History
Retail markets have existed since ancient times. Archaeological evidence for trade, probably involving barter systems, dates back more than 10,000 years. As civilizations grew, barter was replaced with retail trade involving coinage. Selling and buying are thought to have emerged in Asia Minor (modern Turkey) in around the 7th-millennium BCE. [4] In ancient Greece, markets operated within the agora, an open space where, on market days, goods were displayed on mats or temporary stalls. [5] Research from July 2008 suggests that China exhibited a rich history of early retail systems. [6] From as early as 200 BCE, Chinese packaging and branding were used to signal family, place names and product quality, and the use of government imposed product branding was used between 600 and 900 CE. [7] Eckhart and Bengtsson have argued that during the Song dynasty (960–1127), Chinese society developed a consumerist culture, where a high level of consumption was attainable for a wide variety of ordinary consumers rather than just the elite. [8] In ancient Rome, trade took place in the forum. [9] The Roman forum was one of the earliest example of a permanent retail shop-front. [10] Trajan’s Forum in Rome (2nd century CE) featured multi-level shop-lined halls and is considered one of the earliest examples of permanent retail shopfronts.
In Medieval England and Europe, relatively few permanent shops were to be found; instead, customers walked into the tradesman's workshops where they discussed purchasing options directly with tradesmen. [11] In the more populous cities, a small number of shops were beginning to emerge by the 13th century. [12] Outside the major cities, most consumable purchases were made through markets or fairs. [13] Market-places appear to have emerged independently outside Europe. The Grand Bazaar in Istanbul is often cited as the world's oldest continuously operating market; its construction began in 1455. The Spanish conquistadors wrote glowingly of markets in the Americas. In the 15th century, the Mexica (Aztec) market of Tlatelolco was the largest in all the Americas. [14]
Early modern era
By the 17th century, permanent shops with more regular trading hours were beginning to supplant markets and fairs as the main retail outlet. Provincial shopkeepers were active in almost every English market town. [15] As the number of shops grew, they underwent a transformation. The trappings of a modern shop, which had been entirely absent from the 16th- and early 17th-century store, gradually made way for store interiors and shopfronts that are more familiar to modern shoppers. Prior to the 18th century, the typical retail store had no counter, display cases, chairs, mirrors, changing rooms, etc. However, the opportunity for the customer to browse merchandise, touch and feel products began to be available, with retail innovations from the late 17th and early 18th centuries. [16]
By the late 18th century, grand shopping arcades began to emerge across Europe and in the Antipodes. A shopping arcade refers to a multiple-vendor space, operating under a covered roof. Typically, the roof was constructed of glass to allow for natural light and to reduce the need for candles or electric lighting. Some of the earliest examples of shopping arcade appeared in Paris, due to its lack of pavement for pedestrians. [17] While the arcades were the province of the bourgeoisie, a new type of retail venture emerged to serve the needs of the working poor. John Stuart Mill wrote about the rise of the co-operative retail store, which he witnessed first-hand in the mid-19th century. [18]
Modern era
The modern era of retailing is defined as the period from the industrial revolution to the 21st century. [19] In major cities, the department store emerged in the mid- to late 19th century, and permanently reshaped shopping habits, and redefined concepts of service and luxury. [20] Many of the early department stores were more than just a retail emporium; rather they were venues where shoppers could spend their leisure time and be entertained. [21] Retail, using mail order, came of age during the mid-19th century. Although catalogue sales had been used since the 15th century, this method of retailing was confined to a few industries such as the sale of books and seeds. However, improvements in transport and postal services led several entrepreneurs on either side of the Atlantic to experiment with catalogue sales. [22] Founded in 1916, Piggly Wiggly introduced the self-service retail model where customers picked goods off shelves themselves, instead of giving orders to clerks. [23]
In the post-war period, an American architect, Victor Gruen developed a concept for a shopping mall; a planned, self-contained shopping complex complete with an indoor plaza, statues, planting schemes, piped music, and car-parking. Gruen's vision was to create a shopping atmosphere where people felt so comfortable, they would spend more time in the environment, thereby enhancing opportunities for purchasing. The first of these malls opened at Northland Mall near Detroit in 1954. [24] Throughout the twentieth century, a trend towards larger store footprints became discernible. The average size of a U.S. supermarket grew from 31,000 square feet (2,900 m2) square feet in 1991 to 44,000 square feet (4,100 m2) square feet in 2000. [25] By the end of the twentieth century, stores were using labels such as "mega-stores" and "warehouse" stores to reflect their growing size. [26] The upward trend of increasing retail space was not consistent across nations and led in the early 21st century to a 2-fold difference in square footage per capita between the United States and Europe. [27]
21st century
Pre COVID-19
As the 21st century takes shape, large retail stores have come under increasing pressure from online sales models and reductions in store size are evident. [28] Overexpansion of malls and big-box chains brought fierce competition and other issues such as business debt. [29] By the 2010s, a combination of factors led to what some dubbed the retail apocalypse ; a wave of store closures and chain bankruptcies, particularly in North America. Well-known chains like Toys “R” Us , Sears , and JCPenney shrank dramatically or entered bankruptcy. From 2010 onward, thousands of U.S. stores were shuttered each year, and the decline accelerated around 2017 and again in 2020. Not everyone agreed on the term “apocalypse,” noting that many retailers continued to expand and that overall retail sales kept growing, but there was undoubtedly a significant shakeout in the industry. By the end of the 2010s, retailers were increasingly focusing on experiential store concepts and online integration to lure back customers. Large format stores that once dominated retail were rethinking their footprints, while some malls began redeveloping empty space into offices, hotels, or community use.
Recent Trends and the Impact of COVID-19
In the early 2020s, retail has been shaped by the rapid growth of e-commerce and by the disruptive impact of the COVID-19 pandemic . Online retail sales had been steadily rising each year, but the pandemic dramatically accelerated that trend. In 2020, as lockdowns and social distancing kept people out of physical stores, e-commerce sales surged by 43% in the United States; jumping from about $571 billion in 2019 to $815 billion in 2020. [30] This represented an unprecedented increase of nearly $244 billion in a single year. Globally, a similar story unfolded: the share of online sales in total retail climbed sharply. Before the pandemic, around 16% of retail sales worldwide were online; by the end of 2020, online’s share had grown to roughly 19%, a level that held in 2021 as well. Markets with strict lockdowns saw especially large shifts to e-commerce. For instance, countries like the UK and South Korea reached over a quarter of retail sales online in 2021; among the highest in the world. [31]
Key Innovations in Retail Technology and Infrastructure
- Vending Machines (1880s): The earliest known reference to a vending machine is in first-century Roman Egypt. This machine accepted a coin and then dispensed wine [32] or holy water. Coin-operated machines that dispensed tobacco were being operated as early as 1615 in the taverns of England. The machines were portable and made of brass. [33] Simon Denham was awarded British Patent no. 706 for his stamp dispensing machine in 1867, the first fully automatic vending machine. [34] The first modern coin-operated vending machines were introduced in London, England, in the early 1880s, dispensing postcards. The first vending machine in the U.S. was built in 1888 by the Thomas Adams Gum Company, [35] selling gum on New York City train platforms. In 1893, Stollwerck, a German chocolate manufacturer, was selling its chocolate in 15,000 vending machines. It set up separate companies in various territories to manufacture vending machines to sell not just chocolate, but cigarettes, matches, chewing gum, and soap products. [36]
- Self-Service Stores (1910s): The concept of customer self-service in retail debuted in the early 20th century. In 1916, Piggly Wiggly opened in Memphis as the first self-service grocery store, allowing shoppers to freely pick items from shelves with a basket, rather than handing a list to a clerk. [23] This innovation dramatically reduced labor costs (fewer clerks were needed) and empowered customers to browse and impulse-buy; it soon became the standard for supermarkets and many other retail formats.
- Shopping Malls (1950s): The modern suburban shopping mall was pioneered by Victor Gruen in the 1950s. Northland Center (1954) and Southdale Center (1956) introduced the idea of a planned, multi-store complex with ample parking and, in Southdale’s case, an enclosed, climate-controlled environment. Malls offered convenience (many stores in one place) and became social hubs. By bringing the “downtown” shopping experience to the suburbs, malls changed consumer lifestyles and spurred decades of retail real estate development worldwide.
- Discount Mega-Stores (1960s): A new wave of large discount chains emerged in the 1960s, focused on high volume and low prices. Notably, Walmart, Kmart, and Target were all founded in 1962, heralding a shift toward big-box retailing in huge, no-frills stores. These retailers scaled rapidly by offering a wide array of goods (initially general merchandise, and later groceries) at prices undercutting smaller competitors. By the late 20th century, discount and mass merchandise stores had come to dominate retail: for example, discount retailers’ share of U.S. retail sales grew from 42% in 1967 to roughly 87% by 2010. [37]
- Hypermarkets and Big-box stores (1960s–1980s): Building on the discount store model, hypermarkets combined supermarkets and department stores into an even larger format. The first hypermarket was opened by Carrefour in France in 1963, featuring thousands of products including food, apparel, and household goods in a one-stop shop. Hypermarkets (and similar Big-box store formats in the U.S.) proliferated from the 1970s onward, offering convenience and economies of scale. These massive stores (often 100,000+ square feet) became common in suburban areas globally, particularly in Europe, North America, and parts of Asia.
- Barcode Scanning and IT Systems (1970s): The 1970s saw transformative technological advances in retail. The Universal Product Code (UPC) was introduced and in 1974 the first checkout barcode scanner was installed, ushering in automated scanning at grocery checkouts. [38] This innovation greatly reduced checkout times and errors, and allowed retailers to keep digital records of inventory. By the 1980s, barcode scanning and computerized point-of-sale systems were widespread. Retailers like Walmart leveraged these technologies early; adopting UPC scanning in 1983, to track sales in real time and manage inventory across their supply chains. Eventually, these systems enabled practices like just-in-time inventory and data-driven reordering, making retail operations far more efficient.
- E-Commerce and Online Retail (1990s–2000s): The rise of the internet created a new retail channel online . The mid-1990s brought the launch of Amazon (initially selling books online) and eBay (an online marketplace), followed by countless other e-commerce sites. Consumers gradually embraced the convenience of shopping from home. By the early 2000s, online retail was growing at double-digit rates annually. Retailers responded by building their own websites and, later, mobile shopping apps. Amazon in particular grew explosively; by 2020 it had become the world’s second-largest retailer by revenue (after Walmart), with over $280 billion in sales. The e-commerce boom also led to new services like online marketplaces for third-party sellers, digital payment systems, personalized product recommendations, and more.
- Omnichannel Retailing (2010s): As online shopping surged, traditional retailers in the 2010s adopted omnichannel strategies to blend physical and digital channels. This meant creating seamless integration between a retailer’s stores, website, and mobile app; allowing customers to, for example, buy online and pick up in-store (BOPIS), or return online purchases at a local store. [39] Retailers invested in better inventory visibility so that customers could see online if a product was in stock locally. They also used data from loyalty programs and online browsing to personalize marketing across channels. The goal of omnichannel retail was to meet customers wherever they are and provide a convenient, consistent experience; whether one shops via smartphone, computer, or in a brick-and-mortar outlet.
- Cashierless Stores and Automation (late 2010s): The late 2010s have brought experimental new retail technologies. In 2018, Amazon opened the first Amazon Go convenience store in Seattle, introducing a cashierless “Just Walk Out” shopping experience. Shoppers scan their phone on entry, take products off the shelf, and simply walk out with their items; sensors and computer vision systems detect what was taken and automatically charge the shopper’s Amazon account, eliminating checkout lines. [40] This technology, based on artificial intelligence and cameras, is being tested and adopted by other retailers as well. In addition, stores have begun using robots and automation for tasks like shelf-scanning for inventory, warehouse picking, and even customer service robots in-store. While still emerging, these innovations point toward a future where routine retail operations (and potentially jobs like cashiers) could be significantly automated.
