A hundred years ago the world of retail focused on bricks and motor buildings that local residents visited for their supplies. We have had this expand into catalogue retailing and chains of physical stores building up multiple sites to take economies of scale. This enabled goods to be manufactured in higher volumes which meant that retails could take advantage of economies of scale, and offer a larger range of products at lower prices.
This led to a revolution in retailing and the sourcing / production of volume products. As transport costs have lowered, buyers have been able to source from suppliers in other Countries taking advantage of lower manufacturing costs which were passed onto consumers. This lead to lower retail prices and multiple chains forcing out smaller local retailers who could not complete with their economies of scale. An example of this is how Walmart has expanded to become the largest USA retailer. This was the first major retailing revolution.
I believe that we are now in the mist a second retail revolution that has the capacity to change the face of retailing again. That change has also been driven by technology and is called the internet. This has enabled buyers to not have to visit their local retail outlet to view products, but to only go online from the ease of their own home to view thousands of available products from thousands of suppliers.
Again, by retailers such as Amazon, not needing to fund expensive high street retail premises, they can reduce their operational costs and pass the saving onto the client. So internet retailing provides more choice of products and lower costs than bricks and mortar stores can. Online retailers’ main challenge is with the ease of delivery. Which has led to an increase in parcel delivery services to support the rise in online orders; these can vary from same day delivery, to international postal services that can quote up to a month for delivery.
An internet store knows no location barriers, and platforms such as eBay are enabling retailers in international Countries such as China, to offer goods directly to USA consumers. If an international online retailer needs to send a parcel to USA, this can now be done within 2 working days, by cheap international couriers who give large discounts on their tariffs to volume clients. This is enabling manufacturers to have their goods delivered by branded international courier services, such as DHL or FedEx from across the world directly to consumers’ in the USA. All at competitive prices that even the large established retail changes are having trouble in competing with.
This globalisation of consumer markets and manufacturers is set to continue and enable clients to continue to benefit from a wider range of goods and prices than at any time in our history. I believe that only by the large retailers embracing this change, and using the trust in the brands to develop their own online retail stores can they continue and thrive in this new retail world we all live in.