The retail industry landscape has been shaped from the commencementof trading in ancient times, however, of more recent the industry has undertakenthe most notable changes.The medieval time saw the evolution of the mercantiletrading era, which has since evolved into the current era, the future of retailis also being influenced by a number of different aspects, we will look atthese three time periods in this short report, and outline some events thattook place during these times. The idea of trading and retail began in a primitive tradingtime known as the Mercantile era, this was roughly from 1200 to 1815ad.
During this time traders such as farmers, weavers andblacksmiths began to trade locally selling and buying items such as milk,cheese, crafts and workshop inspired items. Trading generally started off smallin a village and town settings and slowly evolved to establish trade routesbetween countries, and over continents such as Europe, middle east and Asia.Merchants could trade silk from India, wine from France and Tea from China.
Merchantsidentified the opportunity to trade with the early colonists of America enablingaccess to, products such as Tobacco, Maize and potatoes, these products couldbe packaged and imported back into the early European market via shippingroutes. The shipping routes across the Atlantic could often be treacherousand because of this a lot of produce was either lost or wasted, however as thetrade routes and ship building improved, productivity and profit increased. Belowis an example of the early medieval continental trade route which span from Turkeyto China and was known as ‘the silk road’.
Here is an example that defines the early shipping routesthroughout the newly founded global continents: Toward the end of the Mercantile era, traders began to ‘match’consumers with the products they would typically buy and could often give theirregular customers a good deal.By the 18th century, early markets began to formwhat would ultimately lead to the creation of retail establishments. Abraham Dent was arenowned shopkeeper in north Yorkshire in the 18th century. At thepeak of his trading life he was sourcing from 175 merchants and suppliers across47 cities in and the world. The Modernera commenced at the end of the Mercantile era, which sparked the industrialrevolution from 1815 to 1900, markets and traders became retailers which arenow firmly established and the retail environment has instantiated a solidfoundation across the globe.The 1800’s saw the birth of some of the largerorganisations which are still thriving today, such as Macy’s in New York and Le Bon Marché in Paris.
Highstreet stores and supermarkets became predominant in the retail sector and thefirst COOP opened its doors to customers in London in 1948 which gave birth tothe ‘everything under one roof’ concept which has led to more than 8000 supermarketsoperating in the UK to date. Supermarkets have since evolved and now are tryingto sell more of their own brandedproducts to their customers, thus leading to the slow decrease of main brands fromtheir shelves. Companiessuch as McDonalds have globally adapted usingglobalization marketing strategies, giving the organisation access to newcustomers and capital. This is a useful strategy as they have in many cases saturatedtheir domestic market. McDonalds have also standardised their organisation andgiven their customers the familiarity and consistency of the local McDonaldsproducts on a global scale, meaning their customers are enjoying the sameproduct and service no matter what restaurant they enter across the world.
Another aspect of the modern era is vertical retailing, thisis when a company owns its upstream suppliers and manages its raw materials,manufacturing, transportation, marketing and retailing.Zara is a prime example of vertical retailing, they are incomplete control of their organisation from sourcing of raw materials toselling of products, this strategy is also known as ‘end to end’ retailing. Initially the supply chain to retailers was managed througha PUSH strategy, which meant that the manufacturer controlled and dictated whatstock the retailer received thus causing friction with the consumers as theywould often not be able to access the stock they wanted, this issue was causedby lack of communication between the producer, distributor and retailer. The supply chain communication has developed and theretailer now adopts a PULL strategy, enabling them to access the goods andmaterials they require, as and when they need it. Enabling a better experiencefor the consumer and ensuring the longevity of the supply chain. The digitalera began in 2000 and saw the rise of technology from the onset. The digitalera is changing the landscape of the retail environment with a much higherimpact than the industrial revolution ever did.
Retailers arebeing seriously challenged to stay up-to date in the 21st centuryand many retailers have gone into administration because of their lack of ITinfrastructure.Someorganisations have failed because their products or services have become obsolete.Blockbuster met their end in 2010 when they became bankrupt because of newinnovations and technologies such as Netflix – ‘vocoli.com’.Thriving retailerssuch as Apple and Next have seized the opportunity of this new technologicalera and have utilized the use of Omni-channel retailing.
These retailerssell their products on many new platforms such as websites, mobile apps andsocial media. Tesco saw the window of opportunity in the digital era and ‘signeda multi-million-pound contract with Cash Bases to integrate of thepoint-of-sale cash management specialist’s SMARTtill technology’ – retailtechnology.co.uk. This gavethem a springboard into the many IT systems and infrastructure that they usetoday.Other retailers are having to review their currentbusiness strategy and address these fundamental elements, are their productsavailable for sale on multiple platforms including bricks and mortar stores andthe accessibility of online shopping 24hours a day, as customers are evolving inthe digital era and their needs are ever changing.
IT infrastructures are moving towards ‘big data’. Bigdata is when data is collected from individuals then analysed by systems toreveal patterns and identify trends and associations, especially gearedtowards human behaviour and interactions. Another factor that can disrupt a retailer’s smoothoperation is the ‘disruptive innovation theory’. This disruptive technologyenables companies to create a new business model that alter the economics oftheir industry and refers to any innovation that creates a new market orproduct. The internet is the main disruption which has caught retailers offguard as many of their business models focused on physical stores andtraditional retailing.Over the last number of years online retail sales have vastlyincreased. The graph below shows the online sales increase for ‘chain reactioncycles’, bike store from 2000-2012.
In conclusion, to stay ahead of the game in this new digitalera, retail organisations have to stay up to date and follow the newinnovations and trends utilizing Omni-channel style retailing, staying currentand updating their systems to suit the needs of their consumers.