Background and History
Over the years, retail has become a diverse, complex, and often confusing industry. However, it is a vital part of economies, customers, and businesses around the world. Erik Nordstrom, President of Nordstrom said, “Retail is a customer business. You’re trying to take care of the customer-solve something for that customer” (Nicasio, 2014). Additionally, Tory Burch went on to say, “My company is an extension of me, so when I designed my stores I wanted people to feel that they were in my home” (Nicasio, 2014).The uniqueness of the ever-changing retail market has made it a competitive industry for virtually anyone. There are many different definitions and variations of the word ‘retail’. According to a standard dictionary, retail is, “the sale of goods to the public in relatively small quantities for use or consumption rather than for resale.” A more business-minded definition says, ”retail is how producers of goods and services get their products to the consumer. Retailers often get their goods directly from the manufacturer. That is when a commodity becomes a finished product” (Amadeo, 2017). The whole idea behind retail is that retailers raise their prices far above what their actual costs of labor, equipment, and distribution are. Either way, retail is not just important to consumers, but it plays a large role in economies around the world.
Believe it or not, the idea of retail markets dates back to ancient times. Thousands of years ago, animals like camels, sheep and cows were used as the first forms of currency for various goods (Braun, 2015). However, it wasn’t until a number of years later that department stores and retail culture began to take shape. It wasn’t until the mid-1800s that mom and pop shops started being taken over by larger retail department stores. In 1852, Marshall Fields became one of the first department stores in the world (Braun, 2015). Today it is known as Macy’s Inc. In the early 1900s, the idea of shopping was changed from a necessary chore to something that was entertaining and an activity that people found appealing. Through the mid-1900s, the invention of the credit card and the formation of convenience stores both added to the booming market that was beginning to take place (Braun, 2015). From 1960 to 1974 inventions such as the electronic cash register and barcode inventory tracking systems quickly made stores across the U.S. and world much more efficient. In 1992, the largest mall in the world, the Mall of America, opened in Minnesota, sparking a market for large scale retail, especially across Asia (Braun, 2015). Since the early 1990s, mega companies like Apple, Amazon, and Google have raced to become some of the first trillion dollar companies in the world. It is crazy to look back and realize how much of an integral part the retail market has become for our modern society.-
According to a number of studies, there is a strong correlation between the retail industry and its impact on an economy. For example, in 2016, the U.S. retail industry generated $1.087 trillion (Amadeo, 2017). To put that into perspective, the GDP of the entire U.S. in 2016 was $18.57 trillion, meaning that retail accounted for about 5.9% of its GDP. Quite clearly this is a significant share of the U.S. economy, and a very large economic stimulant. The same is also true in most countries across Europe. In Germany, the retail market in 2016 was valued at about $541 billion (Amadeo, 2017). This is pretty impressive when you consider that Germany is only about ⅓ the population of the United States. Furthermore, the largest retail company in the world is Walmart which is based in the U.S., but the next four largest retailers are all European based. Additionally, of the ten largest retail companies in the world, half of them are American based and the other half are European (Farfan, 2017). As you can see, the European retail industry has certainly solidified its place on the global retail stage.
Another component to the ever-growing retail industry is online retail. Online giants like Amazon, Zalando, and Alibaba are quickly closing in on Walmart, to take over as the largest retailers in the world. Each of these giants have already destroyed a number of brick-and-mortar retailers around the world. Because they offer access to brands like Tommy Hilfiger, Versace, and Adidas all in one place, consumers are beginning to change their shopping habits (Amadeo, 2017). Additionally, the ease with which customers can place orders online and have things delivered virtually immediately is enticing. Amazon is currently testing drone delivery systems that could deliver goods to your doorstep within minutes. Department stores, shopping centers and malls continue to dominate markets across the world, but it will be interesting to see where markets shift when this eventually dies out.
Although the history of retail is clear, the future of the retail market is anything but. “Brick-and-mortar retailers all know what they have to do to survive: ease out of brick-and-mortar, and get big online,” suggests a scholar for Business Insider (Richter, 1). Additionally, rating agencies such as Moody’s have been warned and expect their default rates to rise by 9% by the end of the year (Richter, 2). Either way, it is clear that retail itself is still desired by consumers and markets across the world. However, only time will tell the medium by which people will have access to the goods they choose to purchase.
Amadeo, K. (2017). What Is the Retail Industry? Its Impact on the Economy. The Balance. Retrieved 2017.
Braun, S. (2015). History of Retail: A Timeline. Lightspeed. Retrieved 2017.
Conick, H. (2017). The end of retail (as we knew it): The rise of mobile devices has ensured retail will never be the same. Companies must deliver a new customer experience or risk falling into the retail chasm. Marketing News, 51(8), 40-47
Farfan, B. (2017). The Biggest European Retail Chains List. The Balance. Retrieved 2017.
Nicasio, F. (2014). 9 Quotes from Successful Retailers That Will Inspire You to Run Your Store Better. Vend. Retrieved 2017.
Richter, W. (2017). The collapse of retail chains is leaving America's shopping malls empty. Business Insider. Retrieved 2017.