This page contains a Flash digital edition of a book.
VIEWPOINT Is There Really a New Retail Paradigm?

Lessons Learned From History MICHAEL P. NIEMIRA*

Call it a “new reality,” the “great convergence” as the

National Retail Federation dubbed one of its sessions at its 2013 annual meeting or describe it as the “new borderless marketplace” as a recent ICSC and NAIOP paper1 did, it is all about how new technologies are changing the retail landscape from the front of the store to the back operations. However, this new reality is not really new, but an evolution. The foundations of this evolution have been around for

quite a while. It is important not to lose sight of the fact that the first “non-store impact” on retail was from mail order. Even before the heyday of the Sears’ and Montgomery Wards’ catalogs, witness an 1887 department store advertisement (see Figure 10-1) by Bloomingdale Brothers that contained many “modern day” retail elements. Bloomingdale Brothers promoted and offered its customers free shipping on mail orders of $5.00 or over. That enticement sounds very modern—or today’s free shipping by online retailers is a very old element of the retail landscape. It is important also not to lose sight that Sears’ catalog

sales, for example, accounted for 9.1% of its 1977 sales and 11.4% of that same year’s sales, if catalog-generated in-store sales were added. Mail-order—even in the late 1970s—was what online commerce represents to many retailers today. Witness the fact that today many stores, on average, generate around 10% of their total sales from e-Commerce. Retailers have been down this non-store path before. The initial wave of the business-to-consumer Internet-

based retail-sales explosion was largely a substitution from mail-order business. Is it any wonder that the U.S. Commerce Department does not separate mail-order and Internet-generated sales in its monthly retail sales statistics? Not really, since conceptually the sale is the same—it is a “non-store purchase.” The second wave of this evolution is the substitution of the retailer’s physical- store sales for its virtual-store sales, which is still ongoing. The third wave—which is in its nascent stage—is likely to be international retailer competition—not physical

* Staff Vice President, Chief Economist, Director of Research, ICSC

1 Curtis D. Spencer and Steve Schellenberg, The New Borderless Marketplace: Repositioning Retail and Warehouse Properties for Tomorrow, NAIOP Research Foundation and ICSC, April 2012.


cross-border, but virtual cross-border competition. But that third wave may take 20 years to be in its prime. The current strong online spending trends may not be

surprising any longer, but it is important to understand the context of why this is happening, which often goes missing in discussions. One of the more interesting contemporary perspectives on this issue was from Professors Larry Rosenberg and Elizabeth Hirschman, who

Figure 10-1 Bloomingdale Brothers Ad

Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44  |  Page 45  |  Page 46  |  Page 47  |  Page 48  |  Page 49  |  Page 50  |  Page 51  |  Page 52  |  Page 53  |  Page 54