The industrial revolution necessitated dramatic changes on the retail front. The increase in urbanization meant that consumers were now clustered in smaller geographic areas. This led to the emergence of shops, to serve the needs of the locals. The middle income consumer’s increased and mass transportation became a way of life. Secondly, mass manufacturing made it possible to manufacture goods in very large quantities. This meant that the manufacturer could rarely sell the produce directly to the consumers. Since quantities were high, the number of customers required was also large. Thus, longer distribution channels evolved as did mass merchandisers.
The industrial revolution saw the retailers evolving new methods of operation. The importance of food to the working class customers and the difficulties faced by them in procuring the food products led to the emergence of co-operative societies in the United Kingdom. By the year 1900, these societies had achieved 6-7 % of the retail sales in the country.
The Emergence of Self Service:
Retail evolved in many ways over the twentieth century. Self service as a concept started in 1916, when Clarence Saunders started the first self service store ‘Piggly Wiggly’ in Memphis, Tennessee. The concept of self service helped the retailer reduce costs, as fewer workers were required to service the customers.
The Development of Supermarket and Convenience Stores
The 1930s saw the emergence of the supermarkets. The end of the World War II reordered the retail scene. However there was no end to the retail boom. It also saw the emergence of Discount stores. These stores appeared to meet the needs of the blue collar workers. The first hypermarket which was developed was Carrefour in France in 1963.
The new formats gave the customer the choice of picking a product, comparing it with others and then taking a decision on buying. This required that the products were displayed and packaged attractively. It also became necessary to provide all the information respect to price, date of manufacture, weight, expiry etc on the product itself, to aid decision making. The mass merchandisers worked on three principles, which have now becomes the fundamental principles of modern selling:
1) They fixed product prices before sale and the customers bought at the set prices.
2) The prices were determined on the basis of stock turns and the amount of profit that would be generated from the product.
3) They departmentalized the products. Accounting systems were devised to determine the contribution of various departments and this enabled them to drop unprofitable goods.
The invention of the automobile helped the development of supermarkets in the USA in the 1930s. It aimed at enhancing merchandise turnover. The invention of home refrigeration further helped the development of supermarket. Discounting emerged as a result of retailers innovating with the methods of operation of a supermarket in new merchandise lines.
The convenience store has its beginnings in the 1920s, when the Southland Ice Company opened retail ice stations, and at the customers’ request, also started stocking basic necessities like bread, eggs and milk. What started as a service to the customers, served as the starting point for the creation of the convenience store concept. The introduction of the mechanical refrigerator in 1926, aided the development of this concept and the company called its stores “Tote’m Stores” which were to be the basis for 7-Eleven. The stores which existed at the time were characterized by open front, drive in stores, which were open from early in the morning, until late at night seven days a week. These stores essentially sold ice, cold drinks, groceries and drug sundries. The name 7 – Eleven evolved when the company realized the need to address the issue of branding.