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Importance of retailing to the economy
Importance of retailing to the economy
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Executive Summery
The retail industry is a very important part of the world economy. “Variety can be categorized by different level of service, and generally fall into one of the following categories: discount department stores, wholesale clubs, supercenters, hyper marts, and so-called category killers” (Variety Stores). A retail business operates in a fixed market location selling goods and service for consumers. The retail industry buys goods from the supplier in large quantities to provide to consumers and make a profit. This could include anything from consumer product and delivery of products to consumers.
PESTLE analysis
Political
The change in politics and policy sometimes affects domestic and international firms. However, the retail industry has benefited from the free trade agreement between the United States and Asia. This has given the U.S. market the opportunity to expand and have a huge profit.
Economic
The United States is the number one consumer in the global market. The global market depends heavily in the U.S market. Due to the free trade agreement, the U.S market has grown rapidly. Also, the market was able to provide goods at low cost, encouraging sales growth and increasing profitability. However, the current situation with the economy could slow down the growth of the industry due to the price of crude oil continuing to rise. This affects the overall industry. Moreover, the increase in the price of oil affects the consumers because the cost is transferred to the consumers.
Social
Knowing the consumer’s needs and wants is necessary for the industry to be successful. However, not understanding the customer’s needs could potentially harm the company market share.
Technology
The opportunity on t...
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...al force is also the most important force that the industry needs to always keep an eye on. If there is any change in the external environment it could hurt the industry overall. In order to avoid these things the industry need to constantly monitor the external environment and have a backup plan to change that might happen.
Reference
Important Part of Retail Business. (n.d.). Retrieved from http://ivythesis.typepad.com/ topics/2009/01/important-part-of-retail-business.html
Global Powers of Retailing 2011 (n.d.). In Deloitte. Retrieved June 10, 2011,
fromhttp://www.deloitte.com/assets/DcomGlobal/Local%20Assets/
Documents/Consumer%20Business/dtt_globalpowersofretailing2011.pdf
Variety Stores. Encyclopedia of American Industries. Online Edition. Retrieved
June 10, 2011, from Business and Company Resource Center. (I2501400716).
The US employment rate has improved over the past years creating a leveled economy market allowing for society to have a more stable income than they have had in recent years. This improvement helps the retail industry to have a growth in the market.
Wal-Mart has had a significant economic impact on the US, as well as the economies of countries that have relations with the US. Wal-Mart is the world’s biggest company of any kind, with 80 percent of the households in America purchasing something from the superstore; it is the nation’s largest retailer. Wal-Mart’s continuing price reduction has given Americans the advantage of being able to afford 15 to 20 percent more than they previously could. (Hansen) In a world governed by globalization and greed, competition has become rigid; as a result firms like Wal-Mart have utilized advanced marketing strategies to insure that they are on the ‘neck’ of competition, and are the core deciders of the market. (Ortega) However, Wal-Mart made decisions that were of a disadvantage to aspects of the economy, including the depletion on a small scale of Small Town USA.
Having prior knowledge of a customers needs, habits, and questions before or during every interaction and transaction can boost customer satisfaction. (Zueschner, Raymond. (1997). Communicating Today. Boston: Allyn and Bacon.
Exploring the profitability of this industry, domestically retailers are struggling to maintain high profit margins. The solid industry growth expected for the coming years is highly supported by the economic turnaround in 2011, however many small retailers are feeling the pressure of low-cost imports . Reduced imports and the continued shifting of manufacturing operations to low-cost countries, creates a trickle down effect onto the fragmented market of companies, with a mix of small and large participants (see Exhibit 2). Increases in price-setting control of wholesalers, are causing downst...
Increased demand on a global scale due to increase in manufacturing across the world, opposite in U.
The retail industry is as old as human civilizations, and it’s worth noting the retail sector is much better geared to change than most sectors. Over the past couple of decades there has been a wide range of changes in the retailing business. The retail sector dates back to the early 1800’s when the first local corner store sold common household items and basic groceries. As its name states, the corner store was just that, stores strategically placed on corners on high foot traffic areas for easy access. As society started to grow so did the need for new consumer goods and how a consumer would reach those goods. Department stores became popular simply because they were able to offer an assortment of categories and a variety of items within those categories all under one roof. The first two cities to start developing large scale department stores were New York City, and Chicago. In New York in 1846, the first building was built offering a variety of goods at fixed prices that were shipped from Europe. Department stores moved away from the idea of bartering and all items sold were considered fixed. However, department stores did offer discounts and coupons as a way to get customers in the door. In 1862, the largest department store was built during this time in New York City. The department store was on a full city block with eight floors and nineteen departments of dress goods, furnishing materials, carpets, fine china, toys and sports equipment. All these items were arranged around a central glass-covered court. The glass windows quickly became a staple in the department stores design. The act of window shopping was introduced and quickly all department stores had floor to ceiling windows advertising the newes...
In summary, it's no way around these forces there going to happen and exist in the business world. If you want to be a successful business adapt to these forces and understand each and everyone. Be prepared for the events and have proper responses to combat them and deal with theses factors successfully.
Firstly, one of the most important focuses would be given to the target customer as we will need to know more about their taste and preferences. What it is they need and or want. Particular topics covering this area will be, the need for ‘Market segmentation’, identifying a competitive position in the market about to enter in the market and studying consumer behaviour, will all be discussed.
We say that we are heading toward a more global economy because of the fact that competition in today’s markets is global. This means that corporations in the United States can compete in foreign markets and vice versa, therefore U.S. corporations and foreign corporations become interdependent and thrive off each other. This can have a good impact on the United States because it allows U.S. corporations to seek materials and labor outside of the U.S. in countries such as China, India, and Mexico, where workers are paid a lot less money than U.S. workers, thus allowing them to sell their products for significantly cheaper than if they were produced in the U.S.; however, the tradeoff is that many American workers in the industrial sector lose jobs due to this shift of labor to overseas. In the long run this will be beneficial for the U.S. and although some percentage of workers are losing work, new jobs in the services sector, in fields such as computer technology, telecommunications, and language skills are opening up and experiencing growth because of this change.
Nevertheless, Wal-Mart could not enter these markets at the same time. Based on their market research, Wal-Mart decided to focus its expansion efforts on Mexico, Brazil, and Argentina during its first five years of globalization. Although the European and Asian markets had great potential, entering these markets would come with several difficulties. The European market was mature at that point, which meant that Wal-Mart would be competing against well-established retailers. According to Govindarajan & Gupta, “Wal-Mart might have overcome these difficulties by entering Europe through an acquisition, but the higher growth rates of Latin American and Asian markets would have made a delayed entry into those markets extremely costly in terms of lost opportunities.” (2002) The Asian market, on the other hand, would have required even more financial and managerial resources due to its geographical distance and cultural and logistic differences from the United States
Economic conditions change rapidly whose effects are far reaching and hence require changes in marketing strategy. If a country or a region goes through a rapid decline a consumers spending pattern also changes. Interest rates and inflation affect buying. Interest rates directly affect the economy or situation. This is particularly important for business markets. Interest rates usually increase during periods of inflation. The economies of the world are connected and the economy of one country affects another. International trade is increasing and thus the change in the economy of one country affects the trade and commerce in another country. A marketing manager must watch the economic environment carefully. In contrast to the social and cultural environment economic conditions change continuously.
Rajagopal. "International Journal of Retail & Distribution Management." Emerald. Emerald Group Publishing Limited, 2011. Web. 21 Feb. 2014
products they want. The goal is to not only provide consumers with what they know they
Many Americans are used to getting the products they desire, at any cost. Trade with other countries is a necessity to the US because of the needs of the American people. Some examples of consumption could be wine, diamonds and gems, and vehicles. Another driving force in the global economy is cost of labor. Imagine the amount of money some companies would have to pay American workers to do the same work as some third world countries. Offshoring has become a big factor in the global economy. Many companies have opened customer service centers in different countries due to the savings. Clothing companies moved their manufacturing plants to other countries due to the cost of labor. Major stores in the US, for example, Wal-Mart, brings in most of their product from other countries to save money and pass that savings onto the consumer. Capitalism in the US has recently helped the global economy, the benefits of the Americans in the world’s marketplace is seen the return of money to the rest of the
On the other hand, most factors prove otherwise. The retail industry does not have high Economies of Scale to be exploited in general . Yet, it is impossible to run department stores like Metro on a small scale . A large retail space, inventory, and warehouse are necessary to host a specialized portfolio of brands and products to better attract both customers and suppliers. Heavy capital requirements and operational expen...