Evolution Of Department Stores And Discount Stores: Historical Development And Future Trends

How department stores and discount stores are evolving. This report should cover the historical development of department stores and discount stores in any country of choice. Obviously you would start by defining both of these types of retail institutions and then describe what merchandise they carry and how they market to distinct types or market segments of retail customers. You may like to discuss mergers, diversification and downsizing in your assignment, as well as cost containment and valuedriven retailing being driving forces behind the evolution of these institutions into the retail outlets of tomorrow. Do you think retailing will be different in 5 years’ time, or in 10 years’ time? Why – what do you think will make these types of store different? Do you think there will be other types of stores that will open up in different markets? Use examples wherever possible to substantiate your opinions in the report. In your answer you also need to refer to the wheel of retailing concept, and the retail life cycle. You will also discuss ways in which shops assemble their merchandise for consumers, such as scrambled merchandising.

• Report structure, format, presentation and layout
• Application of knowledge and course concepts
• Critical analysis and research demonstrated in country retailing trends
• Overall conclusion and strength of arguments/ recommendations
• Research quality and referencing

Overview of Department Stores and Discount Stores

Retail management is a process that includes understanding consumer needs and through promotions of sales of products produced by another company for maximum consumer satisfaction. Retail management includes from persuading consumers to come to retail stores and satisfy their needs (Ayers, 2017). While taking retail management and its aspects wheel of retailing and retail life cycle would be used. There are many retail outlets, among which departmental stores and discount store are considered important to explain this aspect. Departmental stores are the place where the consumer can go and fulfill their needs under one roof with a wide range of goods. It is a store where mostly every desired consumer products are available. Shoppers stop is an example of the departmental stores. In today's world, departmental store merchandise furniture, toys, housewares, toiletries, paint, clothing, hardware, home appliances, cosmetics, gardening, and sporting goods (Chaney, 2012). Discount stores, For example, Walmart is a departmental store with discounted prices for products offered. As compared to the departmental store, discounted stores offer less range and quality. The reason for cheap prices is an efficient distribution center of these stores (Zielke, 2014).

These stores had changed from the early 17’s to today’s world and will be changing in near future due to change in environment and technology. For this reason, the evolution of these stores in the United Kingdom is discussed in detail in this report. In this aspects mergers, diversification, and downsizing are important structures to discuss.

As per wheel of retailing concept, in the retail sector, the new retail chain comes up, grow for a small period, but after a while, it is taken over by another or larger chain. This happens due to a dynamic environment that is changing rapidly due to factors like new technologies, changing customer demands, and intense completion, social, legislative, economic, technological, and political environment. This involves the following stages:

Stage 1: Establishing and Penetrating

In this stage, new retailers enter the market, keeping their prices low with the innovative cost-cutting method, in order to attract more and more consumers. For example, Barnes and nobles first stage was, bookstore started, they bring a unique model of providing all books with amazing discounts under a single roof.

Stage 2: Expansion stage

In order to increase sales, acquire enough market share, and achieving higher profits retailer tries to expand the customer base through targeting different customer segments. For example, Barnes and nobles in this stage will try to expand market share by increasing the number of stores, this will increase brand value, sale, and margins ultimately.

The Wheel of Retailing Concept and Retail Life Cycle

Stage 3: Stabilized business model, attractive margins.

Due to the already established position of the company, in this stage, the company enjoy high margins, and able to attract more customers and retain existing ones. For example, Barnes and Nobles created many stores and grew margins.

Stage 4: New entrant in the retail sector, who challenges, and brings down the original.

In this stage, cost increases for existing retailer and this generates new opportunities for firms to enter into the market with lower cost and better technology. For example, for Barnes and Nobles, Amazon enters the market as a great competitor (Gencer, 2017).

Retailers in the first stage open new retail stores with attractive offers and prices, they gradually able to increase sale and market share in stage 2, a then-new entrant enters into the market and it becomes competitor and growth starts to decline lastly.

These stores have changed the shopping experience of people in the UK. World’s first department store was “Harding, Howell & Co,” started in 1796. It was a Georgian shop, divided into four sections that were jewelry, haberdashery, clocks, hats, millinery, and furs and funs which were said to be departments. The industrial revolution had shaped up the department store. From the 19^th century, with the opening of “Queen Victoria and Prince Albert” in the year 1851, the department store felt and look the way people were not known about. In 1905, it became Europe’s largest departmental store. Millions of people use to go for at-least window-shopping since they were amazed at technology, the novel industrial world had accessible. Whiteleys and John Lewis were some early departmental stores of London, focusing on women of middle-class (BBC, 2015).

Marshall Field was the most ambitious department store of US. For the 20^th century, it redevised the department stores in London. Bedazzled customers, were offered a hundred departments with roof garden, reception areas, a small military of knowledgeable floor-walking subordinates who guides to this retail gem trove, restaurants, a first aid room, and reading rooms by ‘Selfridges’. The strongly sculpted stores “Mendelsohn” established in Chemnitz (1930), Nuremberg (1926), and Stuttgart (1928) attested that retailers could lead architectural invention rather than shadow pseudo-historic styles.  From America’s city street look, Mendelsohn learned and implemented the amazing use of electric lighting. Department stores showed so attractively that they blossomed at most unlikely intervals in 20th Century history. Shopping malls, and online shopping with acceptance of internet, and smartphones, were the biggest threat to departmental stores. People may go for online purchase but still, like to check out what is on offer.  Department stores use to offer a good variety of recent trends in design, and fashion. These stores remain hard to beat because of the marketing and communication technology of the 21^st century (Lee, 2012).

Evolution of Department Stores and Discount Stores in the UK

E-commerce- Use of the internet has been increased a lot in today’s world. Thus, retailers had initiated applying E-commerce in their business.

Live to track with deliveries- Today, with the tracking devices using GPS system in their deliveries, customers, and retailers can track where their package has reached and how much time will it take to reach customers.

After sales services-, the services provided by retailers are not over with the sale of the product, today after sales services are given to the customer in the form of help in installation of the product physically or through online. Moreover, the warranty and guarantee are taken into account and the retailers resolve any problem even after the sale.   

Value-added services- some additional services are provided to customers, to cope up with the highly competitive market. These services could be a good ambiance to shop, providing eating cafeterias within shopping departments. Many salespersons are available in stores for help in finding appropriate sizes and pieces in case of clothes.

Use of smartphones- applications are created, which can be used by consumers for a better experience. For example, credit note is made online today; the return product amount is added to their online wallets that can be used to shop from the stores in near future. All the promotions and discounts are provided to consumers with a click on the application on their phone. These facilities had made, consumers shopping very flexible.

Mergers are two companies combining voluntarily, into one new entity. These are done by exchange of shares for new firm’s stock. Owners of these firs remain owners for the new entity and resources of both firms are combined for the profit of the new entity (Ravenscraft, 2011). For example Sainsbury’s and Asda merger. This deal is a transformational opportunity to generate a new potency in UK retail (Morrison, 2018).

Diversification is growing of small business by gaining diversify opportunities; diversification can be in following forms:

• The new market can be found for existing products
• New products can be produced or sell for existing customers
• New products can be merchandise for new markets (Oh, 2015).

Downsizing refers to shrinking of stores. Intentionally bringing change to stores and reducing workforce or inventory of retail stores. This had become recent trends of a retail store because; online shopping had grown and had capture most market. In order to lower their cost, small businesses are going to storefronts. In the year 2018, many retailers in the U.S planned and announce to downsize and reducing staff, bringing employees to a vulnerable position. M&S announced the closure of 14 stores, making 468 employees risk their jobs (Kang, 2015).

Impact of Cost Containment and Valuedriven Retailing

Cost containment is performing the task as per the planned budget. Cost containment is a managerial function to control expense and keep the costs down to fulfill financial targets. For the long-term success of a business, high profitability is the basic need but in today's competitive market, it is very difficult to earn and retain profits. This can be done by analyzing expenses and do expenses only if it is necessary and use numerous cost control methods in retail stores.

A consumer wants maximum for lowest prices. By providing extra value for the same price are the key to retain and attract new customers for retail stores. This force leads to discount stores. This could be done by providing any value added services to customers, like the ambiance of the store, quality of products, parking facility for the store.

In the future, most of the stores can turn to their business in e-commerce. Even today most of the department store are shutting their many stores and have created their applications and sites for online shopping.

It includes hyper-customized custodian; integration of entertainment, ultra- convenience, and consumption; and on-demand services.

Two days or one-day delivery is already in existence today with Amazon and some other e-commerce sites. As per future perspective, the delivery time would be minimal and chances could be that consumer won't accepts the business with delivery more than a day.

One’s pantry will refill orders automatically for the person. Even discount stores could avail this offer in future, like Walmart sending set goods to your kitchen in fix interval of time, say a month.  There would be no need to remember or take a note to see if coffee, pet foods are about to finish. Your containers can be electronically connected and alarmed when stock level decreases (Rigby, 2018).

The online discount store can be there in near future, where online stores will follow everything of a discount store, the only difference will be the appearance, it won’t be physically present but will be digitalized (Evans, 2011).

Retail merchandising means all marketing and promotions in some way or other, that is contributing to the sale volume in a retail store. To attract customers and increase the sale of stores, merchandising is done in different ways (reflektion, 2018). Some of them are mentioned below:

When a retailer offers a variety of goods which are unrelated to each other and do not imitate the company’s original concentration. This type of merchandising replicates scattered product management approach. Nevertheless, this could give wrong impressing in consumers mind and will not be sure about products (businessdictionary, 2018).

Mergers, Diversification and Downsizing in Retail

It is said, the first impression is the last impression, therefore in the retailing highlighting the appearance of the store, and products through display techniques are important (shopify, 2018).

Digital merchandising involves all marketing done online to sell the products. Everything on site from product display to email marketing is part of digital merchandising.

It is providing seamless purchase experience of consumers. It is forming the unified experience of consumers in their customer journey (Wel, 2012).

Conclusion 

This report concludes retail management and its terms and related aspects. The four stages of the wheel of retailing, and life cycle of retail stores. Department stores were quite popular in earlier times as mostly all consumer goods are supplied under a roof. Discount stores are still very popular as it sells goods at lesser prices than the original due to the innovative distribution method, or economies of scale, this is less cost to the company. There has been a lot of difference in earlier phases of these retail stores and in today’s world, the way of working, services, and methods. Cost containment and value-driven retailing seem to be forced behind the evolution of department stores and discount stores. If retailing were seen for the next five years, this would bring many changes in this industry. Some of them were an increase of digital commerce, delivery would be very quick for all e-commerce business, and grocery shopping would become much easier and time-saving, knowing one’s stock will become easy with a click. The recommendations for the retail stores in future would be, maintaining variety, to attract consumers to department store shopping instead of the online store. Providing value-added services to consumers would be a plus point for retailers. Gaining profit margins would be a difficult gain in future due to completion. Therefore, cost-cutting is suggested for retailers.

References

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BBC, 2015. A history of the department store. [Online] Available at: https://www.bbc.com/culture/bespoke/story/20150326-a-history-of-the-department-store/index.html

businessdictionary, 2018. scrambled merchandising. [Online] Available at: https://www.businessdictionary.com/definition/scrambled-merchandising.html

Chaney, D., 2012. Lifestyles. Oxon: Routledge.

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Gencer, Y., 2017. Supply chain management in retailing business. In Ethics and sustainability in global supply chain management, pp. 197-210.

Kang, Y., 2015. Downsizing and Price Increases in Response to Increasing Input Cost. Korean Management Science Review, 32(1), pp. 83-100.

Lee, Y., 2012. Centripetal and centrifugal movement: Shopping centres in Denver, USA, and Brisbane, Australia. Urban Studies, 49(7), pp. 1489-1506.

Morrison, C., 2018. Sainsbury’s share price soars as it unveils details of Asda merger. [Online] Available at: https://www.independent.co.uk/news/business/news/sainsburys-asda-share-price-merger-deal-walmart-tesco-supermarket-a8328871.html

Oh, C., 2015. Regional and product diversification and the performance of retail multinationals. Journal of International Management, 21(3), pp. 220-234.

Ravenscraft, D., 2011. Mergers, sell-offs, and economic efficiency. washington: Brookings Institution Press.

reflektion, 2018. Merchandising Types and Examples. [Online] Available at: https://reflektion.com/resource/merchandising-types-and-examples#retail-merchandising

Rigby, D. K., 2018. The Future of Shopping. [Online] Available at: https://hbr.org/2011/12/the-future-of-shopping
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shopify, 2018. Visual Merchandising 101. [Online] Available at: https://www.shopify.in/guides/ultimate-guide-to-pop-up-shops/visual-merchandising-101

Wel, C., 2012. Important determinant of consumers’ retail selection decision in Malaysia. World Review of Business Research, 2(2), pp. 164-175.

Zielke, S., 2014. Shopping in discount stores: The role of price-related attributions, emotions and value perception. Journal of Retailing and Consumer Services, 21(3), pp. 327-338.