Please, Please, Mister postman

TRIMILLENNIUM MANAGEMENT
Please, Please, Mister postman

By Pradeep Kumar

The dynamics of retailing continue to be the same in this millennium; it is only that another form of retailing has emerged. Manufacturers and retailers will have to understand the dynamics of the millennial marketplace before deciding on their retail strategies

In his seminal work of forecasting, The Third Wave, Alvin Tofler noted that emerging fields-like e-retailing, teleshopping, e-banking, information-retrieval, and the work-at-home computer cottage-all pointed to a world in which electronic technology would dramatically restructure conventional living-patterns. These technological innovations are set to impact marketing and retailing. This essay will take a look at where the retail format is heading.

The historical development and subsequent growth of retail formats in the us is a ready reckoner for Indian retailing in the 2000s. Until 1870, general stores were the mainstay of retailing. The predominantly rural populace used them not only as retail institutions, but also as the business, social, and political centre of the community. By 1870, the population had taken on urban characteristics, and speciality stores became the prevalent form of retailing.

The founding of the Great Atlantic & Pacific Tea Company in 1859 marked the beginning of the development of the modern chain-store mode of operation. In the years that followed, this concept developed rapidly. In response to the changing economic and social conditions, department stores became the most important retail institution by the end of the 19th Century. By the 1920s, they had been overwhelmed by supermarkets. In the post-World War II period, discount stores also appeared in response to the altering economic and social conditions.

For the rest of the 20th Century, the us retail markets witnessed the emergence of many more retail formats. Traditional institutions were joined by category specialists, superstores, convenience stores, home improvement centres, warehouse clubs, off-price retailers, and catalogue showrooms. In addition, the penetration of non-store retailing-retailing through direct mail catalogues, personal selling, teleshopping, interactive electronic retailing, and vending-machines-grew.

At the beginning of the millennium, India can also boast of a multiplicity of retail formats. All-too unique retail formats like hawkers, grocers, and paan shops co-exist with catalogue firms, teleshopping networks, multi-level marketers, supermarkets, and Net shopping companies. McNair's concept of the wheel of retailing can be used to extrapolate this millennium's retail scenario.

In the entry phase, new types of retailers enter a market as low-margin, low-priced, and low-status merchants. he physical facilities are usually poor, and the services offered are minimal. Merchandise- selection is limited, and the retailer manages to keep costs down. He is treated as a social outcast by the rest of the trade, but customers are attracted by the low prices. In the growth phase, increasing customer traffic brings in respectability, which, in turn, brings about a demand for services like credit, maintenance, and exchange privileges.

Some retailers yield to this pressure, and add to their operating costs by providing new services, thereby losing their cost advantage. In the maturity phase, the retailer is a respected member of the family of retailers. There is a strong tendency on the part of the management to upgrade its image, and the firm increases its assortment of goods and services to do so. Over a period of time, it becomes a high-cost merchant. At this stage, the retailer is vulnerable to competition.

Towards the end of the 20th Century, the new retail format that made the rounds was Net-based retailing or virtual shopping. Driven by the technological advances in communications and computing, the Net provides an inexpensive and targeted means for reaching consumers. Traditional retailers and a large number of entrepreneurs have set up virtual stores to reach out to customers and sell their wares. Using appropriate software, Net-based retailers are able to communicate customised messages and promotions to individuals.

One of the most popular virtual stores is Amazon.com, the bookshop. When the company started as a low-cost retailer, it had no physical structure, could manage with lower manpower than bookstores in the real world, and carried no inventory. A customer who bought a book from Amazon.com got a discount ranging between 10 and 30%. But, as the store became popular, the company had to upscale serviceability. Today, Amazon.com is in the process of creating a buffer-stock (inventory), forging relationships with logistics service-providers, and is focusing on secure payment-systems. Result: costs increase. Thus, McNair's concept is also applicable to virtual stores.

Technological advances will enable mass customisation, 24x7 shopping, the speedy dissemination of information, and a networked community. However, exchanges might present problems. Another issue is the waiting-or delivery-time-- as compared to the search- or travel-time. Hence, the question of delivery must be answered tomorrow in the context of the buyer's need for speed.

How will the Net-based retailing evolve? Maurice Saatchi forecasts that, in 40 years, electronic retailing will eliminate the need for physical stores. Andersen Consulting predicts that, in the next decade, 20 per cent of supermarket shopping will be conducted through non-store electronic channels. And digital guru Nicholas Negroponte argues that, as a consequence of electronic distribution, ''video-cassette rental stores will go out of business in less than 10 years.''

The dynamics of retailing--types of merchandise offered, the merchandise displayed, pricing, and interaction--continue to be the same in this millennium; it is only that another form of retailing has emerged. Manufacturers and retailers will have to understand the dynamics of the new marketplace before deciding on their retail strategies. New formats, obviously, call for new rules in a new era.

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