The Disruptive Forces that Changed the Cost of Retail

Vests may be in today but, tomorrow high waisted jeans are so in. Fashion is constantly changing and just like that the retail industry is constantly evolving. I focused on the cost of retail and how it has changed over the years. I broke down the information I found into the Past, Present, and Future. I further divided it into the Price of Goods, Occupancy Costs, and Marketing Costs. This helped organize this information and easily compare all the information. The common disruptor in all three is technology. With new machines and softwares, producing goods has become a lot cheaper and easier. It is more efficient than a human. This technology has replaced the actual store and salespeople too because now people focus on online shopping.

We started in the past with a higher cost to produce due to having little to no technology. There were occupancy costs associated with the store, holding areas, and factories. They also had to hire more employees to sell and produce goods. Most of their marketing budget went towards billboards, tv/radio ads, and print ads.

We go into the present where we are surrounded by technology and see that the price of producing has gone down because we have replaced humans with more efficient and fast machines. The occupancy costs are similar to the past. Today, companies focus on digital marketing with website, social media, and targeted advertisements.

Looking towards the future, a big question comes up. Will there be a brick and mortar store? What will companies do with online ad blocking softwares? How cheap will it become to produce goods with faster and smarter technology? Find out more about the Disruption in the Cost of Retail in this video!

 

, ,

One Response to The Disruptive Forces that Changed the Cost of Retail

  1. Joe Murdaco November 18, 2016 at 6:28 pm #

    Retail stores are constantly trying to lower their costs. Decreased costs result in increased sales and a higher profit margin. People are more than likely to buy something if it is cheaper. Obviously, right? Decreased costs benefit everyone. In any industry, an important start to increasing profits is to look at the costs of production. That is initially where a lot of companies go to lower costs. With the technology we have today, the production costs are nowhere near where they were centuries ago. Think about the simple example of a shirt. They used to be hand woven by local people with yarn and a tool they had. It would take them half a day to make a single shirt and they would have to sell the shirt for a high price to offset the time and labor. The sales, in terms of units, was abysmal compared to today. The reason for that is simple. The technology back then was non-existent. Mass production was not even a thought. Now, shirts can be made a lot quicker and the quality is much better. Companies can produce shirts by the thousands in a fraction of the time it took that man to make one shirt. The technology we have is extremely important for profit and sales.
    Technology is also important for the safety of the employees. The assembly line was dangerous work for people and machines have taken away most of the risk. This method of mass production was used for centuries, starting with Ford. Millions of incidents occurred where employees lost arms and limbs from the dangerous machines. Now, the machines do all of the work and people have more of a supervisory role. This is a lot better for companies and consumers. Machines make great quality products where they are all identical. It removes human error from the process. Assembly lines call for a lot of workers and that costs a lot of money per person. Machines cost a lot of money upfront but they pay off in the long run. They last a lot longer than people usually do. Also, there is no risk for corruption or stealing with machines. As stated previously, the quality of the products will be outstanding when compared to someone working an eight hour shift. Machines do not slow down, complain or call out sick. These are just a few reasons as to why machines are extremely important and cost effective.
    The improvements of technology are vital to production costs. If they keep improving and advancing, we will find ourselves in a place where people are obsolete. I am usually against robots and advancements in technology when loss of jobs is a result. However, in cases where jobs lives are being saved and costs are being brought down tremendously, I am all for it. I am excited to see where our future goes. I hope costs keep decreasing because that will benefit the entire economy. There is no telling how much we can advance.

Leave a Reply