Evolution of retailing
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This document summarizes the gradual development and evolution of retail formats in the United States and India from the barter system to modern organized retailing. It traces the key phases in the United States from Montgomery Ward establishing mass retailing in the 1800s to the rise of shopping malls, discount stores, and franchising in the post-WWII era. In India, it notes the dominance of small unorganized family-run stores and rural markets, but also the recent growth of branded stores, department stores, and specialty retailers since economic liberalization in the 1990s as organized retail has begun to develop and replace the unorganized sector.
Evolution of retailing
- 1. -Gradual development of something into a more complex or better form.
- 7. Barter system -is a system of transactions where people used to exchange, the valuables they used to possess and has some value in the eyes of other persons PHASE 1:
- 8. Adoption of common means of currency PHASE 2: -the transactions became much easier. -retailing is limited to commodities that fulfill their basic needs.
- 9. PHASE 3: Small stores transforming to bigger size stores. -retailers responded to the changing needs and shopping expectations of the buyers. -to take advantage of scale economy ang value-pricing to customers.
- 11. 1800’s -Mass retailing in the united states began. MONTGOMERY WARD - the first retailer to initiate mass retailing in the U.S. by marketing their products through general merchandise catalogues.Rural areas where largely reached. -founded by Aaron Montgomery Ward. 1940’s -Major economic activities shifted from agricultural to industrial manufacturing. -The first shopping center was opened.JC and Sears expansion. -The use of credit cards increased as major retail chains began.
- 12. 1950’s -opening of the first planned mall and franchised food restaurant in the U.S. -was the beginning of the era of franchising in organized retailing business in the U.S. -Large suburban malls were created and anchored by traditional downtown dept. Stores. -sales of private automobiles grew. -Discount stores were born(Korvetta). 1960’s -was the decade of the growth and enclosed shopping centers,with dept. Stores and specialty retail chains. -Baby boomers reached their teenage years. -Women became the target consumers.
- 13. 1970’s -promotional pricing started to pick up the dept. Stores as off price retailers emerged. -the growth of retail space slowed down. -stiff competition led retailers to under-perform. 1980’s -growth of off price retailing as a distinct,enduring retail format. -acquisitions and mergers became a choice for large players to support their growth strategies. -retailers started developing private brands. -offshore sourcing was developed. -It is this stiff competition in the U.S. That encouraged many retailers to consider franchising as a strategic option for growth.
- 15. 1980’s -organised retailing in India slowly began. -Among the first companies were Bombay Dyeing, Raymonds, S Kumar’s and Grasim. TITAN -A maker of premium watches that successfully created anorganised retailing concept in India by establishing a series of elegant showrooms. 1991(economic liberalisation) -Manufacturers saw a great value in integrating forward by investing into retailing of their own manufactured goods.
- 16. Some Issues: -the average size of each of the retail outlets in India in only 50 square feet making it less competitive against large organized retailers. -the industry is also unorganized, largely fragmented and has rural bias. Unorganized Business -An estimated of 12 to 14 million retail stores in India are very small in size and family owned. About 2/3 of this stores are in rural locations. “the unorganized sector accounts for 98% of the total retailing in India.” -That means that only 2% of its total retail market is organised.In other words, it indicates a great potential for the growth and development of organised retailing.
- 17. High Industry Fragmentation: -as mentioned retail stores in india are very small and owned by individuals and families. Rural Bias: -about 66% of the stores in India are located in rural areas. Haats -are the weekly markets that typically serve a group of 10-50 villages and sell day-to-day neccesities. -replenishment point of small village retailers. Melas - are larger in size and more sophisticated in terms of good sold. (televisions etc.)
- 19. Some prevailent retail formats in India are the ff.: BRANDED STORES -exclusive showrooms run by premium brands have been the Catalysts in pushing up the Indian retail scenario. DEPARTMENTAL STORES -dept. Store’s are expected to take over the apparel business from exclusive brand showrooms. SPECIALTY STORES -stores focusing on specific market segments.(Kids Kemp, crossword,planet M etc.)
- 20. Abscence of Discounting is a dominant format of retailing in India that is a glaring pecularity. Reasons why: -Indian retailers have less bargaining power. - the retailers have no economies of scale to offer discount’s on their own. However this is now changing because of increased investments in the country leading to emergence of bigger retailers who can both bargain with suppliers and reap economies of scale. Hence ,discounting is being accepted in the practice.
Editor's Notes
- #2: Evolution is a concept not new to us, is is defined as the gradual development of something into a more complex or better form.
- #3: We have witnessed alot of its versions...from evolution of pokemons
- #4: The evolution of our communication...
- #5: Mans’s evolution..(our own evolution)
- #6: And the evolution of our means of transportation from this(old car)...to this(1952)...to this(ferrari)
- #7: Now lets discuss an evolution that took place in the field of business....the Evolution of Retailing.
- #8: Phase 1: the phase where the means of paying was barter.
- #9: Phase 2: was triggered by the adoption of a common means of currency. This made the transactions more convenient.p During this phase people only used their money to buy their basi needs like (rice etc.). The adoption of a common means of currency also triggered the birth of small retail stores selling day to day commodities.
- #10: Phase 3: the phase where small stores began to transform into bigger stores that we now have.