What even is retail?
Let’s start with the basics; when we say “retail”, what are we even talking about?
The most straightforward definition is the sale of goods and services to customers and clients, with the purpose of making profit
We aren’t just talking about buying things in shops, of course, retail includes all sorts of channels, such as online, or even door-to-door. In fact the definition has been so expansive throughout history that we can include everything from traveling merchants in ancient times to gigantic shopping malls we either love or hate today.
Let’s take a peek through the shop window of history to see how retail has become the huge industry we can’t live without, plus how our shopping habits and expectations as customers have changed over time.
Retail Stores — Their History and Evolution
Retail marketplaces have been around for a very long time. More than 10,000 years ago, trade was likely conducted through barter systems, according to archeological data. Barter was supplanted by retail trade incorporating coins as civilizations advanced. Around the 7th millennium BCE, selling and buying are supposed to have begun in Asia Minor (now Turkey). Herodotus states that Lydia is where retail, along with gold and silver coins, first appeared. In Sialk Hills in Kashan (6000 BCE), Catalk Huyuk in modern-day Turkey (7,500–5,700 BCE), Jericho (2600 BCE), and Susa, Gharipour cites evidence of prehistoric stores and trading hubs (4000 BCE). Ancient Babylonia, Assyria, Phoenicia, and Egypt all had open-air, public marketplaces. These marketplaces often had a location in the middle of the town. In the alleyways leading to the open market-place, skilled artisans such as metalworkers and leather workers maintained permanent workspaces. These craftspeople may have done direct sales from their shops, but they also prepared things for market days. Markets were held in the agora, a large open area where items were set up on mats or temporary booths on market days. Trade was conducted at the forum in ancient Rome. The Forum Romanum and Trajan’s Forum were the two forums of Rome. The latter was a sizable area with several buildings and four floors of businesses. The Roman forum was maybe the first location to have a permanent storefront for a business.
In antiquity, bartering methods were widely used, and trading entailed direct selling through merchants or peddlers.
The market in the Graeco-Roman era mostly catered to the local peasantry. Local farmers, who were mostly indigent, would sell little excesses from their individual agricultural operations, invest the proceeds in modest pieces of farm machinery, and acquire a few pleasures for their residences. Major producers, like the big estates, were enticing enough for merchants to come to their farm gates directly, eliminating the need for the producers to go to local marketplaces. The extremely affluent landowners controlled their own distribution, maybe by exporting and importing. Ancient literature and archaeological case studies provide extensive documentation of the characteristics of export markets in antiquity.
Romans wanted to buy things from certain locations, such as oysters from London or cinnamon from a particular mountain in Arabia. These location-based preferences fueled trade between Europe and the Middle East. Markets had a significant role as social hubs.
There has been substantial research on the evolution of marketing and retailing in England and Europe, but less is known about trends abroad. However, new study indicates that China had a long history of pioneering retail systems. Chinese packaging and branding have been used to denote family, place names, and product quality since 200 BCE. Between 600 and 900 CE, government-mandated product branding was in use. According to Eckhart and Bengtsson, Chinese society evolved a consumerist culture during the Song Dynasty (960–1127), when a high degree of consumption was accessible to a wide range of common consumers rather than only the elite. Commercial investment in carefully maintained firm image, retail signage, symbolic brands, trademark protection, and complex brand concepts resulted from the growth of a consumer culture.
• The first Department stores: 1800s — 1900s.
Grand retail arcades started to appear across Europe and the tropics by the late eighteenth century. An area with many vendors that operates under a roof is referred to as a shopping arcade. Glass was typically used in roof construction to let in natural light and lessen the need for candles or electric illumination. Due to the absence of pedestrian-friendly pavement in Paris, some of the first instances of shopping arcades were built there. Retailers built crude arcades in an effort to draw window shoppers by creating a clean setting away from the dirty streets. The Champs Elysee building known as the Coliseé had three arcades with 10 stores each when it first opened in 1771. These arcades were connected by a main ballroom. The arcade was only open for two years before closing because Parisians thought the place was too far. The Galerie de Bois, a collection of wooden shops that connected the ends of the Palais Royal and were inspired by the souks of Arabia, debuted in 1786 and quickly rose to prominence in Parisian social life.
The era of covered corridors, which extended from 1786 until 1935, was characterized by the architect Bertrand Lemoine (the Arcade Era). The heyday of the European capitals’ retail arcades, which included the Parisian Palais Royal (1784), the Passage de Feydeau (1791), and the Passage du Claire (1799), occurred in the early 19th century. Piccadilly Arcade in London (opened in 1810), Passage Colbert in Paris (1826), and Galleria Vittorio Emanuele in Milan. (1878).
The Palais-Royal, which opened to the public in 1784 and quickly rose to prominence as one of Paris’s most significant marketplaces, is typically recognized as the precursor to major retail arcades. On the outside of the grounds, beneath the old colonnades, was the Palais-Royal, a collection of gardens, stores, and entertainment venues. There were two theaters, as well as 145 stores, cafés, salons, hair salons, booksellers, and several refreshment stands. Retail establishments that catered to the rich elite specialized in luxury items such exquisite jewelry, furs, artworks, and furniture.
A new kind of retail establishment evolved to meet the requirements of the working poor, whereas the arcades were the domain of the bourgeoisie. Midway through the nineteenth century, John Stuart Mill, who experienced the emergence of the co-operative retail business firsthand, wrote about it. The co-operative movement, which was prevalent in the industrial metropolis of Manchester and the counties of Yorkshire and Lancashire, is where Stuart Mill places these shops. “In 1853, the Store bought for £745, a warehouse (freehold) on the opposite side of the street, where they maintain and sell their supplies of wheat, butcher’s meat, potatoes, and kindred commodities,” he writes of one of the first co-operative retail businesses in Rochdale, Manchester, England.
The business and economic sectors in the states changed tremendously around the turn of the 20th Century, as manufacturing and industry took over from agriculture as the nation’s main business. Commodities like oil, steel and textiles, plus factory-scale food production created new employment and living standards.
With success and better income comes broader tastes and more choice, and Americans were treated to better variety when department stores such as Macy’s in 1858, Bloomingdales in 1861 and Sears in 1886 were born in big cities like New York and Chicago.
• Where to keep that cash?: 1883
James Ritty, a saloon keeper from Ohio, invented the cash register in 1883, which he nicknamed the “incorruptible cashier”, which suggests he may have had some troublesome employees beforehand! The machine was simple, using metal taps with a basic mechanism to record sales. Each sale was completed with the ringing of a bell, hence the phrase “ringing up”, still in use today.
The invention took off dramatically, rapidly becoming commonplace in retail stores, creating a convenient checkout process for well over a hundred years.
Without Ritty, businesses would have continued to have issues keeping a handle on their accounts, unaware whether they were even making a profit or not. As the years progressed, cash registers have been adapted to make them more theft resistant.
Like almost everything, computer systems have replaced mechanical ones, and cash registers are no different. Point of sale (POS) systems used today are computerized registers that process credit cards, keep track of inventory, manage profit margins and allow for multiple touch screen terminals to be connected.
As the number of methods of shopping (even from the same vendors — both in-store and offline) have increased, companies are searching for ways of combining POS and payment gateways (technology used to accept card payments), to oversee all inventory at once.
• Let’s go to the mall: 1950s.
The time frame from the industrial revolution to the twenty-first century is referred to as the modern age of retailing. The department store, which first appeared in major cities in the middle to end of the 19th century, fundamentally altered consumer behavior and redefined ideals of luxury and service. America is where the phrase “department store” first appeared. These establishments were referred to as emporia or warehouse shops in 19th-century England. The earliest department shops in London were located on Oxford Street and Regent Street, where they were a part of a uniquely contemporary retail district. Around 1875, a London draper named William Whiteley tried to turn his Bayswater drapery shop into a department store by introducing a meat and vegetable department and an Oriental Department. However, the other shop owners fiercely opposed him, believing he was encroaching on their space and stealing their customers. However, from the middle of the nineteenth century, significant department stores started to appear in the US, Great Britain, Europe, Australia, and New Zealand, including Harrod’s of London in 1834, Kendall’s in Manchester in 1836, Selfridges of London in 1909, Macy’s of New York in 1858, Bloomingdale’s in 1861, Sak’s in 1867, Sears in 1893, Nordstrom in 1901, J.C. Penney in 1902, Le Bon Marché; In 1838, David Jones; in 1849, Harris Scarfe; in 1900, Myer; in 1985, Harrolds; in 1900, H & J Smith; and in 1909, Farmers. Chain shops, mail-order, multi-level marketing (a.k.a. pyramid selling or network marketing; c. 1920s–30s), party plans; and B2C e-commerce were among the other twentieth-century developments in retailing.
Many of the first department stores were entertainment centers rather than merely shopping outlets where customers might spend their free time. A few department shops had concert halls, art galleries, and reading rooms. Most department shops provided tea rooms or eating spaces as well as spas where women might treat themselves to a manicure. Celebrity appearances were also employed to great purpose. The fashion show, which started in the US in 1907, became a standard feature event for many department shops. The products on display during themed events introduced customers to the various cultures of the Orient and Middle East. The Dayton Arcade was one such market that utilized themed events.
In the introduction we claimed shopping malls were a more modern phenomenon, and they kind of are, but the idea of a central hub where one can visit multiple sellers has been with us since the Ancient Greeks’ agoras. The purpose-built, multi-storey malls we know today, though, came about in the mid-twentieth century.
America’s first mall was actually an outdoor plaza in Kansas City, founded in 1922, but the first indoor mall that resembled the malls we use now was opened in Edina, Minnesota in 1956. Back then, it was common for a large department store to be the focus of the mall, with other satellite stores around it.
There was a correlation between the growth of cars and the growth of shopping centers; as more of the population were able to afford vehicles, more people were able to comfortably commute from the suburbs to the city, where everything they needed was under one roof.
The idea was for these malls not just to be a place for shopping, but cultural and social centers for people to meet together and make a day of it. 14% of all retail sales were made in America’s 4,500 malls that were up and running as soon as 1960.
It seems that malls have had their peak, as sales hit a twenty-year low in 2019, largely thanks to growing online sales. However, shopping environments in the mold of malls are still enticing digitally native companies, for example, Neighborhood Goods, near to Dallas, uses a rotating collection of pop-up stores from various sellers.
What does this teach us? Malls may not be the thrilling, new experience they were in previous generations, but customers are still looking for shopping escapades in both the online and offline worlds.
• Think Big… Box: 1960s.
Though the fun of window shopping, the taking in different stores and the social side were all very exciting for mall-goers. The 1960s welcomed a fresh interest in the one-stop-shop. But they weren’t hankering back to the old mom and pops, instead, huge sites known as big box stores opened to cater to larger populations, offering a wider range of items at cheaper prices.
1962 was the year of the big box, as in Rogers, Arkansas, the first Walmart came into being. The same year, Target and Kmart opened their doors for the first time.
A simple service, often frictionless, was the norm in these massive shops thanks to their size and efficiency, which attracted many customers. The big boxes encouraged a more self-service approach so customers could speed up the process if need be, unlike the department stores of yesteryear with their more attentive, personalized customer service.
Big box stores took advantage of law changes that came into being after the Second World War which allowed for discounted retailing, meaning consumers could purchase the goods they needed at much cheaper prices.
The likes of Walmart and their big box competitors are still huge names in the business today. Walmart had sales over $500 billion in 2018 and were projected to grow further, so to compete, other big box stores need to be very inventive, revolutionizing their current stores and offer an even greater shopping experience if they’re to break Walmart’s dominance, especially with the threat of Amazon always looming.
A pattern toward greater shop footprints emerged during the 20th century. From 31,000 square feet (2,900 m2) in 1991 to 44,000 square feet (4,100 m2) in 2000, the average size of a supermarket in the United States increased. The first hypermarket operated by Carrefour opened in St. Genevieve-de-Bois, France, not far from Paris, in 1963. By the end of the 20th century, to represent their expanding scale, retailers began adopting terms like “mega-stores” and “warehouse stores.”
For instance, the well-known hardware retailer Bunnings in Australia has transitioned from smaller “home centers” (retail floor space under 5,000 square meters (54,000 sq ft)) to “warehouse” stores (retail floor space between 5,000 square meters (54,000 sq ft) and 21,000 square meters (230,000 sq ft)) in order to accommodate a wider range of products as well as in response to population growth and shifting consumer preferences. There was a two-fold disparity in square footage per capita between the United States and Europe in the early 21st century as a result of the upward trend of expanding retail space not being uniform across nations.
• Ecommerce looms on the horizon: 1990s.
Arguably one of the biggest flashpoints in retail history is the dawn of widespread internet shopping. Amazon was established in 1995 as a simple online bookseller. In 2018, the online retail platform reported a net income over $10 billion dollars.
Clearly, over the past three decades people have jumped onto the ecommerce bandwagon. There are a number of reasons for this. Ecommerce provides convenience and efficiency to the shopping experience and enables shoppers to research, examine reviews, compare prices, and make purchases at all hours of the day.
The growth of ecommerce mirrored the growth of the internet. As more and more people had access to the digital world, they became more interested in shopping there. Initially, some people were skeptical of providing personal data and payment information online, but the development of SSL security protocol in the 1990s helped to assuage those fears.
• Shopping gets social: 2007.
More than 60 million functioning businesses have pages on the world’s biggest social media platform, Facebook. Companies are using other social media sites for specific functions; want to talk to your customers? Use Twitter. Want to show off your new products in real-world situations? Use Instagram.
Social networks have provided opportunities for retailers with a new challenge, but if the challenge is mastered, then they can capitalize on reaching new customers and making more sales.
Sponsored stories made their Facebook debut in 2011, as a primitive form of social media advertising. The vast amount of data provided on Facebook by its users allowed marketers to target specific audiences. Brands can now sell their products directly on Meta platforms Facebook and Instagram.
• Ecommerce on the up: Today
So, what of retail in 2022? For the past few years, retail has been growing, but steadily; growth in physical stores in 2018 was just 3.7%, even before the pandemic restricted in-store shopping for many of us. Ecommerce sales increased, though, by 15%, and in the past ten years ecommerce has gone from accounting for 5% of the market share, to around 15%.
Consumers are in search of online shopping convenience, but that doesn’t mean all ecommerce is viewed the same way. Some brands are looking into efficient multi-channel strategies to keep up with the market, and we’ll check out why some are thriving in the modern world, while others are being left behind.