Chapter 7 consumers

о

Ui

о •

Й

оз

Си

0

о

о

а

з

о

J-H

О

сз N

й

о о

N и

оЗ £

Есл

О

с и

л

-Й

"аЗ

Q

.о

Й

аз

-Й

и

Й

С

е

оЗ


С

-й

и

СО

л

U

с

оз

РСн

CS

со

^l^40N00(J\OH(Nr0^,t¹^)

around the world. Clearly, there are tendencies in that direction, with elements of store formats and signage, for example, being common across all markets. A British shopper entering a store of the leading UK retailer Tesco in Prague (Czech Republic) or Bangkok (Thailand) would quickly see aspects of the store design that are very similar to stores in the home country. Equally, however, the same shopper would also notice significant variations in terms of the product range on offer, the display of goods to consumers, and the physical structure of the store. In Prague, for exam­ple, Tesco has a city centre department store stretching over several storeys. In Thailand, Tesco hypermarkets often include a range of other food, leisure, and community services, while in rural areas, smaller Tesco stores offer external market space to local traders (see Figure 7.2). All these stores are quite different to the free-standing single-storey supermarkets that dominate in the United Kingdom.

Equally, we should not be lulled into thinking that international retail expansion is a straightforward process. On the contrary, meeting the needs of different national consumer markets is a challenging business and the recent history of retail globali­zation is littered with examples of both high-profile successes and failures across the leading retail TNCs. For example, Wal-Mart, while successful in many markets as shown in Figure 7.1, has failed to establish itself and subsequently exited the mar­kets of Germany (1998-2006), Hong Kong (1994-1996), Indonesia (1996-1998), and South Korea (1998-2006). Sometimes troubles in the home market can lead to market exit decisions: Carrefour, one of the first retailers to expand into Southeast Asia in the early 1990s, announced in late 2010 that it was withdrawing from the region due to its severe losses incurred in Europe and that its hypermarkets in Thailand, Malaysia, and Singapore were up for sale. Transnational retailers work hard to achieve legitimacy within host markets through the strategic localization of their store and sourcing activities to meet the needs of specific territories - the extent

Figure 7.2 Tesco Lotus in Thailand Source-, the authors.






tesco LQtuS
to which they are able to achieve this has a strong bearing on their success or failure. Wal-Mart’s failure in Germany, for instance, can be traced to a mismatch between a ‘lean retailing’ business model developed in the United States and the needs of the German market. In particular, Wal-Mart was unable to adapt its supplier and labour relations to conform to German norms for collective governance and struggled financially as a result. An inability to adapt sufficiently its business model to the needs of the host market also underpinned Wal-Mart’s exit from South Korea. It is too simplistic, however, to conclude that some retailers are ‘good’ at international expansion while others are not; the reality is a complex picture of success and fail­ure as retailers from different home contexts strive to adapt to widely varying host economy conditions.

From Centre to Suburbs, and Back Again?

Having established the contemporary importance of processes of retail globaliza­tion, we can now move on to consider the changing geography of retailing at the urban scale. In particular, we want to profile the shifting patterns of retail invest- nient from the inner city and downtown to the suburban periphery and back again, and in so doing, reveal how retail capital plays a central role in the constant _re-making of the urban built environment (a dynamic capitalist process intro­duced in Chapter 3).

Up until the 1950s, retailing was essentially a central urban activity. The post- World War Two suburbanization of retail capital and related decline of dty-centre retailing were arguably pioneered - and indeed most evident - in the United States (set* Box 7.2 for the classic example of Chicago). These dynamics, often driven by powerful alliances of property developers, retailers, and financiers, have been repeated in hundreds of cities across the United States and Canada. A similar suburbanization of retail provision has occurred in many other countries, and par­ticularly those of Western Europe, Such trends have been fuelled by a series of

CASE STUDY

Box 72 Retail decentralization in post-war Chicago

The scale and significance of these dynamics can be illustrated through briefly looking at developments in and around Chicago, Illinois, over the period from 1950 to the mid-1970s (drawing on Wrigley and Lowe 2002). By the end of the 1950s, four large open-air shopping centres with ample parking provision had appeared on the periphery of Chicago as department stores began to realize the potential of shifting their focus to the rapidly expanding middle-class suburbs (see Figure 7.3). The 1960s saw the build­ing of a series enclosed shopping centres or malls in a ring around Chicago, facilitated in part by the expanding urban expressway network. By the end of the decade, a total of 11 suburban shopping centres had combined retail sales to rival central Chicago. By 1974, the total was up to 15 shopping centres, and a second ‘ring’ around Chicago was starting to emerge. Some of the key tenants of these new suburban centres were the very department stores — such as Sears Roebuck and J.C. Penney - that had once dominated downtown shopping districts. At the same time, central and inner city retail outlets were closing in their hundreds. Chicago’s leading inner city shopping district, known as 63 rd and Halsted, was severely hit, finding itself in the middle of a decaying area with falling income levels by the early 1970s. In just two-and-a-half decades, the geography of Chicago’s retail provision had undergone a profound transformation.




Figure 7.3 The development of Chicago’s suburban shopping centres, 1949-1974 Source: adapted from Berry et al. (1976).




overlapping dynamics: the increased mobility of consumers and high levels of car ownership; the emergence of portions of the population with large amounts of disposable income; population decentralization from urban to suburban areas; higher female participation in the workforce driving demand for quicker and more

means of shopping (e.g. the ‘one-stop-shop’); and the growth strategies of _r!_H.y _sec-k enhanced economies of scale through larger and more acces- fjstiiil'j]_u, _extent to which the North American trends described above have ^S'^^L' ^sI,\|j_cated elsewhere has been dictated by the strength of planning regulations -^1<гЧ гI'ferent countries: most European countries, for example, have been more *'V [ mt to suburban greenfield developments than in the United States. Moreover, ¹ ]|iy fast-growing Asian cities - for example, Bangkok, Hong Kong, Seoul, and к ,|_u1j _ strong centralization of retail remains the dominant feature of the ban retail landscape. Regulatory conditions also critically affect the timing of decentralization processes. In the United Kingdom, for example, there was a boom in development of out-of-town food superstores in the 198l)s and early 1990s when planning guidelines on building in suburban areas were favourable. These regulatory influences clearly show how general patterns are imprinted with the characteristics of the different territories and places in which they play out.

In most countries, however, suburban retail parks are now a well-established part of the retail landscape. In the United Kingdom, the initial wave of food super­stores has been joined by three subsequent phases of out-of-town development. First, there has been a wave of retail parks containing, for example, home main­tenance, carpet, furniture, and electrical stores whose bulky products suit such accessible locations. Second, in contrast to the large-scale decentralization of city centre retailing seen in the United States, planning constraints have restricted such relocations (beyond the food superstores and retail parks just mentioned) to a small group of massive regional shopping centres that aim to serve more than their immediate urban hinterland. As shown in Figure 7.4, these are quite evenly spread across the country and pioneers, such as Brent Cross and the MetroCentre apart, were largely built in the 1990s. The 1998 Trafford Centre, for example, on the western outskirts of Manchester, has approximately 1.9 million square feet of retail, catering, and leisure space encompassing 280 stores and attracting 30 mil­lion visitors a year. An interesting line of research has explored how such shop­ping centres are carefully designed in ways to induce consumers to spend money (see Box 7.3).

The third, and latest, wave of suburban retail in the United Kingdom takes the form of outlet shopping malls that offer clothing manufacturers’ excess stock at reduced prices. Outlet malls originated in the United States; one of the most famous is Woodbury Common, an 850,000 square foot facility just one hour’s drive from New York City, offering 220 different stores. The largest outlet mall in the United Kingdom - Cheshire Oaks in northwest England - has over 140 stores selling a wide range of designer brands (see Figure 7.5). Overall, it is important to recognize that the suburbanization of retailing now constitutes many different kinds and formats of retailing, and that its extent varies significantly across differ­ent national territories.

While suburbanization has had a massive and lasting impact on the spatial pat­terns of retailing, there are also notable recent trends working in the opposite

Figure 7.4 Britain’s largest shopping centrcs Sonrcc. adapted from The Guardian (2011).

direction. While the nature and extent of the trend will again vary from context to context, three brief illustrations can be offered here to show the kinds of dynamics that are occurring. First, in the United States, since the mid-1970s when die level of retail decentralization was at its peak, considerable efforts have been

FURTHER THINKING

Box 7.3 The ‘magic of the mall’

Ro ping malls are a particular kind of retail space especially designed to h'duct-* consumption. In contrast to the more open landscape of the street, , ]Js are enclosed, privately owned territories. As such, to understand them, *eneed to look beyond the surface ‘magic of the mall¹ (drawing on Goss 1993). P^Llt another way, by exploring the form, function, and meaning of shopping malls it is possible to understand better how developers, retailers, and designers actively encourage the purchase of goods and services. There is a wide range of seemingly mundane attributes of mall design that seek to promote consumer spending, including:

• 
  The use of attractive central features to draw shoppers in particular directions and then direct them towards further purchasing options.
  
• 
  The configuration of escalators, and the strategic positioning of toilet facilities and exits, in order to make consumers walk past as many shop fronts as possible.
  
• 
  Limiting long straight stretches so consumers are unaware how far they are walking.
  
• 
  The use of signs and displays to encourage shoppers to keep walking.
  
• 
  Supplying rest points and seats for the weary consumer.
  
• 
  The use of soft-lighting and the absence of natural light to help suspend a sense of time.
  
• 
  The use of mirrors and reflective glass to create an illusion of space.
  
• 
  The use of ‘soothing’ background music to induce spending.
  
• 
  The presence of highly visible security staff to reinforce the safety of the environment.
  
• 
  Ongoing, regular cleaning to reinforce the cleanliness of the environment.
  

At the same time, and linking back to arguments made in Chapter 4, strenuous efforts are made to disconnect the commodities on sale from their real-world production systems and reposition them in a world of pleasure, fantasy, and magic promoted through architecture, interior design, and theming that evokes other times and places. In sum, what at first might seem to be a rather bland shopping mall is in reality a highly designed and strate­gic territory, reflective of the power of its owners, designers, and tenants. While it gives the impression of being a public place, in reality it is privately owned and is intended to generate profits. For a more recent study of a mall in Buenos Aires, Argentina, see Miller (2014).




Figure 7.5 Cheshire Oaks outlet mall Source: the authors.

made to regenerate the downtown districts of American cities. Central to such initiatives have been so-called festival marketplaces, stimulated by the success of the Faneuil Hall Marketplace, which opened in Boston in 1976. The central idea here is to use combinations of architecture, cultural exhibits, concerts, and ethnic festivals to attract people to speciality markets, shops, and restaurants. A differ­ent, but closely related, form of development has seen downtown retail revitaliza­tion as part of multiple-use complexes comprising offices, hotels, leisure facilities, and convention centres (for example, the Marina Bay Sands integrated resort in Singapore; see Figure 7.6). Similar schemes have subsequently been tried in many cities around the world, including those where retail decentralization has been less pronounced.

Figure 7.6 The Marina Bay Sands integrated resort, Singapore Source', the authors.




Second, in many of the post-industrial cities of developed countries (e.g. New York, Toronto, and Manchester) inner city retail has been boosted by gentrifica- tion processes, which have seen the return of young middle-class professionals to live in new or renovated apartments in inner city areas. This has created high- income areas that are attractive to shops, restaurants, nightclubs, and so on. These processes are also becoming apparent in rapidly developing Asian cities such as Shanghai. Third, large retailers have starred to reinvest in the inner city, prompted in part by the gentrification trends just mentioned. In the United Kingdom, both Tesco and Sainsburys have established new small supermarket and convenience store formats to tap into these growing urban markets. These processes have partly been driven by the competitive responses ol retailers to planning restric­tions on large format stores, a process also seen in emerging markets (e.g. the rapid growth of Tesco’s small Express format in Thailand).

The Online Spaces of Retailing

Many forms of retailing evidently still rely on the co-presence of sellers and buy­ers within a dedicated physical space, i.e. stores. Since the late 1990s, however, various forms of business-to-consumer e-commerce have emerged, presenting challenges to traditional retailers. After many initial years of steady expansion, the last few years have seen explosive growth in such online retailing, driven at the global scale by developments in China. While estimates of online retail; vary considerably, many observers agree that in 2017, online sales in СЫ^ exceeded US$1 trillion for the first time (over twice the levels of the next larg_es market, the United States, and up from less than US$100 billion in 2010), ассбид ing for approximately 20 per cent of all retail sales in that country. Other leading markets in terms of the penetration of online retailing at that time were the United Kingdom (18 per cent of total sales), United States (15 per cent), Germany (I S p_er cent), South Korea (14 per cent), France (Ю per cent), and Japan (9 per cent).

Geographic unevenness in uptake of online retailing has been accompanied by important sectoral differences. In 2017, in the United States, for example, over 60 per cent of sales of books, films, and music were conducted online, and over 40 per cent of sales of computers and toys, while for food and cars the figures hovered at around just 5 per cent of the total. For certain segments, therefore online retailing has already been transformative. Online sales of books and DVDs - easily transported, non-perishable standardized products - have expanded rapidly, bankrupting many store-based retailers, and distribution of certain com­modities such as music have moved decisively to the Internet (e.g. iTunes). Online retailing has also proven highly effective for a range of niche and specialist goods (e.g. relating to hobbies) due to the Internet’s ability to match buyers and sellers over long distances, thereby increasing the effective size of the market. In terms of services, the Internet has proved to be a very efficient channel in several areas including travel and insurance. These variations reveal two important aspects of the nature of retailing. First, it has become clear that while online retailers can save money by avoiding the need for store premises, there are still considerable costs associated with selecting and delivering goods ordered over the Internet. In particular, the logistical challenges associated with high-frequency, low-value local deliveries are severe. Second, there are elements of tactility and sociality inherent in many forms of shopping, meaning that ahead of purchase consumers like to see and Teel’ the goods, discuss them with family and friends, and benefit from the expert knowledge of retail staff. These concerns may encompass both low-order (e.g. selecting high-quality, fresh foods) and high-order goods (e.g. expensive clothing or large electronics purchases). In this way, many consum­ers now move seamlessly between the online and physical spaces of retailing, sometimes even for the same product, for instance, combining in-store assessment of goods with the power of online price comparisons and peer review.

Growth in online retailing, therefore, has been driven not only by‘online only’ retailers but also by store-based retailers who have moved parts of their business online, remodelling themselves as multichannel ‘bricks-and-clicks’ operators. Major store-based retailers have been proven to have considerable competitive advantages relating to their pre-existing warehouse and supply chain infrastruc­tures, customer support centres, and product-return networks. They have been able to leverage these resources and economies of scale - for example, in terms of sourcing - by grafting e-commerce operations onto their existing businesses.

^{l U} . two basic models of fulfilling online orders, either direct from a dedicated attribution facility or by ‘picking’ products from store shelves. However, there is



1 prating extent!vw v

°l^x |₍₎^j_stics have become critical to these combined operations. Initially, there

Bfanv ~~~ •

5 ^{eXremiVe St0re a0d 0ПППС}' °^peratit,ns simultaneously. Increasingly, _effi

were two

|eiding _retailers, for instance, those in Table 7.2, have thus become hybrids,
now a plethora of different online fulfilment models, again being driven by •^novations in the Chinese market, involving different geographical configura­tions of warehouses and different levels of involvement of independent logistics firms (Wang and Xiao 2015}. Same day delivery at a predefined timeslot of even the most mundane goods has become the norm in China and other contexts, and is underpinned in the Chinese case by an army of over 1.2 million couriers con­tinually criss-crossing cities in vans and on motorbikes.

Until this point, online retail spaces have thus by no means replaced physical spaces, but rather are overlain on, and interact with, the changing geographies of store-based retailing. Moving forward, however, there are signs that online-only retailing may he in the ascendancy, as the operations of the global leaders such as Amazon, Alibaba (Taobao and Tmall), and JD.com are reaching an unprecedented scale and driving more systemic change. The rapid rise of Alibaba’s Taobao in China, for instance, is having very varied impacts in rural towns and villages. In many places, small stores are being [Hit out of business by the online competition. For so- called Taobao villages’, however, of which there are now estimated to be over 1,500, specialized production of certain commodities (e.g. cultural products and furniture) for the national market (accessed through Taobao) is driving economic growth and, in some cases, dramatically reducing poverty levels in certain localities.

The meteoric rise of Amazon is also highly instructive here (see Figure 7.7). The company was established in 1994 and did nor return any profit until 2001, but has undergone exponential growth since 2010. What started out as a bookseller has become a broad-based retailer with annual revenues approaching US$200 billion, roughly one-third of which comes from acting as a platform for third-party sellers, and selling internet ‘cloud’ services and subscriptions (notably lor its ‘Prime’ ser­vice, which also gives access to original film and TV content on which Amazon spent US$4.5 billion in 2017). Its e-commerce website accounts for 5 per cent of all retail spending in the United Stares, and the company employed over 500,000 people globally in 20IX, up from just 150,000 in 2014, and was the second largest employer in the United States after Wal-Mart. The company’s competitive strength derives from its combined abilities in logistics and data management (I lesse 201 8).

While its data centres collect and manage a vast array of consumer data, Amazon’s fulfilment centres manage the efficient flow of goods to customers, in some cases using its data processing to predict consumer demand ahead of it actu­ally being realized through purchases on the website, Amazon’s operations are therefore underpinned by an extensive network of different kinds of centres, as shown in Figure 7.8 for the case of Europe. There are clear spatial patterns here: fulfilment centres are spread across locations near to large urban areas, customer

Year

Figure 7.7 Amazon’s growth trajectory Source: based on data from Bloomsberg; Thomson Reuters.

services centres are in more peripheral locations, and HQ/data centre operations are located in leading cities. Interestingly, to cope with the increasing demands of time-sensitive deliveries and also a growing interest in fresh food retailing, Amazon is currently adding a layer of smaller scale ‘sorting centres’ in its leading markets to bridge between regional distribution centres and urban end markets. Overall, while our argument about the uneven geographic and sectoral penetration of online retailing still holds, there is growing evidence of a tipping point being reached in certain leading markets (e.g. China, the United States, and the United Kingdom) in terms of its significance and wider implications.

Informal Retailing

So far we have tended to focus on formal retailers - both in terms of stores and the underlying logistical infrastructure - as perhaps the most prevalent and important consumption sites in capitalist society. It is vital to recognize, though, that beyond the formal spaces of retail lie a wide variety of informal trading and exchange

Dunfermline
■ Corporate office

Edinburgh Doncaster у Peterborough