SHUTTERSTOCK
It’s that time of year. No, I’m not thinking of Veganuary (I can’t even pronounce the word), no, I’m thinking of that time of year when most retailers declare their Christmas trading figures…..kind of. Because as we know, reporting periods are massaged and margin and returns are never disclosed. However, although we may have to reach for a rather large pinch of salt, the annual list of Christmas winners and losers still gives a good indication of the relative state of the market.….Story continues…
By: Andrew Busby
Source: Forbes
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Critics:
Retail formats (also known as retail formulas) influence the consumer’s store choice and addresses the consumer’s expectations. At its most basic level, a retail format is a simple marketplace, that is; a location where goods and services are exchanged. In some parts of the world, the retail sector is still dominated by small family-run stores, but large retail chains are increasingly dominating the sector, because they can exert considerable buying power and pass on the savings in the form of lower prices.
Many of these large retail chains also produce their own private labels which compete alongside manufacturer brands. Considerable consolidation of retail stores has changed the retail landscape, transferring power away from wholesalers and into the hands of the large retail chains. In Britain and Europe, the retail sale of goods is designated as a service activity. The European Service Directive applies to all retail trade including periodic markets, street traders and peddlers.
Retail stores may be classified by the type of product carried. Softline retailers sell goods that are consumed after a single-use, or have a limited life (typically under three years) in they are normally consumed. Soft goods include clothing, other fabrics, footwear, toiletries, cosmetics, medicines and stationery. Grocery stores, including supermarkets and hypermarkets, along with convenience stores carry a mix of food products and consumable household items such as detergents, cleansers, personal hygiene products.
Retailers selling consumer durables are sometimes known as hardline retailers automobiles, appliances, electronics, furniture, sporting goods, lumber, etc., and parts for them. Specialist retailers operate in many industries such as the arts e.g. green grocers, contemporary art galleries, bookstores, handicrafts, musical instruments, gift shops. To achieve and maintain a foothold in an existing market, a prospective retail establishment must overcome the following hurdles:
Regulatory barriers including: Restrictions on real-estate purchases, especially as imposed by local governments and against “big-box” chain retailers, Restrictions on foreign investment in retailers, in terms of both absolute amount of financing provided and percentage share of voting stock (e.g. common stock) purchased, Unfavorable taxation structures, especially those designed to penalize or keep out “big box” retailers (see “Regulatory” above).
Absence of developed supply-chain and integrated IT management. High competitiveness among existing market participants and resulting low profit margins, caused in part by:constant advances in product design resulting in constant threat of product obsolescence and price declines for existing inventory. Lack of a properly-educated and/or -trained work-force, often including management, caused in part by loss in business
Lack of educational infrastructure enabling prospective market entrants to respond to the above challenges, Direct e-tailing (for example, through the Internet) and direct delivery to consumers from manufacturers and suppliers, cutting out any retail middle man.
When discussing the impact of technology on shopping and retail, e-commerce is often the first thing that comes to mind for retailers. However, technologies such as big data, artificial intelligence, computer vision and the Internet of Things have used data to transform every part of the shopping experience, from browsing to checkout.
It is important for organizations to embrace digital disruption in order to gain a competitive advantage. When an industry experiences digital disruption, it typically signals that consumer needs are shifting. Retailers enhance their analytics process and make better informed decisions thanks to big data, artificial intelligence, computer vision, and the Internet of Things. The use of data by retailers is mostly evident in the following aspects, based on the above-mentioned new technologies:
- Enhance marketing by Personalizing customer experience
- Optimize supply chain management
- Adjust prices to maximize profits
Many leading brands choose to target tourists who specifically travel to shop or spend money while on vacation. According to the Global Retail Tourism Market Report 2019-2023, the value of the global shopping tourism market was estimated to be around $1.2 trillion in 2018. The report also forecasts that the market will grow at a compound annual growth rate (CAGR) of 6.7% from 2019 to 2023. In 2023 Kogan Page published a critically acclaimed book “Leading Travel and Tourism Retail“, which researched in depth the travel retail sector post COVID.
Among retailers and retails chains a lot of consolidation has appeared over the last couple of decades. Between 1988 and 2010, worldwide 40,788 mergers & acquisitions with a total known value of US$2.255 trillion have been announced. The largest transactions with involvement of retailers in/from the United States have been: the acquisition of Albertson’s Inc.
For US$17 billion in 2006, the merger between Federated Department Stores Inc with May Department Stores valued at 16.5 bil. USD in 2005 – now Macy’s, and the merger between Kmart Holding Corp and Sears Roebuck & Co with a value of US$10.9 billion in 2004. Between 1985 and 2018 there have been 46,755 mergers or acquisitions conducted globally in the retail sector (either acquirer or target from the retail industry).
These deals cumulate to an overall known value of around US$2,561 billion. The three major Retail M&A waves took place in 2000, 2007 and lately in 2017. However the all-time high in terms of number of deals was in 2016 with more than 2,700 deals. In terms of added value 2007 set the record with the US$225 billion.
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