Summary:The retail sector is a huge part of the U.S. economy, accumulating over three trillion dollars in retail sales per annum. Millions depend on this sector for employment as it stimulates job growth on a yearly basis. It has continued to be viewed as a good source of entry-level employment. Over the past few years, technology has begun to play a major role in this industry and will continue to do so. It appears that the next trend in retail will be geared towards online shopping, but some experts in the industry are not so optimistic. Despite this optimism, many continue to recognize retail as an industry with the potential to create new ventures of commerce.
Some of these new ventures include online shopping. "Business models need to be substantially changed," said Steven Burd of Safeway, when confronted on the issue of online grocery shopping. He believes that an "Internet pick up" strategy could be more beneficial and convenient for consumers. "Internet pick-up" is interpreted as a means of placing an order online and retrieving it at your convenience. As far as grocery shopping is concerned, new companies such as Webvan are operating at a product cost disadvantage and therefore, may not be able to compete with the big retailers.
On the other hand, Leonard Riggio, CEO of Barnes and Noble, stated that "the Internet is enabling retail" as it transfers businesses to stores. Riggio also agrees with Burd in that " to be a great retailer, you have to be a low cost producer." Analysts have stated that the fall of many online grocery retailers was not necessarily correlated to those of other online retailers but instead was an issue of the profit margin from which the industry benefits. Yet others believe it′s a temporary setback and remain somewhat optimistic about the return of online grocery retailing.
Another important issued addressed was human capital, and its contribution to sustaining a productive management system. The retail industry is a low-paying one and companies must find ways to retain their employees. Charles Conaway declared that in order to compete for human capital, "K-Mart uses an incentive system" to keep employees satisfied with their positions and refrain them from transferring to competitors. Safeway, on the other hand, incorporates a system that rewards its branch managers in hopes of better branch management that can, in essence, retain its own employees.
Burd stated that employees with a bachelor′s degree have better growth opportunities after accumulating a couple of years of employment at Safeway than anywhere else.
Finally, the issue of real estate was said to play a major role in the future success of retail. "Anything built on good real estate will be successful," said Arthur Coppola. He added that "people are looking for high barriers for entry." Although urban settings may allow for certain constraints, such as parking difficulty, enough space indoors should be sufficient to attract consumers and in turn capture a great portion of market share.
