The Retail Industry
The Retail industry generates around 19% of Global GDP and employs approximately 9% of the World population. Any organisation that sells a finished good to a consumer is generally considered to be a retailer. Historically, retail outlets originated from local markets where traders could exchange goods and services. Towns, villages and entire cities originated from a trading centre.
Today, many small communities still rely on market squares and local high streets. Planners design high streets to cater for retail shops in urban areas. These bring together families and a sense of the local community. The larger the population living nearby, the greater variety of shops within that high street supporting that community. Most high streets consist of a collection of independent convenience stores, discount stores and shops that are part of a larger branded group or network.
Most of us shop out of necessity for food. While many more of us love shopping as a leisure activity, so we can browse products we want but probably cannot afford. Shopping is a favourite leisure pastime for many people and is often referred to as 'retail therapy'. The larger 'out-of-town' supermarkets and their smaller branded high-street outlets offer consumers a standardised and consistent shopping experience.
Supermarkets like to build up detailed profiles of their customers buying habits, so they can offer them loyalty incentives on their preferred products (such as a points system or discount vouchers off future purchases). Smaller traditional retailers cannot hope to compete in the same way or on price, due to a lack of economies of scale. Supermarkets buy from their suppliers in bulk, in exchange for the lowest possible purchasing cost per unit. 'Stack'em high and sell'em cheap' became the motto consumers associated and expected from a supermarket business model.
Different types of shops have evolved over the years. The traditional department store aims to bring together a wide range of non-food products and generally focused around the home and garden. Whereas, a supermarket or hypermarket now dominates most consumers food shopping habits due to low cost food items. A general convenience store tends to focus on books, newspapers, magazines, cards, gifts, confectionery and other bits and pieces. There are also many factory outlets which serve trade suppliers over the counter but are also open to retail customers. These tend to focus on home improvement markets (carpets, tiles, bathrooms, and general building supplies). There is also a rise in the number of small and specialty stores focusing on niche's such as organic foods, health and beauty, clothing and antiques and collectables. Although restaurants and cafes can be found in most high streets, they tend not to be included in the retail industry figures.
Sadly in times of recession, many high streets are seen an increase in pawnbrokers, discount wholesalers and betting shops. The economic downturn has also meant a rise in the number of charity shops and second-hand shops appearing on the high street. Jobs in the retail sector tend to be part-time and low-paid. Retail staff tend to be required to work flexible hours to meet peaks and troughs in demand.
Retailers mark-up their products as a percentage of what they paid for them from the wholesaler or distributor. There are strict retail laws in most countries regarding retail pricing, labelling, returns policy, fitness for purpose and product quality and safety. Consumers crave good quality customer service and deplore poor quality products that do not match their expectations.
To attract regular shoppers and passing trade retailers rely on brand awareness (through advertising), and a good high street location. Capitalising on impulse purchases is extremely difficult if the shop is located miles away from transport links or other shops. Inner-city retailers often complain that their local authorities business tax rates are to high, and many shoppers are put off by high parking charges and the lack of adequate parking spaces. Many city centre shopping centres are pedestrianised yet parking nearby always seems to be a problem.
Many high street independent retailers are also struggling against online retail alternatives. It is estimated that 30% of all shopping will take place online by 2020, leaving many smaller shops empty on the High Street. Cash pressed consumers love online shopping because it is easy to compare prices, it is quick to buy, and products can be delivered to their home without any hassle. Consequently, many high street stores have chosen (or been forced out of necessity), to set up an online store to supplement consumers changing demands. Many larger retailers offer a 'click and collect' option (which has the advantage of attracting buyers into their stores for a potential up-sell).
Many tangible products still need to be tried on or seen, before consumers make a buying decision for an expensive item. The massive sea-change from high-street to online shopping and home delivery has caught many retailers off-guard. Despite many retailers efforts to keep up and build their own shop website, most cannot hope to compete with the massive global retailers and online price comparison websites. Likewise, smaller retail outlets do not have the same marketing resources, skills base or experience to promote their online brands to a mass audience.