Evaluate the international retail environment and discuss how changes over the last decade have influenced the development of retailing Essay

Evaluate the international retail environment and discuss how changes over the last decade have influenced the development of retailing.

International retail environment is competitive, rapidly developing and increasingly dynamic environment. It has a great impact on our lives and lifestyles as it all around us. In terms of economic significance, the retailing sector makes a major contribution to the Gross Domestic Product of countries and employs a large number of people. (Fernie et al., 2003) At the same time, retail environment is influenced by larger societal factors, such as political, economic, socio-cultural, natural and technological, that affect the retailer and marketing decisions. Due to this, retailers have to be flexible, adapt to changing structures, react consistently to the environment and satisfy their consumers by meeting their needs. For the purpose of this essay, I am going to consider the key trends which influenced the retail industry over the last 10 years. First of all, it can be seen that the most radical change has occurred owing to the technological progress. Technological environment is continually changing and it has already affected the retail industry by different inventions like EPOS, PDCU, which enabled to provide accurate sales data, improve the promotions and reduce the costs of production.

Further development has led to the growth of non-store formats and especially to E-Tailing that have become so popular because of increased consumer access to the internet. By 2002, it was estimated that the number of Internet users numbered 450 million (Fernie et al., 2003) and that figure continues to rise. Many companies, such as Amazon.com or eBay.com have started to sell and promote their products over the Internet. Moreover, eBay has enabled individuals working from their home to become microretailers reaching a global marketplace. Today, it has the largest Web site for the buying and selling of used cars, motorcycles and etc. In fact, more than $1,000 worth of goods are bought and sold every second. (Dunne & Lusch, 2004) Woolworths along with many other retailers exit from the high street and rediscover themselves as purely as an E-Tailer, this is where they are based entirely online and there is no major overhead costs such as fixed stores or high number of staff and there is worldwide access as well as round the clock shopping. The benefits of the E-Tailing are enormous.

Using the Internet, retailers can provide as much information as each consumer wants to make a purchase decision. Furthermore, information can be frequently updated and will always be available 24/7, 365 days per year. (Levy & Weitz, 2009) E-Tailers, such as Asos.com, always analyse a database of their customers and therefore use e-mail to inform of new merchandise and special promotions that could interest them. E-mail can be also used by retailers to confirm the receipt of an order, and indicate when an order has been shipped. (Levy & Weitz, 2009) And, of course, Internet has changed the retail playing field by providing an additional means of reaching an international market. (Davies & Ward, 2002) Further, I would like to write about changes in natural environment. Due to the natural disasters that have occurred during the last decade, the concern for the natural environment has spawned the so-called green movement. As consumers started to seek for eco-friendly products, the retailers had to respond to this trend by developing recyclable or biodegradable packaging, recycled materials and components, better pollution controls, and more energy efficient operations (Armstrong et al., 2009) For example, McDonalds company has warmed to “greener” practices, including environmentally friendly refrigeration and converting used oil into biodiesel fuel.

Moreover, they have redesigned their restaurants and background of logo from red to green, which should mean they are more eco-friendly than ever. Besides, Wal-Mart company claimed that they are going to invest $500 million in technologies that will reduce greenhouse gases from the companies’ stores and distribution centres by 20 per cent over the next seven years. If to concern the social environment, non-traditional households are becoming more representative in a modern society. Due to valued independence, more people are divorcing or separating, choosing not to marry, delay marriage or marrying without intending to have children. (Armstrong et al., 2009) This would mean that compact housing units, smaller food packaged items and different leisure products are becoming more widespread. (Gilbert, 1999) In addition, during the last decade there has been noticed an increase in interest of ethnic minorities as their percentage increase share of the population. Due to this trend many companies in several industries are now waking up to the needs of the ethnic groups by stocking and promoting ethnic foods. (Gilbert, 1999) For instance, holiday companies have recently demonstrated a particularly strong interest in the large amounts of money being spent in the “gay tourism”. (Armstrong et al., 2009) Besides, it is important to notice that over the past 10 years, society became more interested in health, well-being and beauty. As average life expectancy in combination with lower birth rates is creating an ageing population, so-called grey market, a lot of companies, such as L’Oreal or Garnier, are now implementing new anti-ageing product lines. Finally, it is important to mention that owing to the global recession consumer spending power has decreased dramatically.

However, in spite of mass unemployment and large fall in sales, the recession gave an incentive for retailers to evolve and better satisfy their consumers’ needs. It has also helped to expand, as the failure of retailers like Woolworth’s increased the amount of affordable retail space. By considering the changes in retail environment over the last decade, it can be concluded that consumer trend demands and desires have been affected significantly by changes in such environmental forces, as economic, natural, socio-cultural and mainly technological. Therefore, to succeed and gain a competitive advantage, retailers had to become more flexible and customer-focused. By analysing the larger societal factors that affect consumer needs, they are now able to develop organisational strategies that help the company to avoid the threats and take advantage of the opportunities the environment provides.

Reference list

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Dunne P.M. and Lusch R.F., (2004) Retailing. 6th ed. Mason: Thomson South-Western. Farmbrough H., (2010) UK Retail Industry – Time for a Change.
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Fernie J., Fernie S. and Moore C., (2003) Principles of Retailing. London: Butterworth-Heinemann Gilbert D., (1999) Retail Marketing Management. Essex: Prentice Hall Levy M. and Weitz B. A., (2009) Retailing Management. 7th ed. New York: McGraw-Hill/ Irwin Newman A.J. and Cullen P., (2002) Retailing: Environment & Operations. London: Thomson Learning The Oxford Institute of Retail Management. (2007)Innovation in the UK Retail Sector. [online] Available from: http://www.nesta.org.uk/library/documents/inno-in-services-retail-report.pdf) [Accessed: 26th November 2011]