The online retail world is barely a decade old but has changed drastically in that short time â€“ on the other hand, the High Street, which has evolved slowly over hundreds of years has barely changed, but, has in fact drastically over that same decade â€¦.what is happening?
In my brief lifetime, the face of the High Street has changed drastically; the High Street was where all retail took place, long before out-of-town retail parks and the ubiquitous hypermarket cities sprung up. Each shop â€œspecialisedâ€ in its own fare; the baker, the butcher, the hardware store, the post office, the bank and the sweet shop, and the family shopping was conducted in a very traditional way, as it had long before, for generations.
These were the days when motherhood was a full-time occupation and most did the household shopping daily. For the housewife, cars were neither needed nor afforded, heavy items like milk were delivered to the doorstep and bottled water was yet to be thought of. Slates and the â€œnever-neverâ€ represented retail credit facilities and loyalty cards took the form of Green Shield stamps. Coupons and commercial advert breaks in the â€œSoap Operasâ€ were the only real marketing campaigns to direct the shopper. Shopping for the housewife was a social occasion where all the shopkeepers knew everyone, and most likely everyoneâ€™s business.
All shops closed on Wednesday afternoons, and the only thing you could probably buy on a Sunday was a newspaper. Almost all shops were privately owned and were handed down from family to family across villages up and down the country for generations.
Until â€¦.something changed!
During the great depression, Michael Kullen opened the very first supermarket (King Cullen) in New York in 1930. Self service, mass merchandising, innovation and shopping carts brought cheaper prices to impoverished nations. At the cost of those traditional shops that had been trading for generations, the supermarket phenomenon began and changed the face of the High Street forever.
The supermarket took off and proved the concept profit making on selling volume rather than just price â€“ â€œstack it high and sell it cheapâ€ worked and the supermarket flourished.
Since those early days, the supermarkets have slowly ebbed away more and more on the High Street and moved out of towns to larger locations where car-parking has become a prerequisite to success. Most mothers now work full-time, and the weekly shopping has become a chore, not the social necessity it once was. Not only has the supermarket stolen business from the High Street, but it is becoming more and more the High Street itself â€“ most of the larger stores now have their own in-house pharmacy, post-office, newsagent, key cutter, cobbler, florist, insurance company, bank even. Some are now even moving into real estate with even the prospect of branded house-building! Where will it end? Perhaps in my lifetime, they will offer a truly cradle-to-grave service for the local community where mothers can attend maternity classes whilst their shopping is bagged and trade loyalty points for off-the-shelf coffins for their own long-term exit planning.
So what has really happened?
Well, big business with their economies of scale and global ambitions versus the local village value-added shopkeeper won the day, and are changing the High Street faster than any other time in our civilisation.
Like it or not, the supermarket has evolved over the last 75 years and learnt fast. They have become the ultimate distributor for the food manufacturer who now presumably deals with far less suppliers than ever before which has resulted in optimal supply chain and efficient pricing, bringing some benefits to the consumer at least. The manufacturers are clearly being squeezed by the sheer buying strength of those fewer (but larger and international) retailers, but the efficiencies to their own commercial operations should not be underestimated. It would be very difficult to imagine companies like Heinz, Kellogs or Unilever deciding to sell off-supermarket and start their own retail shops on the basis they are too dependent on their few sales channels, and can earn higher profits by trading directly. Rather the opposite, supermarket own branding hurts original branded products more so, and would almost certainly replace their sales completely if they withdrew their own branded products from the shelves. Many manufacturers of course now supply own branded products directly to these stores â€“ the emphasis (and the challenge) is on the original brand manufacturers to prove their extra value (and pricing) over those own branded items.
The â€œtrafficâ€ to the supermarkets is also increasing as the range and variety of products now stocked greatly increases now stretching way beyond groceries and hardware to clothing, financial products and services, garden equipment, furniture, holidays and restaurants â€“ these organisations are bringing more and more traffic to these marketplaces.
The supermarket is now the High Street marketplace for 99% of consumers â€“ it doesnâ€™t matter which of the big 4 or 5 we refer to as they all operate in exactly the same way â€“ they open up where the consumers are (delivering traffic to the manufacturersâ€™ products), promote and market their products, process payments, deal with returns, manage the customer, set optimal pricing and manage optimal store product placement for maximum returns.
It would of course be ludicrous for a manufacturer to align themselves with a single supermarket company as no single supermarket chain has (or would realistically have) a monopoly, so manufacturers ensure they have maximum reach by supplying to the major players at the optimum prices.
Over the last 75 years or so, manufacturing and retail have streamlined enormously, changing the High Street landscape, and squeezing out the middlemen and smaller trader probably forever.
As in all human civilisations, things seem reasonably stable and then suddenly, seemingly out of the blue, a seed change happens, and the world changes. At what point did the supermarkets migrate away from their modest High Street locations to the out-of-town settlements they now have? What suddenly caused all these ubiquitous but soulless retail parks to spring up? Did the traditional High Street shopkeepers see all this coming?
What can the online retailer learn from this?
[To be Continued]