customers from other retailers. Also, Internet is used to support Konzum and Tisak expansion into Bosnia and Herzegovina, Serbia and Monte Negro markets, as there is minimum language barrier. In primarily graphic data analysis, several interested trends were noticed. The most interesting one was increase in Internet sales chain index for each observed period in which total sales decreased. In time, Internet channels in Konzum and Tisak will become more important, but more likely in support activities than in online sales realization.