Retail Yesterday, Today, & Tomorrow
Evolution of Retail
The history of retail is completely intertwined with the history of humankind. There is evidence that people have been trading in marketplaces dating back at least 10,000 years. These informal dealings likely involved the barter system and seem to predate the written word. Throughout history, culture and knowledge have spread through trade. We find the same forces at work today on the internet as the reach of our ability to buy and sell becomes a vital function served by the global communications infrastructure.
It’s not an exaggeration to say that all written languages and mathematics of the Western world owe a great debt to salesmen in ancient times who didn’t completely trust their trading partners.
More than 7,000 years ago, Mesopotamian traders began to document their expenditures and trade goods with clay ledgers. When you traded something in Uruk, (now modern-day Iran) you would use clay tokens to represent items in ones, tens and hundreds. These tokens would be attached to a string and baked into a clay envelope to seal them so the amount couldn’t be tampered with. If there was a dispute, the clay envelope could be broken open for a recount.
These forms of record-keeping eventually evolved into cuneiform, which became the basis of written mathematics and the alphabet that spread throughout the Middle East, Europe and beyond.
The Ancient Egyptians, Babylonians, and Romans used papyrus to record many forms of economic data. The nature of that material and the previous clay tablets used in Mesopotamia mean that much of the archeological evidence we have from ancient civilizations in the in form of ledgers, sales records and accounting systems. The most common words and symbols of ancient written languages are for things such as bread, beer, sheep, cattle, and clothing.
The Merchant Class
Early marketplaces and bazaars were simply gathering spots where farmers, hunters, and traveling merchants would trade goods. By the Renaissance, a new breed of more formalized commerce and trade on an international level and leading up to the industrial revolution.
Growth in national wealth, advances in technology, and the continued exploitation of the New World led to the rise of a merchant class in Europe. Increased availability of products and wealth soon gave birth to more formalized shops and town squares, where imported and local goods could be purchased regularly side-by-side. Initially, the selection might not be great and the stock might vary considerably, but merchants could now make a living with shops in small towns and cities alongside tradesmen and farmers.
As advances in technology such as the railroad and steam ships improved logistics, an ever-growing assortment of products and inventions were available. To service this higher level of commerce in burgeoning urban centers, the department store was born.
These modern marvels brought a dizzying array of products right to the consumer. The department store was the first iteration of what we now consider modern retail shopping. The experience of shopping in Macy’s in 1800s New York was not all that different from today.
Mass Production and Mail Order
As the 19th century ended, new techniques turned consumer goods into mass-produced items rather than hand-crafted one-offs. This lowered prices and increased widespread distribution of all kinds of products.
While the comforts of the modern age found their way into the urban department stores of London, Paris, and New York, residents of smaller cities and towns were at the mercy of the general store. Pricing and credit was informal at best and inconsistent at worst, which you could get away with when you’re the only store in town.
Then came the Sears & Roebuck Catalog. It offered set prices and the ability to order just about anything that could be mass-produced and shipped – even a house! The Sears catalog’s ability to bring affordable and consistent retail products to the masses helped usher in the 20th century phenomenon of the middle class.
Retail Embraces Technology
In 1878, James Ritty, owner of a bar in Dayton, Ohio, was travelling on a boat when he saw a device that counted revolutions of the propeller. The idea inspired him to create the first mechanical cash register as a way to ensure his bartenders were staying honest. He eventually sold the invention to John Patterson, who used it to found the National Cash Register Company (NCR).
The introduction of the cash register led to a gradual adoption of technology into the retail business model. By the late 1950s and early 1960s, larger chains were able to automate and computerize inventory, logistics, order management, and other main office and warehouse tasks.
Newer compact laser scanners first appeared in the 1970s and UPC symbols made their way into stores. This system and the rise of microcomputers in the 1980s unified the large-scale inventory tracking system in the warehouse with the day-to-day shelf stocking data in the field. Retailers now had exact inventories, sales data, and trends at the fingertips. The new data assisted with placing orders, selecting inventory, and detecting sales trends. A UPC code also offers the benefit of being able to change the price on the shelf and in the system without altering the product.
At the same time, microcomputers made online credit card processing possible, allowing retailers to accept major credit cards with more confidence and frequency than they had previously.
Internet urban legend suggests that a pizza from Pizza Hut was the first thing someone ordered on the World Wide Web in the early 1990s. By 1995, eBay and Amazon were poised to change the face of retail forever and online commerce became a real threat to traditional retail companies. Those that were able to adapt to changing customer expectations thrived when they realized they could reach customers all around the world and securely process their payments. Retail outlets that were slower to change struggled in the new online world.
Along with the e-commerce experience came the capture and retention of customer-related data. Knowing that Customer X bought shoes is valuable info when you make socks. Relationships became a crucial component of the retail experience. A century ago, the local general store owner new your tastes and your needs, but he had to compete with the selection and prices of the big department stores. Modern retailers offer a less personalized experience but must now compete with the experience of sitting home in pajamas and ordering online.
One way to compete with the couch at home is to act like the general store owner and really get to understand what your customers want. In 21st century retailing, fostering the connection between customer and retailer became one of the most important functions of not only sales and marketing, but also in-store customer relationships. This means not only knowing their purchase history, but also using your knowledge of them to predict what they will want to buy in the future.
Everything in the Cloud
The increasing importance of the customer-retailer relationship showed a strong need from customers to receive better customer service more quickly, regardless of what channel (online, brick-and-mortar, telephone customer service) they use to interact. In response, retailers consolidated systems and integrated point-of-sale, inventory, and customer relationship functions.
The rise of cloud computing power made this possible on a device such as a cell phone or tablet, offering sales associates instant roaming in-store access to the customer relationship, inventory, pricing, and every other bit of important information they can use to specially customize the retail experience. This customized experience keeps people coming back the store for items they could probably order online.
What does the Future Hold?
Real-time credit card processing has evolved into mobile payments. The next step could be something like Amazon Go, a small food store where you can grab what you need and RFID trackers charge your mobile payment as you exit. No checkout required.
Another possible look for the brick-and-mortar store could see it evolve into a symbol of a lifestyle or brand coupled with a mini local instant fulfillment center. With the close integration of the e-commerce and in-store sales channels, the actual location could become a meeting point for those looking to try new products or examine new styles (perhaps while grabbing a cup of coffee or glass of wine) while getting to know the brand in a comfy lounge.
After that experience, the customer may go home and make a purchase on the mobile app later on. Local quick-delivery services (or even robots) could pick the item up at the store and have it to the customer quickly. In a more traditional retail model, the store technically never made the sale – it went to the e-commerce channel. But as the lines between digital and “real life” are blurring for customers, they are also blurring for retailers.
Technology has revolutionized the retail sector many times over the centuries. We have come a long way from clay tablets to electronic tablets. The industry has had to evolve more quickly in the past 15 years than it had in the previous 50, but those who have adopted advanced technology are seeing the benefits with improved customer satisfaction and greater brand loyalty.
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