Comparison between the retail revolutions in the UK and US - Essay Example

?Project Order 505961 Deadline: 02-27; 17:31 Compare and contrast the retail revolutions in the UK and US. What are the similarities and differences and who are the winners and losers? Informal sectors define the retail industry as characterized by (a) ease of entry, (b) reliance on indigenous resources; (c) family ownership of enterprises; (d) small scale of operation; (e) labor intensive and adapted technology; (f) skills acquired formal education and (g) unregulated although competitive in market (Broom and Joyce-Clarke, 1990). This justify the widening acceptance of retail micro-economy which has in fact built varied structures, sometimes pyramid system, just to introduce the product from the center to the remotest possible market. As can be observed, economic analysts and consultants refocused to explore retail trade to exhaust the opportunity from middle class consumers. This also encouraged analysts and consultants to develop systems that boldly shape a superfluous social phenomenon of consumerism because products are promoted in all forms of media – something that consequentially dictate and influentially redefine peoples’ wants and needs. As such, real estate investors are driven on constructing malls and retail centers lovely tagged as “retail cathedrals” for lease. These retail centers oddly became indicators of progress as peoples would enjoy ‘one-stop-shop’ to complete their endearing wants for new clothes, school supplies, home fixtures and furnitures, kitchenware, appliances, grocery items and/or to simply quench their hunger by availing services from prominent food chains (Dutta. 2006) . This robust business in fact made UK earmarked sales of ?221 billion and have employed about 3 million people and operating over 300,000 shops. Lao (2008) pointed that the transformation of economic sphere thru retail system generated both social acceptance and disdain because the development of chain stores have also marginalized the small retailers that lacked the capacity to offer first class convenience, a feature preferred by most consumers for comfort while shopping. Its adverse impact lead to the closure of small bookstores, eye-wear, footwear and the like as branded goods enter the chain stores (Lao, 2008). This reality is true for United States of America (USA) and United Kingdom (UK). In the last four decades, the countries’ retail revolution boom with the influx of chain “stores, supermarkets and self-service stores” (Lao, 2008). 1. UK and the Retail Industry It’s just lately when UK retail trade is dominated by small shops run by the whole family which offer services to the market for lengthy hours and sometimes round the clock. This system also engenders personal relations with customers as owners sometimes allow credit. Others employ salesmen for home delivery services or for mobile selling. Lao (2008) however pointed that retailer and consumer relations in UK was affected when large chains like Fine Fare, Sainsbury’s, Tesco and other food stores started to operate with express leverage in bargaining power and in offering cheaper prices of pre-packed fresh goods in the markets compared to that of “old small proprietary stores.” As a consequence, old corner shop closed in favor of thriving convenient well-stocked stores; employment shifted from proprietary to supermarket chains; and relationships were formalized by using checkout counter and digitized sales and accounting. Stores restructured and employed educated salespersons and managers. And as competition heightened, proprietary retailers and wholesalers organized themselves into association to devise their own promotions, pricing of products, and mechanism to retain customers. With these turn of events, it is likely that dominant chain will rise and proprietary stores die in the absence clear state policies that protect small retailers. This affirmed fears that with retail owners allying themselves to protect their corporate interests, the retail grocery will maintain its oligopolistic character (Burt & Sparks, 2003). Clarke (2000) pointed that such increase in retail power also redefines consumers’ options which is perceived disadvantageous to small retailers. Recent situation bared that there are already mounting cases of conflicts arising from retail industry which disturbed the economic climate of UK. The Department of Business Enterprise and Regulatory Reform (BERR) in its studies in 2008 pressed for the government to provide appropriate market conditions allowing “fair and free competition” and to provide an avenue where stakeholders of this industry can discuss recommendations and “policies to resolve issues that may put an excessive risk to supply chain” and widen issues on sectoral polarization (Findlay and Sparks, 2006). 2. Retailing in United States United States is populated with 300 million people with an influx of 26 million businesses with Gross Domestic Product for 2007 of over $13,000,000 million, and Gross National Income (GNI) estimate of $44,970 (World Bank, 2007). A substantive percent of this income are derived from small entrepreneurs engaged in retailing products. Like UK, America is also driven to change the scope of retailing by refining their systems, operations, and outsourced partners to uphold the sector for employment. There is however general observation that retailing sales in US are episodic, ergo, irregular. Although UK’s retail industry thrived better than US, the latter however served as a factor as comparator on small entrepreneurial matters. With financial fluidity in the latter part of the new millennium, US underwent slow down due to ‘credit-crunch’ as retail business is also significantly affected with macro-business state. Inspite of this, there were study which pointed that 11 out of 18 US business owners achieved growth at or faster than planned compared with 5 out of 21 in the UK (Blackburnm, Kitching, Hart, Brush, and Ceru, 2008). 3. UK-US similarities and differences in retail industry There is not much differences about how US and UK manage the retail industry. Both countries employ workers with high educational qualifications and equipped with skills especially in financial management. Both are motivated by influences, experiences, opportunity, technology and aspirations for quality life or with detailed business plan (Blackburnm et. al, 2008). Although growth is dependent on effectiveness in performance, both countries explored the essential competitive strategies based on product quality instead of price; custom technologies, and in bridging relationship with consumers. Both countries have entrepreneurs challenged to sustain sales (Blackburnm et. al, 2008). Entrepreneurs of these countries also depend on media to popularize their products and identities to increase their sales. In matters relating to policy, UK’s retailers report difficulties in securing contacts with government while US government is more liberal in the procurement of contracts and in legislating policies (Blackburnm et.al, 2008). They vary in regulatory environment. UK is export-dependent thus, need more protective policies. Geographically, US and UK differ in sales and markets. They also had variation of strategies especially in the identification of target clients viz aims for profit and growth. This means that there are valid issues that each nation must address about by legislating or enforcing policies that will assuage the condition of the retail industry and resolve its conflicts within including its sustainability (Blackburnm et. al, 2008). Annotated Bibliography Broom, M. and Joyce-Clarke, C. (1990), A Retail Perspective of the Informal Sector. South African Journal of Economics, 58: 290–297. doi: 10.1111/j.1813-6982.1990.tb00956.x Authors are writers or researcher of South African Journal of Economics. Broom hailed from the Department of Business Science of University of Cape Town while Clarke came from former Institute of Retail Studies, Graduate School of Business University of CapeTown. Devangshu Dutta. (August, l2006). Myth and Reality pf the Retail Revolution. Fly on the Wall. pp 1-9. Dutta is a retail sector consultant and chief executive of the consulting firm Third Eyesight. Lao, S.L. (2008). No change can take place without some people being hurt. Business world. Bahadur Shah Zafar Marg, New Delhi. 4 Jan 2008. ttp://www.businessworld.in/index.php/Web-Exclusives/Retail-Revolution.html. Accessed February 26, 2011 The author is former director-general, National Council for Applied Economic Research Steve L. Burt and Leigh Sparks. Power and Competition in the UK Retail Grocery Market. British Journal of Management. Volume 14, Issue 3, pages 237–254, September 2003, DOI: 10.1111/1467-8551.00377 Burt is Professor of Retail Marketing and Director of the Institute for Retail Studies in the Department of Marketing, University of Stirling and president of the European Association for Education and Research in Commercial Distribution. Leigh Sparks is professor of retail studies at the University of Stirling, Scotland, UK Ian Clarke (2000) "Retail power, competition and local consumer choice in the UK grocery sector", European Journal of Marketing, Vol. 34 Iss: 8, pp.975 – 1002 DOI 10.1108/03090560010331469 World Bank (2007) Doing Business 2008: Comparing Regulation in 178 Economies, International Bank for Reconstruction and Development/World Bank, Washington DC. http://www.doingbusiness.org/documents/FullReport/2008/DB08_Full_Report.pdf WB is a financial institution of United States of America that often conducts research and studies on matters affecting its operation and its interest for economic growth in all regions where it is perceived as stakeholder for development. Anne Findlay and Leigh Sparks (2006). The Retail Planning Knowledge Base Briefing Paper 5. Retail Planning and Food Retailing Competition Issues. Institute for Retail Studies . University of Stirling, Scotland. Spark is Professor of Retail Studies University of Stirling and Director of the CSRS while Findlay is a research fellow of the same university member of the Centre's Research Team that sustain the web site and the CSRS Scottish Retailing Bibliography The Department of Business Enterprise and Regulatory Reform (2008). Supply of Groceries in UK: The Government Response to Competition Commission Market Investigation. Department for Business, Enterprise & Regulatory Reform. www.berr.gov.uk First published July 2008. Crown Copyright. URN 08/1127 The Department for Business, Innovation and Skills (BIS) is a department created in 2009 after the merger of Department for Innovation, Universities and Skills (DIUS) and the Department for Business, Enterprise and Regulatory Reform (BERR). Robert Blackburnm, John Kitching, Mark Hart, Candida Brush, and Dennis Ceru (2008). Growth Challenges for Small and Medium-sized Enterprises: A UK-US Comparative Study. Small Business Research Centre. Kingston University London and Babson College, Mass. Researchers are London and US based that explored explore the influence of factors contributing to small scale entrepreneurship practiced by retailers toward the development of public policy. Read More