Page 11 - DMGT551_RETAIL_BUSINESS_ENVIRONMENT

Retail Business Environment

Notes 1.4 Rise of the Retailer

The retail sector is changing at ever increasing rate and this is leading to greater competitor
activity. Such activity leads to a need to improve the way companies approach retail marketing.
Retailing is not only an integral part of our economic structure but also shapes and is shaped by,
our way of life. While the trading of goods has always been a part of traditional societies, in
recent times the buying and selling of products has became a much more formalized and brand-
dominated activity. Even as relatively recently as the 1960s retailing was predominately seen as
having a smaller and significantly less important role than other industries such as manufacturing.
Retailing is a major part of U.S. and world commerce. Retail sales and employment are vital
economic contributors, and retail trends often mirror trends in a nation’s overall economy.

Did u know? According to the Department of commerce, annual U.S. retail store sales
exceed $3.5 trillion – representing 31 percent of the total economy. Telephone and mail-
order sales by non-store retailers, vending machines, direct selling and the web generate
hundreds of billions of dollars in additional yearly revenue. And personal consumption
expenditures on financial, medical, legal, educational, and other services account for another
several hundred billion dollars in annual retail revenues.
Durable goods stores – including the auto group; furniture and appliance group; and lumber,
building materials, and hardware group – make up 42 percent of U.S retail store sales. Non-
durable goods and services stores – including the general merchandise group, apparel group,
gasoline service stations, eating and drinking places, food group, drug and proprietary stores
and liquor stores – together account for 58 percent of U.S retail store sales.

Large and Increasing Contribution of GDP

The increasing importance of the retail sector is reflected in its contribution to GDP. In the India
the retail sector accounted for a substantial 8-10% percent of GDP in 2007 (source:
business.mapsofindia.com). This implies that a very significant proportion of the economy is
linked to retailing hence public policy tends to recognize its importance as a driving force and
aims to promote its sustained growth.

Major Employer

A significant historical reason underlying the perceived increasing importance of retailing is
that its contribution to the economy is much more visible in the modern era than it was in the
past. Due to the Cobble income of couple, they likely to make their purchases at retail stores. All
products are available under one roof. There by you can save the time, efforts, save money and
enjoy the shopping.

Retailers as Gatekeepers

Retailers are becoming less important in their role as gatekeepers within the channel of
distribution. In the past, when suppliers were dominant, retailer supplied the merchandise that
was on offer and consumers selected from this. However, as retailer have become significantly
more powerful they are more able to exert their power over supplier and stock only the brands
they wish to sell, depending on their overall retail strategy and supplier relationship.

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