The Past, Present, and Future of Retail: What Is the Way Forward for the Industry?
The history of the retail industry can be traced as far back as 9000 BC when people traded cows and sheep. From sharing, selling, and bartering resources to setting up the first retail stores, the retail industry has evolved from markets in ancient Greece to large and small retail stores that are a staple feature of modern civilization.
A force in itself, the retail industry has developed to accommodate changing customer perceptions, technological advancements, and an emphasis on efficiency, convenience, profitability, and other variables.
With the Coronavirus pandemic shutting down standard retail operations in many places, it stands to question how the retail industry can cope with the new normal. Let us evaluate the major milestones in the retail industry and what lies ahead.
Then and Now: How Has the Retail Industry Evolved Over the Years?
The history of retail could fill many volumes. However, if we fast-forward to the post-industrial era, some of the most notable developments include:
The Emergence of “Mom and Pop” Stores
A colloquial term used to refer to small, independent and family-owned businesses, Mom and Pop stores became a prominent feature in the United States during the 1880s. Most of these were general stores or drug stores that sold everything, from medicines and groceries to fabrics, tools, and toys.
The Arrival of Department Stores
Department stores emerged in the mid-1800s and early 1900s. Some of the most affluent department stores borne into existence at this time included Macy’s (established in 1858), Bloomingdales (established in 1861), and Sears (established in 1886).
These stores did not just sell products. They also offered demonstrations and lectures along with avenues of entertainment that appealed to customers looking for more creative ways to spend their disposable income.
The Introduction of the Cash Register and Point Of Sale Systems
In 1883, James Ritty invented the first cash register. It was a simple device used to record sales and greatly contributed to easing customer checkouts. It also allowed retail businesses to keep track of their accounting and offered insights on whether the business was generating a profit or incurring a loss.
More advanced point of sale systems have followed since. Some upgrades include making cash registers more resistant to theft, inventory tracking, processing credit cards, and more.
Currently, businesses are looking for methods that combine point of sale systems with payment gateways. This can help them keep track of inventory across online channels and in-store sales.
Shopping malls arrived in the 1950s. They represent a major milestone in the retail industry that allowed customers to survey products offered by multiple merchants in one place. In theory, it resembled the markets in Ancient Greece, where merchants gathered to sell their products in the Agora. However, it also revolutionized the shopping experience.
Unlike previous concepts in retail, shopping malls were developed to encourage social interactions. You didn’t just visit them to buy products. Instead, it was also considered a social activity that allowed you to spend time with your friends and families. Their success was imminent, and by 1960, shopping malls had captured 14% of the market share in retail.
The Introduction of eCommerce
Up to a certain point, the retail industry revolved around brick and mortar stores and in-store purchases. eCommerce and the emergence of online internet shopping changed that. In 1995, Amazon was born. Today, it is the largest online retail platform and reported an income of $11.59 billion in 2019.
Online shopping has driven some of the most significant changes in the retail industry. Previously, the industry was marketplace-driven. However, thanks to inventions, such as personal computers, smartphones, and the internet, businesses now employ cross-channel strategies. This allows them to reach out to customers online, as well as through physical stores.
The ready availability of product information and online reviews also drive purchase decisions. Shoppers are no longer dependent on salespersons to form an opinion and have become increasingly independent. This means that retailers must focus on offering authentic, high-quality products that deliver what was promised or risk damaging their reputation in bad online reviews.
There is also a growing emphasis on an omnichannel retail experience. For instance, one of the challenges confronting the online shopping experience is that shoppers cannot touch the product or try it on. However, technologies such as interactive video, 360-degree views, and augmented reality offer a potential solution to this.
Payment methods have also evolved from cash and checks to credit cards and debit cards to facilitate online purchases.
On the whole, the shopping experience has become much faster and more efficient, with customers being able to view numerous products across different online stores with the touch of a button. Instead of going out, shoppers can now make purchases from the comfort of their homes.
Retail businesses are also evolving to accommodate these changes to remain competitive and continue generating profits.
Evaluating the Impact of COVID-19 on Retail
The COVID-19 pandemic has been equal parts beneficial and devastating for the retail industry. For companies, such as Amazon, the pandemic caused a massive surge in profitability, and the Company tripled its profits in the third quarter of 2020.
Self-isolation and social distancing drove shoppers to shop online as much as possible, and people that were previously skeptics, discovered the convenience of shopping online.While online sales increased, many brick and mortar retail stores had to shut shop.
Department store chains such as J.C. Penney was forced to file for bankruptcy in May. It had been incurring losses over the last 10 years, and the pandemic appeared to be the final straw. Other large UK department store chains, such as Debenhams, also filed for administration recently as its stores closed down. Retail businesses like J.Crew, Gold’s Gym, True Religion Apparel, and Neiman Marcus filed for bankruptcy, as well.
Other challenges that confronted the retail industry amid the pandemic include:
- Stores had to improve their online purchase and delivery operations to deal with large orders and handle customer complaints regarding increased wait times and missing delivery items.
- Grocery stores and pharmacies struggled to predict demand for essential items, such as toilet paper and hand sanitizers, as they ran out of stock.
- Retailers with physical stores had to reevaluate their current cash position and figure out a way to maintain liquidity amid falling revenues.
- Retailers that remained operational during the pandemic had to introduce safety measures to ensure their employees remain protected.
Adapting to a COVID-19 World: How Can Retail Businesses Cope?
The COVID-19 pandemic has put the future of the retail industry in considerable jeopardy. With more and more people shopping online, retailers with physical footprints must figure out how to remain operational and continue generating sales.
Cross-channel retail strategies hold the key to this. With a vaccine on the horizon, there are chances that retailers will be able to reopen safely in 2021. However, there’s no guarantee that their customers will return at the same rate.
Establishing an online presence can help overcome this challenge. The future is online. If you want to ensure the long-term sustainability of your retail business, you must consider modifying the business model of your company to offer your products through this medium.
You need a high-functioning eCommerce website that:
- Has an aesthetic design and is easy to navigate
- Is optimized to work across desktops, mobiles, and digital tablets and rank high on search engines
- Displays your products and has a smooth purchase process
- Offers secure payment gateways to customers
Establishing an online customer base helps you remain profitable amid a potential crisis, invite old customers to re-engage with your business, and rebuild your brand image.
If you need assistance in creating a fully-functional eCommerce website or improving your existing one, reach out today and learn more about our services. We offer end-to-end eCommerce web development and can help you overcome the challenges that confront your business right now, boost your sales, and get more use out of your digital assets.