Retail Sector

Introduction:

The retail sector has drastically changed over the course of America’s history. Whilst it once was dominated by general stores, those that specialised in sectors of the industry, the development of technology through the centuries has ushered in different eras of retail through industrialisation, standardisation and urbanisation (Rees 2016).

Pre-Industrial Revolution:

Prior to the Industrial Revolution that began in the 1790s, America’s retail sector was largely saturated by local, family-run stores (Harvard Business School, 2012). These rural establishments were limited to those such as ranches, ‘mom-n-pop’ shops, local textiles and general stores, in turn, capping the supply (US History, 2018). In addition, ‘hawkers’ were another mode of retail, peddling the streets, hoping to sell their limited supplies (Carden, 2013). Furthermore, due to the lack of technological advancements in terms of machinery and transportation, society was limited by the lack of resources, reducing the population to subsistence farming. This way of living forced the idea of the market on the backburner whilst placing the attention of the farmers on their family (Henretta, 1978). As a result of the small marketplace, advertising was limited to word of mouth, posters, pamphlets and sign posts, again, restricting the reach of the potential market (Dean, 2010).

The pre-Industrialised society was also marked by the absence of any division of labour, as well as little variation in social class, as work was, for a majority, distributed based on gender (Volti, 2011). In addition to the lack of labour division, there was also a lack of labour laws. Families became dependent on children, particularly in the farming industry, at a young age and depended upon them to provide for the family (Edith, 1908).

Pre-Industrial America was an age defined by rural dwelling, subsistence farming and local shops (Whittemore, 2018).

Industrial Revolution:

The Industrial Revolution, which began in the 1790’s and lasted until the early 1900’s, saw the shift from agrarian societies to urban, industrial communities, an introduction to new technologies in the manufacturing industry, as well as transportation and improved communication across the country (HISTORY, 2009). Collectively, as new technology, such as electric power, printing presses and new combustion engines, became available, textiles mills and factories skyrocketed, and with them, mass production, standardisation of goods and a greater division of labour (Sage, 2018).

Whilst before families were constrained to subsistence farming, the development of factories turned their focus on mass production, yielding a large number of goods at a low cost. The use of assembly lines introduced the standardisation of products, encouraging consistency and quality in the overall yield (Hall, 1986). Consequently, this increase in quality, as well as trust in the product and decrease in overall cost led to a consumer revolution.

As introduced by Henry Ford, the method of employing unskilled workers for mundane, monotonous tasks and paying them generously, essentially opened the door for the middle class (Bonzagni, 2014). This newfound wealth led to cultural transformation: consumerism. In particular, women’s consumerism. With the increase of disposable income, mass production and advertising in magazines largely directed towards women, a societal shift began to take form – selfless consumerism (Hampson, 2005).

This spike in demand for goods coupled with the improvement of transportation led to the rise of department stores (Leach, 1984). Department stores were radically innovative in their architecture, fixed pricing, payment methods, return policies and supplies they provided (Quartier & Van Cleempoel, 2013). These large, groundbreaking retail establishments quickly became the emblem of America’s retail culture, acting as lures for tourists, historical landmarks in the urban scene and important cultural foundations (Edwards, 2018).

In line with the rise of consumerism and retail chains, advertising also gained importance during the early 19th century. In fact, John Wanamaker and Rowland Macy, American department store founders, are thought of as the founders of modern day display advertising (McArthur, 2013). In the early ages of modern advertising, the availability and attributes were widely accentuated, with only a small number promoting the product as a ‘time-saver’ (Gross & Sheth, 1989). Moreover, the focus of advertisements was shifted from the product, to the consumer, creating a brand identity (AdAge, 2003). Brand identity became essential due to the growth of competitors in the market place as it provided products with a unique value that would set it apart from competition (Petty, 2012).

During this period marked by rapid industrial growth, monopolies began to take form due to the lack of regulations and competition (Investopedia, 2018). Monopolies quickly initiated a large die-off of the old local, family-run shops (Geisst, 2000).

The Industrial Revolution was a time of great societal and cultural transition. In a relatively short time, society saw an increase in the population, an explosion in the means of transportation, an unprecedented development in technology and a transformation from an agrarian society to a culture focused on consuming (Magaudda, 2015).

The Great Depression – 1940’s:

The Great Depression of 1929 was catastrophic to the retail industry in America. The years leading up to the economic collapse, businesses were booming, employment was high and so were the wages, however, soon factories began closing, shops were shuttering and much of society had no savings (Kennedy, 2003).

In terms of retail, people went from once buying lavish products in garish department stores for no reason other than the fact they could, to only being able to focus on purchasing, if possible, what was necessary for survival (CSG, 2013). Moreover, whilst once department stores advertised that they were full of unique, extravagant pieces of clothing, the Depression induced a period where advertising was shifted to focus on repairing, reusing and mending clothing, rather than buying (Harvey, 2016). Although large department stores such as Macy’s and JCPenny were still in business during the Great Depression, their target consumers were now in poverty and unemployed, consequently, the sales dropped, forcing them to cut back on advertising (Carver, et al., 2013).

It was not until World War ll that the economy began to bounce back from the depression. In response to the war abroad, nearly 17 million jobs were created, namely in the manufacturing industry, introducing new technology and increasing the average family’s income (Goodwin, 1992). Advertising also gained back the importance it once had in retail, particularly in newspapers, window shop displays, editorials and public service broadcasts (Young, 2005).

In addition to department stores regaining their place in society, supermarkets began taking shape during the 1940s, offering self-service shopping experiences (Witkowski, 1998).

1950s – Today:

The 1950’s saw the rise of the now-iconic shopping mall, the first opening its doors in 1956 (Wholf, 2014). With the rise of malls, chain stores and ‘big box retailers,’ there was a shift in American culture, once viewing downtown as the place for leisure and consumerism, malls soon became the centre of activity (Jackson, 1996). However, discount merchandising began to emerge due to the increased supply comparative to the demand; in other words, when manufacturers lowered prices, consumers bought more overall, and consumed quicker (Mayhew, 2003). Consequently, near the end of the 20th century, department stores were struggling due to the new entrant into the market – discount chains (Howard, 2015).

Along with the transformation in the retail sector, advertising was also evolving into more of what it is today. Marketing quickly became consumer-oriented, attempting to position the product in the mind of the customer, particularly in comparison to its competitors (AdAge, 2003). In addition, the development of modern day technology radically transformed advertising and marketing, reaching new audiences like never before. Advertisements went from being on the page of a magazine to being on the TV, in forms of commercials and dedicated channels, such as QVC and Home Shopping Network (Scott, n.d.).

In addition to the development of television, computers, inventory control, scanners and quicker credit card processors were also entering the scene, shaking up the retail sector (Foster, et al., 2006). Amazon opened its virtual doors in the early 1990s, providing shoppers with an easy, fast and safe shopping experience without having to leave home – the beginning of a new, cyber marketplace (Miva, 2011). Whilst word of mouth has always been a tactful way to draw consumers in, the introduction of virtual customer reviews has quickly become an important influencer on shoppers (annalect, 2017)

The latter half of the 20th century was marked by rapid and ground-breaking technological advances, completely transforming the retail sector. The once mighty department stores and malls saw their peak, shuttering after the introduction of e-commerce.

Whilst some view today as the ‘retail apocalypse,’ e-commerce has become beneficial to companies in terms of capturing a wider audience (Cressy Commercial Real Estate, n.d.). In fact, omnichannel retail has become essential for businesses if they wish to survive (CBRE, 2018).

Whilst the virtual retail industry is relatively new, it has undoubtedly impacted the way businesses are run, for example, in the marketing of products, improved customer service, personalisation and brand image (Dahiya, 2017).

The Future:

Whilst omnichannel retailing will continue in the next 5-10 years, it will most likely transition from PC shopping to mobile shopping (Atkins, 2017). In accordance to the rise of mobile-use, social media and ‘chatbots’ will likely be used to purchase products right through the platform or message, offering effortless, quick consumption (Vend, 2018). Furthermore, technology will be incorporated more in the actual store to enhance the customer’s experience. This could include AR and digital changing rooms, offering touch screen mirrors that would allow them to virtually try clothing on, again, creating a painless experience (Grosman, 2017). Finally, technology will be vital in delivering a greater sense of personalisation to the customer; learning preferences, past purchases, Internet searches and their personal information will allow the consumer to feel like they are being taken care of and are important (Post, 2017).

America’s retail sector has seen several transformations in a relatively short time, beginning just a few hundred years ago with subsistence farming to now, delivering goods to a consumer’s door via drones. The importance of technology has and will continue to be the spark behind retail revolution.