The History of merchants who handle products from manufacturer to final consumer is given in Distribution, Distribution Systems, and the diagrams of Development of Industry & Commerce.
An important impact has been occurring recently from The Media with the development of the Internet together with Databanks, and the sucecssful introduction of on-line advertising which has contributed to the decline of the print media. A parallel development has occurred with the creation of Databanks of goods and services, creating new distribution businesses selling by the above advertising direct to the consumer in many countries, with delivery of physical items by post - giving an up-lift to this declining media.
We will call these On Line Integrated Distributors - for they compete with existing Integrated Distributors, as well as Wholesalers and Retail outlets. There are economies from property taxes, and depending on the nature of what is sold from sales taxes. Nation States are not yet geared up to imposing and collecting tribute on items delivered on line. The consumer saves by not having to battle through crowded shopping centres - though a lot like to see the products then buy cheaper on line. The result is that those Integrated Distributors of the Department Store type have lost business to the extent that a number of well known names have closed on both sides of the Atlantic. They are in decline. All are trying to develop on line sales - but like the publishing industry the newcomers generally are more successful than the older established business.. Here they are still burdened with higher property costs and taxes, have problems how to price on-line compared with in-store, and may not be in-tune with Big Data and on-line advertising (from Media). There is uncertainty how far this impact has to run. There are several impacts to consider. Distribution consumes a large part of the final price, as the Table below on Mark-ups shows, its productivity is low, which the new On-line Integrated Distributors are improving. High Street rents are high, and Government taxes on high street properties and sales people are high. Neither Landlords or Governments wish to see these reduced, despite high street closures. Governments though out the Western World have great funding problems, and it takes a long time to reduce a tax based on reduced high street values. The On Line Integrated Distributors are more efficient in a low productivity sector, a Substitution Curve has set in and is likely to continue for matching products and services.
The main future trends identified in these Sectors is of a continuing move towards the large Unified distributor, and towards the On Line Integrated Distributors for suitable products and services. However, there are clearly prosperous retail outlets occupying prime high rent premises. We will thus enquire into their future, and the type of goods and services which will go through them, and not through the Unified distributors. The input is largely impacts from other Areas.
Small shops in decline are typically food, newsagents-tobacconists, chemists. Small shops which are growing in number are fast food, specialist hobby shops (e.g. hi-fi, electronics, computers, photography), jewellery, fashion clothing. These may be part of chains, or franchises - and thus are in fact wholly or in part Unified distributors. There are also independent outlets - who will be served by wholesalers.
A feature of the growing small outlets is that they tend to provide products which satisfy the higher levels of Maslov's needs - Esteem and especially Self-Actualisation (creativity, sense of achievement). It is a conclusion from Leisure & Wealth Deployment that man's activities in Post Industrial Societies will increasingly be centred around these higher needs, especially Self-Actualisation. It is possible to relate typical mark-ups to the needs the products satisfy:
Typical Retail Mark-up Food (Basic needs) 10% Consumer Goods (functional plus Esteem) 30 - 50% Fashion Clothing (Self-Actualisation) 100%
Clearly people place a higher value on products which satisfy higher Maslov needs - and these are likely to be the province of the smaller retail outlet in the future - especially where there are important elements of advice and after sales service needed for the product.
Where fashion is involved, especially fashion clothing, it is likely to be the province of the independent retailer - who can react quicker than a large national chain. Links with the underground markets are and will be important. High priced fashion goods go through prestigious outlets - and if fashion changes these goods are sold through the till to market operators. Part of the need for the high mark-up is the risk that stock will be remaindered by fashion changes.
Hypermarkets have been growing, and are popular when they are opened. Resistance by town planning authorities has slowed up their development, but will not prevent it (from Town - Country Symbiosis). Hypermarkets cater for the efficient distribution of goods at minimum mark-ups. They do not operate so well for specialist goods. However, as Hypermarkets become more numerous they can be expected to capture the distribution of say the more functional consumer goods which at present go through profitable small retail outlets. They will not be geared to selling specialist products which also require specialist knowledge and advice - this will be the province of the small retailer - though some of them are and will be specialist chains. There is however a development of hypermarkets with specialists shops within them catering for mass market specialist items - so erosion of the independent specialist shop will occur from this quarter.
Supermarkets provide food which as low value items do not lend themselves to the On Line Integrated Distributors. Supermarkets are moving to the range of goods provided by Hypermarkets, and are also developing their own on-line shopping - which after some 50 years is restoring the home delivery of groceries. The process is very labour intensive for the Supermarkets, with staff often going round picking items off shelves, and its doubtful if its profitable - but no doubt they feel they must develop an on-line presence. More automation can be expected.
Services as a whole are forecast to grow (from Services), covering a multitude of activities. Often the distribution of services is at a primitive level - which we expect to follow in the footsteps of physical goods. The Computer-Media (CM) will be the key - since many services are largely or wholly to do with information. To illustrate potential developments, some examples are considered
It appears that in many cases where an individual operator runs a retail outlet in the future he will be part of a Franchise Chain; in other cases such as fashion clothing, he is likely to buy to order off local producers. Other retail outlets will tend to be part of chains, who buy directly from manufacturers. The traditional shop, such as food shops, buying off wholesalers or cash & carry, are in decline.
This suggests that the traditional wholesaler, as an independent business between manufacturers and retailers, will continue to decline. Some specialist products will continue to to lend themselves to sale through single independent outlets - and so give opportunities for wholesalers in these products. However in the longer run the Computer-Media may enable direct ordering between retailer and manufacturer - even to foreign countries. The only problem then is delivery of the product - which may not favour the independent wholesaler business.
Supermarket retailing is occurring in other countries in advance of the economic Level in which they first occurred in the Advanced Countries (Level 9). The driver to the development of self-service is the very high cost of human time in late Level 9 Societies, which is not present in some of the Societies developing supermarkets. Operators should evaluate carefully whether the simpler and smaller form of shop is more appropriate to their local conditions. On the other side of the coin, the range of goods available in a self-service supermarket is far larger than could be achieved in a mid Level 9 grocer's shop - though whether this can be exploited depends on if the range of products now available in the Post Industrials can be economically provided in other Societies.
It is likely that the conditions for widespread development of the Unified distributors will be confined to those few countries approaching the Post Industrial condition. They may however be applicable in large urban centres of MRCs.
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