The Future of Traditional Retailing

The Future of Traditional Retailing

Retailing can be vaguely described as the business of selling goods or services to the final customer. This particular area of business is extremely important to the economy, totaling an estimated three trillion dollars in sales per year. Retailers are in constant battle among themselves to find new and innovative ways to meet the customers’ needs and wants in order to secure a share of the market.

There are numerous channels through which retailing can be performed. The most prominent form is the brick-and-mortar operation. This category consists of the physical store locations where customers can go to browse through the selection of merchandise. These operations have been a staple in communities for years past and will most likely remain for years to come. However, their stronghold on the retail industry is being seriously threatened by the extraordinary growth of e-commerce. E-commerce is defined as the business of retailing conducted over the Internet.

Although the retailing industry is a driving force behind the economy, its magnitude leaves little room for growth. The industry has reached its maturity, sales have not grown in great proportions, and expansion has slowed (Loeb, May 1998). In addition, the level of competition is at a high. Customers have more choices than ever on how to spend their dollar with the abundance of stores and catalogs (Maruca, Jul/Aug 1999). These conditions have lead retailers to search for a different channel by which to reach consumers.

A relatively new development has been the introduction of Internet-based retailing. It is estimated that online sales have tripled between 1997 and 1998, reaching roughly nine billion dollars. With the growing number of households joining the Web each day, projections indicate no signs of slowing down anytime soon (Anonymous, Aug 1999). Interactive retailing can prove to be a real threat to existing businesses. A recent article by Bob Woods discussed a report from Jupiter Communications LLC which “claims that most of the growth will come at the expense of traditional retailing” (Aug 13, 1999, p. 11). The report goes on to state that a large part of Internet sales is not growth, but a shift in dollars from traditional retail channels. In order to regain lost sales, many brick-and-mortar outlets have ventured into the World Wide Web.