Retailing Is the Selling of Goods and Services Directly - Essay Example

Future of Fashion Retailing is the selling of goods and services directly to the consumer or user. It may be done on a small-quantity basis where a limited number of goods are sold to a few number of users or on a big-quantity basis where a large volume of goods are sold to a large mass of consumers. To succeed in retailing, one must be able to manage the basic elements of the business which include the product itself, the price, the quantity, the timing, the appeal of the product and lastly the place where the product is being sold. While all factors of the retailing business are equally important, the place where the product or service is being sold must always be considered of prime value because it is where the prospective buyer gets to actually see the product. This visual physical contact will determine to a large extent whether the costumer will like the product or not. The place therefore is very essential because it is where the actual sale occurs! The place of the retailing activity - the Store - has its evolution: from the retailer's house, to a small stall without a roof on a busy street; to a structure with a roof in an open plaza or space, to a big store in a big building, to a shop inside a building with other smaller shops, and to a group of many big stores all housed under a large structure or venue. A store's size may be small, medium or big. It may only have a table where the goods are placed for sale or it may have many merchandising elements like shelves, racks, booths, kiosks, counters, cashiers, aisles, promotional materials and sales people. The shop may be a simple room or an architectural building with interior design to make it attractive for customers to come inside the store. The store therefore performs many functions other than just the place of sale; it also serves as a promotional, advertising and marketing tool. It must attract people to come inside, look at the products and make a purchase. It must give customers a good feeling and pleasant experience for them to visit again and buy. With the hectic changes and very fast-paced improvement of technology however, the significance and effectiveness of the store is slowly being threatened to the point where it may be relegated to performing a minor or useless role. That single technology challenging the role of the store as the forefront of the retailing business is the Computer-Internet tandem. With changes in technology come also changes in the psychological and mental attitudes of people. Human beings when exposed to the capabilities of gadgets and instruments become attracted to the benefits and amenities that technology brings and they soon begin to have a lifestyle revolving around such technology. These modern tools have brought them up close to and face to face with goods and services through the internet without having to enter a store. According to Campus Market Research, 91% of US college students are online everyday and 74% prefer to buy textbooks online (Sanchez 6). Products can be seen before the monitor of a computer with colors approximating their real value; the specifications of the product may be downloaded and known; and prices from different stores may be viewed and compared. The products can be ordered and paid with credit cards through the internet itself or executed with the support of electronic peripherals like a telephone, cell-phone or fax machine. Lastly, the buyer has the luxury and comfort of having the bought items delivered to his or her doorstep without ever having to step inside a single store! One may be led to think that the Internet may cause the complete obliteration or obsolescence of the store. As mentioned earlier, Traditional or Conventional Retailing is done through the Store (store-retailing). It is a real place where real goods are physically located. It is a place where consumers can go to look at the goods they need and possibly buy if they want them. They can see, smell and touch the actual product; they can make real time appreciation and evaluation of the product which facilitates and enables the decision-making. Various kinds of stores have developed in time: Specialty stores, Discount stores, Give-away stores, Boutique shops, Chain stores, Convenient Stores, Warehouse stores, Department stores, Supermarkets and Mega-size Malls. The single common factor in all these is the existence of a real store with real products ready for sale to the consumer at real time, that is, at the actual moment of contact between product and buyer. The main advantage of the Store is that consumers can actually see the real product and on that basis make instantaneous appreciation and evaluation of the item and decide to buy at the moment. Walk-in customers or passers-by doing window shopping who have no previous intention of buying may be enticed to come inside a store upon seeing the displays; and having actually seen the real goods may then decide to buy at impulse. Human interaction with a sales staff is also an advantage of the store. Assuming good personnel service training, the warm reception of sales people facilitates the making of sale. The social element of the store is therefore a very essential benefit in conventional retailing; moreover, people nowadays go to big stores or malls not only to shop but also to seek relaxation, recreation and entertainment. The disadvantages related to store retailing are however numerous. They include the geographical location of the store which requires physical effort from the customer - distance or traffic could discourage the consumer from taking the trip to the store; the limited availability or non-availability of products; limited choices or alternatives in terms of product variety or price options - the buyer has to physically move to other stores to seek other alternatives; crowding in the store due to the presence of a large volume of customers especially during sales rushes, discount promos and holiday seasons; disturbing sales staff intervention or annoying influence; and the store size which could be too small and cramped for movement or too big making products difficult to find. Non-Traditional retailing or Non-Store retailing on the other hand may be done through telemarketing, vending machines and the internet. Internet retailing is known in various ways as Electronic Business, Web Commerce, Electronic Commerce, Internet Selling or Online Shopping. Online Selling is a very profitable method of selling goods. From 1999 to 2002, online sales in the United States grew from $15 to $44 billion (Electronic 2). In Online-Selling, the retailer displays fully colored pictures of the products in a Website complete with specifications as size, material used and other product information. The prospective buyer can access the website and see a virtual image-representation of the products and read the related product information in the monitor of a computer connected to the Internet. The customer can then make a decision, place the order, pay through the internet and have the goods delivered. The benefits of this kind of "virtual" commerce to both retailer and consumer are many. To the retailer, Online-Selling means that the main cost of store rent is done away with; eliminated also are store employee costs, utility bills like telephone and electricity, maintenance costs of store assets and paraphernalia, and other peripheral store-related costs. The new costs that arise however include delivery costs which could be local or overseas delivery, website hosting and maintenance, and website upgrades and improvements. To the consumer, the main benefit of Online Shopping is the physical accessibility of the store that could be located inside his house or office - virtually! There is no traffic to contend with, no unpleasant sales personnel, no crowds to bump into, no rushing to and jockeying for cashier lines, no small store space to be cramped in, no big store space to get lost and waste time; more virtual stores that can be visited through the Internet in a very short span of time and therefore more product alternatives to see and more price options to compare to get the best price. What all these benefits add up to is that Online Shopping could mean simple, quick, safe and more economical purchases for the consumer! According to Sweeney Research, 76% of consumers think online shopping is becoming safer (Sanchez 6). However, there are inherent disadvantages to Online Shopping which primarily includes the fact that buyers can not see the actual or real product. Through the computer monitor, they can only see a possible approximate color of the product, information about sizes, textures and other product information, description of the benefits of the product, and endorsements of other customers that may not be credible anyway. Online shopping is like buying with a catalog where one is not able to feel, touch, smell and hold the actual product to be able to have a real sense and real judgment of the product's true benefits and value. Security and safety is also a problem; the online store may not genuinely exist and is there to commit fraud and run away with people's money. If truly existing and legitimate, it is the process of paying online that can be subject to scams. According to TRUSTe, 40% of consumers will avoid small online stores due to identity fraud (Sanchez 6). One may not also be able to return permanently or quickly goods bought online. According to PriceRunner, 40% are dissatisfied about the return process (Sanchez 6). The future of retailing may be seen in extremes. The traditional retailer who maintains only store-based operations may gradually lose business as more and more people shift to Online Shopping. According to ComScore, 36% of shoppers have bought online (Sanchez 6). As people's confidence in dealing with technology increases and as their success in making online transactions multiply, in time, people will discover the expediency of Online Shopping. The traditional store-only retailers may see their profits dwindle if they are not actually pushed out of business. The non-traditional or non-store retailers who maintain pure online-based operations on the other hand, will continuously see gradual business growth. According to ComScore Networks, online buying hit $23.1 billion in 2006, up by 26% (Sanchez 6). While online retailers may experience constant annual profit increase, they may not be able to sustain and optimize their growth as consumers globally may never have the luxury of getting the services of a computer and the internet. Those who have access to internet may never have confidence in dealing with online or technological transactions, not until the credibility of internet business improves drastically. 50% of consumers are wary of online shopping because of spam (Sanchez 6). Besides, some consumers may never give up the social benefits and the joyful experience of visiting the store. The New Retailer therefore is a business person who will have both Store and Online operations. They will be the retailers of the future for they will be able to survive the onslaught of technological advancement and the lifestyle changes of people. By maintaining multi-channel, mixed-retail or click-and-mortar operations, they will take advantage of both traditional and technological markets - the loyal individuals who will still shop and buy their goods from the store and the trendy tech savvy individuals who will buy through the internet. According to Shop.org and BizRate.com, 50% are searching online and then buying offline (Sanchez 6). Because of these changes, the big store concept may become a thing of the past; retailers may have to downsize their shop spaces to adjust to the decreasing store people traffic. Companies like Tesco, Safeway, Wal-Mart, Whole Foods, Circuit City, Tiffany & Co., JC Penney and Best Buy are trying smaller stores (Eight 1). With less number of store visitors, a big store space may be replaced with smaller ones. There is no need for big display rooms as this is partly accomplished by the website display. What is needed is a storehouse to keep the unsold inventory and the goods ready for delivery. A small showroom may also be maintained to accommodate passers-by, walk-in clients and online researchers who want to see the goods first before putting their orders online. The New Retailer may also put up small mobile and collapsible "pop-up" stores. Target, London Fashion Bus, TheShop, Levi's with Alife, Umbro with Shotgun, and APE Malandra are some of the companies that have joined the pop-up retail (Pop-Up 1). While retailers maintain a number of fixed stores in certain profitable sites, they can put up these pop-up stores in selected areas such as schools, offices, churches, hospitals, parks and other non-conventional commercial sites. They may do this for limited periods of time and only during profitable seasons such as Christmas holidays and only during special events or occasions such as sales bazaars, conventions and exhibits. They can move out instantaneously as soon as profits dip or fold up as soon as business proves to be costly and un-economical; they have the dual advantage of moving in or out of a business position as they please. They consequently avoid the losses normally incurred because of costs that go with maintaining permanent or fixed stores come low or high season. The volume of internet sales is increasing: Online-Selling is therefore here to stay for as long as technology holds up. According to Jupiter Research, it increased by 20% in 2006 in the United States; retail, the second largest industry in the U.S., registered only 3.38% increase in 2007 ($4.49 Trillion) while eMarketer projected online retail sales growth of 21% ($131 Billion) for the same year (Retailing 1). While online retailing is seen by analysts to continue rising in the future, it remains to be seen whether it will be able to catch up with traditional-conventional retail-store selling and become a dominant sales mechanism. This will depend on how long it will take for the computer to reach each individual household worldwide and how fast people will adapt to new technology. It is forecasted that by 2050, everybody will be online every day (Sanchez 7)! Meanwhile, Online-Selling will perform its complementary role of supporting the New Retailers' Store-Retailing component by bringing in additional sales and augmenting profits through electronic commerce. Everything that can be sold through the store can be sold through the internet: products like food, clothes, cars and houses; and services like financial planning, website designing and many more. While there are products effectively sold through the internet, there are also other products like food and clothes that are better sold through stores or shops. Clothes, for example, may be classified into several categories: High Fashion clothes, Ready-to-Wear clothes and Mass clothes. High fashion clothes (haute couture) are very expensive clothes made of very high quality fabrics and used by an elite group of people normally the royalty, the very rich, famous personalities and high profile celebrities. These are apparel usually associated with European and American designers and the clothes they create are usually custom-made, that is, made exclusively for the user. Ready-to-Wear clothes are ready made clothes that are moderately priced, also made of good fabrics with limited sizes to choose from and also available in limited quantities, therefore only for a limited number of people. They are usually worn by the middle class, which include businessmen and professionals. Mass clothes as the term signifies are clothes worn regularly by many people. They are low priced, made of simple material with a wide array of sizes to choose from for children to adults and produced in large volumes. They include casual clothes, working clothes and sporting clothes. They may be worn for functional, occasional and business purposes. Clothes like school uniforms and jeans are examples of mass clothes. Of the three types of clothing, the mass clothes may be easily sold through the internet as these clothes are normally standard clothes. Companies like eBay, Amazon.com, Tesco, Marks & Spencer are selling clothes online (Poulter 1). The buyer need not see items physically as these are regular clothes made of standard materials with standard cuts and designs. Without seeing them before ordering, buyers can well anticipate the kind and quality of clothes they are ordering. They do not have to be very meticulous with regards to buying these kinds of standard regular clothing. If the delivered items are not as they expected, the discrepancies may be of minor consideration that will not probably affect the usefulness of the product. Besides, considering the low price of the item, the buyer may think he has not lost much. Ready-to-Wear clothes may still be sold through the internet only on a limited basis as the consumers who comprise this sector may be made up of sophisticated and choosy buyers. According to statistics, however, 60% of men and 64% of women shop online (Sanchez 6). If online sale of cosmetics and fragrances are expected to rise because of these men and women using these items, online purchasing of clothes may not be too far behind. Since RTW clothes command higher prices, buyers may want to see the product first before buying. Retailers may therefore display their array of RTW apparel in the website for prospective customers to initially view and review prices. When the prospect decides to buy, he can visit the store to examine the item, fit the apparel, order and pay for the good. In this case, the retailer's website functions as an advertising or marketing tool to initiate and facilitate the making of a sale. High-fashion clothes may be the most difficult if not impossible to sell online. High-end consumers will not probably have the time to browse the website and they may consider surfing the internet themselves as very demeaning to their high stature. Besides, high-fashion clothes are custom-made and personalized; this means that contact between the Fashion Designer and the customer is necessary. What online technology can do is to promote the person, qualifications and design works of the Fashion Designer through the website. The website does not aim to sell any product but to bring the works of the designer to the awareness of the prospective client. The internet opens communication lines between Fashion Designer and prospect which may lead to an eventual face to face contact and subsequently leading to the closing of a favorable transaction between buyer and seller. Traditionally, Fashion Designers promote their clothes, or their capability to make clothes, through fashion shows. They do not need a store to sell clothes but instead need an office to meet with customers and a display room for finished clothes. The display room also serves to show the works of the fashion designer or fashion merchandiser before buying online (Sanchez 7). According to Michael Wilmott, Head Futurologist, by 2010, 85% of the population could be using the internet and 80% of the people shopping online (Sanchez 7). Shop.org and Forrester Research say that clothing has become the top-selling item in the consumer product category excluding travel (Online 1). In order to maintain an edge over competitors, it is imperative and crucial for those in the fashion or clothes business to utilize online technology for the purpose of selling and/or promoting, advertising and marketing their business through a website in the internet. Statistics indicate that more and more people will be buying clothes through the internet. It is therefore very vital for clothes retailers to have online-selling to capture a share of this growing electronic-market. On the other hand, statistics also show that people will continue buying from conventional stores. It is also equally essential therefore for fashion merchandisers to have a store-selling component to gain a portion of the shopping-market. To employ a dual selling system would mean optimizing business sales income and therefore assuring business survival. Fashion designers, fashion merchandisers and clothes retailers who do not operate a multi-channel, mixed-selling, click-and-mortar retail - that is, combined Store-Online selling business - will be left out of the race and will soon find themselves out of business! Works Cited Browining, Arthur L. "The Future of Online Shopping." Ezine Articles. 20 November 2006. EzineArticles.com. 27 December 2007. Carr, Amanda. "Future Retail Trends: World Retail Congress." Business Resource Research. 2 August 2007. WGSN. 27 December 2007. "Eight Predictions for '08." NRF Stores. December 2007. Stores Magazine. 27 December 2007. "Electronic Commerce." MSN Encarta. 2007. Microsoft Corporation. 27 December 2007. Kary, Allison. "Online Shopping." ESCTW. 13 December 2005. Every Students Com Technology Wiki. 27 December 2007. "Multi-channel Stores Are Crucial." World Retail Congress. March 2007. EMAP Communications Ltd. 27 December 2007. "New Retail Trends Being Set by the Internet." 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