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The End of an Era: A Time for Retail Perestroika
In the 1990s, marketers rather than merchants will be the key movers of retail businesses, as retailers shift from their traditional supplier orientation to focus directly on the customer.
-- Retailers' traditional role has been that of a funnel through which merchandise passes from manufacturer to consumer. This role has become insufficient and obsolete in the face of radical changes sweeping the marketplace which require that retailers be able to create concepts geared to consumer demand, and market them through assortments and packaging that project them to targeted customers.
The impetus for this historic shift stems from several retailing and societal developments such as the following:
-- Markets are becoming increasingly overstored and fragmented.
* In too many markets, there is moe retail space than can be profitably supported.
* Megadevelopers are building ever larger malls, further fragmenting retail business in many markets.
* By expanding beyond their regional bases, strong, well-managed retailers are reconfiguring competitive conditions in their new markets. For example, Nordstrom and Macy's, each with just two stores in Washington, capture $150-170 million in sales from existing retailers.
-- The U.S. marketplace has become highly homogenized as a result of broad distribution of high profile resources and their imitators.
* Retailers have resorted to constant promotions to move the over-supply of look-alike merchandise.
-- Many of the retail pacesetters are led by centralizers or super reactors who are forging narrowly defined, cookie-cutter, risk-averse businesses.
* The May company, for example, is creating a centrally managed, highly efficient national department store by imposing a uniform operating/merchandising dogma on its many divisions, regardless of …